---



QUARTZ MOUNTAIN RESOURCES
LTD.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JULY 31, 2015, 2014, AND 2013

(Expressed in Canadian Dollars, unless otherwise stated)

---



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 balance sheets as of July 31, 2015 and 2014, and the related consolidated statements of loss and comprehensive loss, changes in shareholder’s deficiency, and cash flows for the years ended July 31, 2015, 2014, and 2013 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 auditors consider 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, 2015 and 2014 and its financial performance and its cash flows for the years ended July 31, 2015, 2014, and 2013 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 indicates that Quartz Mountain Resources Ltd. has suffered recurring losses from operations and has a net capital deficiency.  These matters, along with the other matters set forth in Note 1, indicate the existence of material uncertainties that raises substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

“DAVIDSON & COMPANY LLP”

|Vancouver, Canada | Chartered Professional Accountants
|----------------- | ----------------------------------

November 25, 2015

---

|QUARTZ MOUNTAIN RESOURCES LTD.       
|-------------------------------------
|Consolidated Balance Sheets          
|(Expressed in
      Canadian Dollars)

|                                                       |   | July 31     |   |   | July 31     |  
|------------------------------------------------------ | - | ----------- | - | - | ----------- | -
|                                                       |   | 2015        |   |   | 2014        |  
|                                                       |   |             |   |   |             |  
|ASSETS                                                 |   |             |   |   |             |  
|                                                       |   |             |   |   |             |  
|Current assets                                         |   |             |   |   |             |  
|Cash and cash equivalents                              | $ | 461,986     |   | $ | 1,025,320   |  
|Amounts receivable and other assets
      (note 3)     |   | 16,419      |   |   | 11,504      |  
|                                                       |   | 478,405     |   |   | 1,036,824   |  
|                                                       |   |             |   |   |             |  
|Restricted cash                                        |   |            |   |   | 38,563      |  
|Amounts receivable and other
      assets (note 3)     |   |            |   |   | 8,295       |  
|Mineral property interests (note 4)                    |   | 2           |   |   | 891,628     |  
|                                                       |   |             |   |   |             |  
|Total assets                                           | $ | 478,407     |   | $ | 1,975,310   |  
|                                                       |   |             |   |   |             |  
|LIABILITIES AND SHAREHOLDERS'
      DEFICIENCY         |   |             |   |   |             |  
|                                                       |   |             |   |   |             |  
|Current liabilities                                    |   |             |   |   |             |  
|Amounts
      payable and other liabilities (note 6)   | $ | 4,062       |   | $ | 6,844       |  
|Convertible debenture 
      current portion (note 7) |   | 50,000      |   |   | 600,000     |  
|Due to a related party (note 9(b))                     |   | 2,973,276   |   |   | 2,957,075   |  
|                                                       |   | 3,027,338   |   |   | 3,563,919   |  
|                                                       |   |             |   |   |             |  
|Convertible debenture (note 7)                         |   | 450,000     |   |   |            |  
|                                                       |   |             |   |   |             |  
|Total liabilities                                      |   | 3,477,338   |   |   | 3,563,919   |  
|                                                       |   |             |   |   |             |  
|Shareholders' deficiency                               |   |             |   |   |             |  
|Share
      capital (note 5)                           |   | 26,050,118  |   |   | 26,050,118  |  
|Reserves                                               |   | 592,011     |   |   | 592,011     |  
|Accumulated deficit                                    |   | (29,641,060 | ) |   | (28,230,738 | )
|Total shareholders' deficiency                         |   | (2,998,931  | ) |   | (1,588,609  | )
|                                                       |   |             |   |   |             |  
|Total liabilities and shareholders' deficiency         | $ | 478,407     |   | $ | 1,975,310   |  

Nature and continuance of operations (note 1)

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

|/s/ James Kerr | /s/ Ronald W. Thiessen
|-------------- | ----------------------
|               |                       
|James Kerr     | Ronald W. Thiessen    
|Director       | Director              

---

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

|                                                                     |   | For the year ended July 31 |  
|-------------------------------------------------------------------- | - | -------------------------- | -
|                                                                     |   | 2015                       |  
|Expenses                                                             |   |                            |  
|Exploration and
      evaluation                                     | $ | 14,067                     |  
|Assays and analysis                                                  |   | 5,147                      |  
|Drilling                                                             |   |                           |  
|Engineering                                                          |   |                           |  
|Geological                                                           |   | 8,175                      |  
|Graphics                                                             |   | 145                        |  
|Property payments                                                    |   |                           |  
|Site activities                                                      |   |                           |  
|Sustainability                                                       |   | 600                        |  
|Transportation                                                       |   |                           |  
|Travel and accommodation                                             |   |                           |  
|                                                                     |   |                            |  
|General and
      administration                                     |   | 472,773                    |  
|Conferences and travel                                               |   |                           |  
|Legal, accounting and audit                                          |   | 34,775                     |  
|Office and administration                                            |   | 406,667                    |  
|Regulatory, trust and filing                                         |   | 20,209                     |  
|Shareholder communications                                           |   | 11,122                     |  
|                                                                     |   |                            |  
|Equity-settled share-based
      payments (note 5(c))                |   |                           |  
|                                                                     |   | (486,840                   | )
|Other items                                                          |   |                            |  
|Flow-through share
      premium (note 8)                            |   |                           |  
|Impairment of mineral property interest (note 4(a))                  |   | (891,626                   | )
|Interest income                                                      |   | 10,750                     |  
|Interest expense (note 7)                                            |   | (42,606                    | )
|Gain on
      disposition of a mineral property interest (note 4(a)) |   |                           |  
|Tax related to flow-through
      financing (note 8)                 |   |                           |  
|Loss and comprehensive loss for the year                             | $ | (1,410,322                 | )
|                                                                     |   |                            |  
|                                                                     |   |                            |  
|Basic and diluted loss per common share                              | $ | (0.05                      | )
|                                                                     |   |                            |  
|Weighted average number of common shares outstanding                 |   | 27,299,513                 |  

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

---

|QUARTZ MOUNTAIN RESOURCES LTD.                                              
|----------------------------------------------------------------------------
|Consolidated Statement of Changes in
      Shareholders’ Equity (Deficiency)
|(Expressed in
      Canadian Dollars)                                       

|                                                                |  | Share Capital |  |   | Reserve    |  |   |                |  |   |             |  
|--------------------------------------------------------------- |  | ------------- |  | - | ---------- |  | - | -------------- |  | - | ----------- | -
|                                                                |  |               |  |   |            |  |   |                |  |   |             |  
|                                                                |  |               |  |   |            |  |   | Equity-settled |  |   |             |  
|                                                                |  | Number of     |  |   |            |  |   | share-based    |  |   | Accumulated |  
|                                                                |  | shares        |  |   | Amount     |  |   | payments       |  |   | deficit     |  
|                                                                |  |               |  |   |            |  |   |                |  |   |             |  
|Balance at August 1, 2012                                       |  | 22,032,793    |  | $ | 24,514,381 |  | $ | 381,139        |  | $ | (23,906,484 | )
|Loss for the year                                               |  |              |  |   |           |  |   |               |  |   | (3,458,827  | )
|Equity-settled share-based
      payments (note 5(c))           |  |              |  |   |           |  |   | 210,872        |  |   |            |  
|Shares issued for cash, net of issuance costs
      (note 5(b)) |  | 2,214,323     |  |   | 528,160    |  |   |               |  |   |            |  
|Shares issued for property option payments (note 4(a))          |  | 3,052,397     |  |   | 1,007,577  |  |   |               |  |   |            |  
|Balance at July 31, 2013                                        |  | 27,299,513    |  | $ | 26,050,118 |  | $ | 592,011        |  | $ | (27,365,311 | )
|                                                                |  |               |  |   |            |  |   |                |  |   |             |  
|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 | )

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 |  
|------------------------------------------------------------------------------------------------- | - | -------------------------- | -
|                                                                                                  |   | 2015                       |  
|Cash flows from operating
      activities:                                                       |   |                            |  
|Loss for the year                                                                                 | $ | (1,410,322                 | )
|Adjusted for:                                                                                     |   |                            |  
|Equity-settled
      share-based payments (note 5(c))                                             |   |                           |  
|Flow-through share premium                                                                        |   |                           |  
|Gain on disposition of a
      mineral property interest (note 4(a))                              |   |                            |  
|Impairment of mineral property interest                                                           |   | 891,626                    |  
|Interest income                                                                                   |   | (10,750                    | )
|Interest
      expense                                                                            |   | 42,606                     |  
|Shares issued for
      property option payments (note 4(a))                                      |   |                           |  
|Changes in non-cash working
      capital items:                                                  |   |                            |  
|Amounts receivable and
      other assets - current                                               |   | (4,915                     | )
|Amounts
      receivable and other assets - non-current                                           |   | 8,295                      |  
|Amounts payable and other
      liabilities                                                       |   | (871                       | )
|Due to a
      related party                                                                      |   | 16,201                     |  
|Restricted cash                                                                                   |   | 38,563                     |  
|Net cash used in operating activities                                                             |   | (429,567                   | )
|                                                                                                  |   |                            |  
|Cash flows from investing
      activities:                                                       |   |                            |  
|Acquisition of the
      Galaxie Project                                                          |   |                           |  
|Disposition of mineral property interest (note 4(a))                                              |   |                           |  
|Interest received                                                                                 |   | 10,750                     |  
|Net cash provided by investing activities                                                         |   | 10,750                     |  
|                                                                                                  |   |                            |  
|Cash flows from financing
      activities:                                                       |   |                            |  
|Proceeds from issuance of
      share capital, net of issuance                                    |   |                            |  
|costs (note 7(b))                                                                                 |   |                           |  
|Principal payment on
      convertible debenture (note 7)                                         |   | (100,000                   | )
|Interest paid on convertible debenture
      (note 7)                                             |   | (44,517                    | )
|Net
      cash used in/(provided) by financing activities                                         |   | (144,517                   | )
|                                                                                                  |   |                            |  
|Increase (decrease) in cash and cash
      equivalents                                            |   | (563,334                   | )
|Cash and cash equivalents, beginning of year                                                      |   | 1,025,320                  |  
|Cash and cash equivalents, end of year                                                            | $ | 461,986                    |  
|                                                                                                  |   |                            |  
|Supplemental cash flow information:                                                               |   |                            |  
|Components of cash and cash
      equivalents                                                     |   |                            |  
|Business and savings
      accounts                                                               | $ | 461,986                    |  
|Cash held in guaranteed investment
      certificates                                             |   |                           |  
|                                                                                                  | $ | 461,986                    |  
|                                                                                                  |   |                            |  
|Non cash investing and financing activities:                                                      |   |                            |  
|Property acquisition costs
      paid through issuance of shares (note 4(a))                      | $ |                           |  
|Property
      acquisition costs paid through issuance of convertible debenture (note
      4(a)) |   |                           |  
|Portion
      of debenture assubed by Amarc (note 4(a))                                           |   |                           |  
|Extinguishment of receivable from Amarc
      (note 4(a))                                         |   |                           |  

Theaccompanying notes are anintegralpart of theseconsolidatedfinancialstatements.



---

|Quartz Mountain Resources Ltd.                                
|--------------------------------------------------------------
|Notes to the Consolidated Financial
      Statements          
|For the years ended July 31, 2015, 2014, and 2013             
|(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, 2015 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, 2015, the Company had cash and cash
equivalents of $ $461,986, 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, obtaining the necessary permits to mine, on future profitable
production of any mine and the proceeds from the disposition of the mineral
property interests. General market conditions for junior exploration companies
have resulted in depressed equity prices.

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

In October 2014, the Company entered
into an agreement with the holder of its convertible debenture to restructure
the payment terms of the debenture (note 7).

Of the total current liabilities of
$3,027,338 at July 31, 2015, approximately $2,973,276 is payable to Hunter
Dickinson Services Inc. ("HDSI"), a related party (note 9(b)).

Management believes that it is able to
maintain its core mineral rights in good standing for the next 12 month period.
Additional debt or equity financing will be required to fund exploration or
development programs. 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, 2015, 2014, and 2013             
|(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, 2015.

Issuance of these Financial Statements
was authorized by the Companys Board of Directors on November 25, 2015.

|(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 fair values of mineral property interests; 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, 2015, 2014, and 2013             
|(Expressed in
      Canadian Dollars, unless otherwise stated)

Critical accounting judgments:

| |  | Assessment of the Company's ability to continue
      as a going concern; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |  | The recoverability of the carrying value of the
      exploration and evaluation assets is dependent on successful development
      and commercial exploitation, or alternatively, sale of the respective
      areas of interest. The carrying value of these assets is reviewed by
      management when events or circumstances indicate that its carrying value
      may not be recovered. If impairment is determined to exist, an impairment
      loss is recognized to the extent that the carrying amount exceeds the
      recoverable amount (note 4(a)).

|(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, 2015 and July 31, 2014 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, 2015, 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.                                                                                                                                           

---

|Quartz Mountain Resources Ltd.                                
|--------------------------------------------------------------
|Notes to the Consolidated Financial
  Statements              
|For the years ended July 31, 2015, 2014, and 2013             
|(Expressed in
      Canadian Dollars, unless otherwise stated)

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.

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

Cash and cash equivalents

Cash and cash equivalents in the
balance sheet 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 changes 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.

---

|Quartz Mountain Resources Ltd.                                
|--------------------------------------------------------------
|Notes to the Consolidated Financial
  Statements              
|For the years ended July 31, 2015, 2014, and 2013             
|(Expressed in
      Canadian Dollars, unless otherwise stated)

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.

|(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.

---

|Quartz Mountain Resources Ltd.                                
|--------------------------------------------------------------
|Notes to the Consolidated Financial
  Statements              
|For the years ended July 31, 2015, 2014, and 2013             
|(Expressed in
      Canadian Dollars, unless otherwise stated)

|(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.

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 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.

---

|Quartz Mountain Resources Ltd.                                
|--------------------------------------------------------------
|Notes to the Consolidated Financial
  Statements              
|For the years ended July 31, 2015, 2014, and 2013             
|(Expressed in
      Canadian Dollars, unless otherwise stated)

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.

|(j) | Loss per share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | The Company presents basic and diluted loss per share
      data for its common shares, calculated by dividing the loss attributable
      to common shareholders of the Company by the weighted average number of
      common shares outstanding during the period. Diluted loss per share does
      not adjust the loss attributable to common shareholders or the weighted
      average number of common shares outstanding when the effect is
      anti-dilutive.                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|(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, 2015, 2014, and 2013             
|(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, 2015, 2014, and 2013             
|(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

The following standards and amendments
to existing standards have been adopted by the Company effective August 1, 2014:

These include IAS 32 (Amendment)
Offsetting Financial Assets and Financial Liabilities, IAS 36 (Amendment)
Recoverable Amount Disclosures for Non-Financial Assets, and IFRIC 21 Levies.
The Company has adopted these policies and they did not have a significant
effect on the financial statements. The nature and the impact of each new
standard are described below:

Offsetting Financial Assets and
Financial Liabilities (Amendments to IAS 32)

The amendment to IAS 32, Financial
Instruments: Presentation, requires that a financial asset and financial
liability should only be offset and the net amount reported when an entity has a
legal enforceable right to set off the amounts and intends either to settle on a
net basis, or to realize the asset and settle the liability simultaneously.

Recoverable Amount Disclosures for
Non-Financial Assets (Amendments to IAS 36)

Under the amended IAS 36, Impairment,
the recoverable amount of a CGU is required to be disclosed only when an
impairment loss has been recognized or reversed.

IFRIC 21, Levies

IFRIC 21 clarifies that obligating
events giving rise to a liability to pay a levy is the activity described in the
relevant legislation that triggers payments of the levy.

---

|Quartz Mountain Resources Ltd.                                
|--------------------------------------------------------------
|Notes to the Consolidated Financial
  Statements              
|For the years ended July 31, 2015, 2014, and 2013             
|(Expressed in
      Canadian Dollars, unless otherwise stated)

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                        
| | - | --------------------------------------------------------------------
| |  | IFRS 14, Regulatory Deferral Accruals                               
| |  | Amendments to IFRS 11, Joint Operations                             
| |  | Amendments to IAS 16 and IAS 38, Depreciation
      and Amortization

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

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.

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

| |                                                                             |   | July 31, 2015 |  |   | July 31, 2014 | 
| | --------------------------------------------------------------------------- | - | ------------- |  | - | ------------- | 
| | Current:                                                                    |   |               |  |   |               | 
| | Sales tax receivable                                                        | $ | 3,300         |  | $ | 4,834         | 
| | Prepaid insurance                                                           |   | 6,040         |  |   | 6,670         | 
| | Estimated British Columbia Mineral Exploration Tax Credit
      recoverable |   | 7,079         |  |   |              | 
| | Total                                                                       | $ | 16,419        |  | $ | 11,504        | 
| | Non-current:                                                                |   |               |  |   |               | 
| | Estimated British Columbia Mineral Exploration Tax Credit
      recoverable | $ |              |  | $ | 8,295         | 

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

| |                                  |   | July 31, 2015 |  |   | July 31,2014 | 
| | -------------------------------- | - | ------------- |  | - | ------------ | 
| | Galaxie Project (note 4(a))      | $ | 1             |  | $ | 891,627      | 
| | Angel's Camp royalty (note 4(b)) |   | 1             |  |   | 1            | 
| | Total                            | $ | 2             |  | $ | 891,628      | 

|(a) | Galaxie Project
|--- | ---------------

The Company holds a 100% mineral
property interest in the Galaxie Project, which is situated in the Stikine
Terrane, a region in northwestern BC, and it includes the Gnat Pass Property and
the Hotailuh Slope mineral claims. The
Company also holds a 100% interest in the ZNT property located in central
British Columbia. The property was staked by the Company in 2012.

---

|Quartz Mountain Resources Ltd.                                
|--------------------------------------------------------------
|Notes to the Consolidated Financial
  Statements              
|For the years ended July 31, 2015, 2014, and 2013             
|(Expressed in
      Canadian Dollars, unless otherwise stated)

The Gnat Pass claims were acquired in
August 2012 from Finsbury Exploration Ltd. ("Finsbury"), a private company with
certain directors 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").
| |   |                                                                                                     
| |  | making a cash payment of $50,000 to Bearclaw,
      and                                             
| |   |                                                                                                     
| |  | issuing a $650,000 convertible debenture (the
      "Debenture") (note 7) to Bearclaw.              

The Companys mineral property interest
in Gnat Pass Property is subject to a net smelter returns (NSR) royalty
agreement which requires the payment to a third party of a 1% NSR royalty  up
to a maximum of $7,500,000.

In November 2012, the Company and Amarc
Resources Ltd. (Amarc), a publicly traded company with certain directors in
common with the Company, entered into an agreement, pursuant to which Amarc
could earn up to 50% ownership interest in the Galaxie and ZNT Projects, subject
to certain earn-in requirements. In December 2012, the Company and Amarc formed
an unincorporated joint arrangement to conduct exploration activities at the
combined Galaxie-ZNT Project. The Company recognized a gain of $1,578,969 in
relation to the 40% disposition of the Galaxie ZNT Project to the Joint
Arrangement.

In June 2013, the Company and Amarc
entered into further agreements to exploration programs at the Galaxie and ZNT
properties. Amounts received from Amarc totalling $402,636 pursuant to these
agreements were recorded as reductions to the carrying amount of mineral
property interest.

On March 31, 2014 the Company and Amarc
agreed to terminate the joint arrangements governing exploration activities at
both the Galaxie and ZNT properties. Pursuant to the terms of the termination of
the joint arrangements, the Company regained a 100% interest in the Galaxie and
ZNT properties.

Impairment

As of July 31, 2015, the carrying
amount of the Companys mineral property interest in the Galaxie Project
exceeded the Companys market capitalization. During the last two years, in view
of a very high level of uncertainty as to the availability of capital resources,
the Company has maintained a strategy of conserving its cash resources and,
while the Company believes that its mineral assets have exploration potential,
curtailed activities relating to the Galaxie project to a minimum level that is
necessary to maintain core mineral claims in good standing. The Company believes
that, as per IFRS 6, these circumstances require an impairment testing of its
mineral property interest in the Galaxie project under IAS 36, Impairment of
Assets (IAS 36). Due to measurement uncertainties inherent in the
valuation of mineral resources and in view of the prevailing uncertainty in the
capital markets, the Company has determined that a reliable estimate of the
recoverable amount for the mineral property interest in the Galaxie Project
cannot be made. Consequently, the Company has written-down the carrying amount
of the mineral property interest to a nominal amount. For the purposes of IAS
36, the Company considers the Galaxie Project as a single cash generating unit.

---

|Quartz Mountain Resources Ltd.                                
|--------------------------------------------------------------
|Notes to the Consolidated Financial
  Statements              
|For the years ended July 31, 2015, 2014, and 2013             
|(Expressed in
      Canadian Dollars, unless otherwise stated)

|(b) | 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 Angel's Camp property is
      currently held by Alamos Gold Inc.
|    |                                                                                                                                                                                                                                              
|    | The royalty has been recorded at a nominal
      amount of $1.                                                                                                                                                                               
|    |                                                                                                                                                                                                                                              
|5.  | CAPITAL ANDRESERVES                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                              
|(a) | Authorized share capital                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                              
|    | At July 31, 2015, the authorized share capital
      of the Company comprised an unlimited number of common shares without par
      value and an unlimited number of preferred shares without par
    value.                                
|    |                                                                                                                                                                                                                                              
|    | No preferred shares have been issued to date. All issued
      common shares are fully paid.                                                                                                                                                 
|    |                                                                                                                                                                                                                                              
|(b) | Private Placement and Flow-Through
      Financing                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                              
|    | In December 2012, the Company
      completed a non-brokered private placement (the "2012 Private Placement")
      of 2,214,323 common shares for aggregate gross proceeds of $641,202. The
      2012 Private Placement was comprised
of:  

| |  | 461,914 non-flow-through common shares issued
      at a price of $0.25 per share for gross proceeds of $115,479; and                                                                                                                              
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                    
| |  | 1,752,409 flow-through common shares issued at
      $0.30 per share, including a premium of $0.05 per share over the offering
      price for the non-flow through common shares, for gross proceeds of
      $525,723 (the "Flow-through Funds").

After issuance costs of $25,422, net
cash proceeds from the 2012 Private Placement were $615,780, of which $87,620
was recorded as a flow-through share premium liability (note 8) and the balance
of $528,160 was allocated to the common shares issued.

|(c) | 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 ten 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, 2015, 2014, and 2013             
|(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 31 |  
| | ------------------------------------------------------ |  | ------------------ | -
| |                                                        |  | 2015               |  
| | Options outstanding at
      beginning of year         |  | 1,587,000          |  
| | Forfeited during the year                              |  | (36,900            | )
| | Expired during the year                                |  | (722,100           | )
| | Options outstanding and exercisable at the end of year |  | 828,000            |  

The weighted average contractual
remaining life of the share purchase options outstanding and exercisable at July
31, 2015 was 1.47 years (July 31, 2014  1.5 years, July 31, 2013  2.5 years).

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

| |                     |   | Year ended July 31 | 
| | ------------------- | - | ------------------ | 
| |                     |   | 2015               | 
| | Amounts payable     | $ | 4,062              | 
| | Accrued liabilities |   |                   | 
| | Total               | $ | 4,062              | 

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

| |                                                                          |   | 2015     |   |   | 2014    |  |   | 2013    |  
| | ------------------------------------------------------------------------ | - | -------- | - | - | ------- |  | - | ------- | -
| | Balance at the beginning of
      the year                               | $ | 600,000  |   | $ | 600,000 |  | $ |        |  
| | Convertible debenture issued                                             |   |         |   |   |        |  |   | 650,000 |  
| | Portion of payment made
      pursuant to amendment by Amarc (note 4(a)) |   |         |   |   |        |  |   | (20,000 | )
| | Payment made pursuant to amendment by the
      Company                  |   |         |   |   |        |  |   | (30,000 | )
| | Repayment during year                                                    |   | (100,000 | ) |   |        |  |   |        |  
| | Balance at the end of the year                                           | $ | 500,000  |   | $ | 600,000 |  | $ | 600,000 |  
| |                                                                          |   |          |   |   |         |  |   |         |  
| | Current portion                                                          | $ | 50,000   |   | $ | 600,000 |  | $ |        |  
| | Non-current portion                                                      |   | 450,000  |   |   |        |  |   | 600,000 |  
| |                                                                          | $ | 500,000  |   | $ | 600,000 |  | $ | 600,000 |  

Pursuant to the purchase of the Gnat
Pass Property (note 4(a)) in fiscal 2013, the Company issued an unsecured
$650,000 convertible debenture (the "Debenture") to the vendor, Bearclaw Capital
Corp. (Bearclaw), as part of the purchase price. In July
2013, Quartz Mountain and the holder of the Debenture entered into an agreement
to amend the Debenture, whereby among other things, a principal payment of
$50,000 toward the Debenture was made, reducing the outstanding balance to
$600,000. The interest rate applicable on the new balance of $600,000 and for
the remaining term of the Debenture was increased to 10% per annum from 8% per
annum, and the maturity date was extended to October 31, 2014 from October 31,
2013. Interest on the Debenture was payable quarterly in arrears and the
principal sum of Debenture, along with any unpaid interest, was convertible at
the option of the debenture holder into the Company's common shares at $0.15 per
share (previously $0.40 per share) on or before maturity of the Debenture on
October 31, 2014.

---

|Quartz Mountain Resources Ltd.                                
|--------------------------------------------------------------
|Notes to the Consolidated Financial
  Statements              
|For the years ended July 31, 2015, 2014, and 2013             
|(Expressed in
      Canadian Dollars, unless otherwise stated)

Effective October 1, 2014, the Company
and Bearclaw amended (the Amendment) the terms of the Debenture pursuant to
which the Company made a principal payment of $50,000 against the Debenture and
the remaining balance of $550,000 (the Principal Sum) was to be payable 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 Sum
outstanding bears interest at 7.5% per annum, payable quarterly in arrears.

Upon a completion by the Company of an
equity financing (the New Financing) for a minimum amount of $1,000,000, at
least 50% of any outstanding balance of the Principal Sum along with any
interest accrued thereon will be automatically converted (the Automatic
Conversion) into the Companys common shares. Bearclaw may elect to convert,
concurrent to the Automatic Conversion, any portion of the remaining 50% of
outstanding balance of the Principal Sum and accrued interest thereon (the
Optional Conversion). For the purposes of Automatic Conversion and Optional
Conversion of any principal sum, subject to the rules and policies of the TSX
Venture Exchange, the conversion price will be determined as the greater of (i)
the volume-weighted average trading price of common shares of the Company on the
Exchange for the 20 consecutive trading days ending on the fifth trading day
preceding the date of such conversion and (ii) the price at which the Company
issues common shares pursuant to the New Financing. For the purposes of the
Automatic Conversion and the Optional Conversion of any accrued interest, the
conversion price will be the market price of the Companys common shares on the
date of conversion. Other than pursuant to the Automatic Conversion and Optional
Conversion provisions, Bearclaw does not have an option to convert the Debenture
into the Companys common shares.

The Company has determined that, for
the purposes of IAS 39 Financial Instruments: Recognition and
Measurement, the Amendment resulted in a substantial modification of the
terms of the Debenture and it has been accounted for as an extinguishment of the
original financial liability and the recognition of a new financial liability;
however, no gain or loss was recognized as the fair value of the latter equaled
the carrying amount of the former.

---

|Quartz Mountain Resources Ltd.                                
|--------------------------------------------------------------
|Notes to the Consolidated Financial
  Statements              
|For the years ended July 31, 2015, 2014, and 2013             
|(Expressed in
      Canadian Dollars, unless otherwise stated)

As at July 31, 2015, long-term debt
repayments over the next five years are as follows:

| | Fiscal year    |   |             |  |   |            |  |   | Payments       | 
| | -------------- | - | ----------- |  | - | ---------- |  | - | -------------- | 
| |                |   | Payments    |  |   | Payments   |  |   | (principal and | 
| |                |   | (principal) |  |   | (interest) |  |   | interest)      | 
| | 2016           | $ | 50,000      |  | $ | 36,051     |  | $ | 86,051         | 
| | 2017           |   | 50,000      |  |   | 32,209     |  |   | 82,209         | 
| | 2018           |   | 50,000      |  |   | 28,459     |  |   | 78,459         | 
| | 2019           |   | 50,000      |  |   | 24,709     |  |   | 74,709         | 
| | 2020           |   | 50,000      |  |   | 21,010     |  |   | 71,010         | 
| | Remaining term |   | 250,000     |  |   | 48,555     |  |   | 298,555        | 
| | Total          | $ | 500,000     |  | $ | 190,993    |  | $ | 690,993        | 

|8.  | FLOW-THROUGHSHAREPREMIUMLIABILITY                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | Pursuant to the private placement of
      flow-through shares during calendar 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. During the year ended July 31, 2014 and 2013, the Company
      recognized $35,639 and $462,990, respectively, in the consolidated
      statements of loss and comprehensive loss as de-recognition of
      flow-through share premium liability.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|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.                                                                                                                                                                                                                                                                                                                                                                                                                                                 

---

|Quartz Mountain Resources Ltd.                                
|--------------------------------------------------------------
|Notes to the Consolidated Financial
  Statements              
|For the years ended July 31, 2015, 2014, and 2013             
|(Expressed in
      Canadian Dollars, unless otherwise stated)

The Company compensated key management
personnel as follows:

| |                                                                           |   | Year ended July 31 | 
| | ------------------------------------------------------------------------- | - | ------------------ | 
| |                                                                           |   | 2015               | 
| | Short-term employee benefits,
      including salaries and directors fees | $ | 159,918            | 
| | Equity-settled share-based payments                                       |   |                   | 
| |                                                                           | $ | 159,918            | 

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.

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 31 | 
| | -------------------------------------------------------------------- | - | ------------------ | 
| |                                                                      |   | 2015               | 
| | HDSI: Services received based
      on management services agreement | $ | 252,253            | 
| | HDSI: Reimbursement of third party expenses paid                     |   | 69,810             | 

Outstanding balances were as
follows:

| |                         |   | July 31, 2015 |  |   | July 31, 2014 | 
| | ----------------------- | - | ------------- |  | - | ------------- | 
| | Balance payable to HDSI | $ | 2,973,276     |  | $ | 2,957,075     | 

The Company acquired mineral property
interest (note 4(a)) from Finsbury, a private company with certain directors in
common with the Company.

---

|Quartz Mountain Resources Ltd.                                
|--------------------------------------------------------------
|Notes to the Consolidated Financial
  Statements              
|For the years ended July 31, 2015, 2014, and 2013             
|(Expressed in
      Canadian Dollars, unless otherwise stated)

|10. | EMPLOYEESBENEFITEXPENSES                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    | The amount of employees' salaries and benefits
      during the year ended July 31, 2015 was $327,135 (2014  $528,801; 2013 
      $2,614,921).                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|11. | 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.                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|12. | 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, 2015,
        the Company had unused non-capital loss carry forwards of approximately
        $5,279,000 (2014  $4,459,000) in Canada and $48,000 (2014  $40,000) in
        the United States.
      The Company had approximately $4,347,000 (2014 
        $4,343,000) of resource tax pools available, which may be used to shelter
      certain resource income.

Reconciliation of effective tax
rate:

| | Year ended July 31                                              |   | 2015       |   |   | 2014     |   |   | 2013       |  
| | --------------------------------------------------------------- | - | ---------- | - | - | -------- | - | - | ---------- | -
| | Loss for the year                                               | $ | (1,410,322 | ) | $ | (865,427 | ) | $ | (3,458,827 | )
| | Income tax expense                                              |   |           |   |   |         |   |   |           |  
| | Loss excluding income tax                                       | $ | (1,410,322 | ) | $ | (865,427 | ) | $ | (3,458,827 | )
| |                                                                 |   |            |   |   |          |   |   |            |  
| |                                                                 |   |            |   |   |          |   |   |            |  
| | Income tax recovery using the Company's
      domestic tax rate | $ | (367,000   | ) | $ | (225,000 | ) | $ | (874,000   | )
| | Non-deductible expenses and
      other                         |   | 31,000     |   |   | 147,000  |   |   | 693,000    |  
| | Change in deferred tax rates                                    |   | (2,000     | ) |   |         |   |   | (77,000    | )
| | Differences in statutory tax
      rates                        |   | (1,000     | ) |   | (2,000   | ) |   | (9,000     | )
| | Changes in unrecognized temporary differences                   |   | 339,000    |   |   | 80,000   |   |   | 267,000    |  
| |                                                                 | $ |           |   | $ |         |   | $ |           |  

---

|Quartz Mountain Resources Ltd.                                
|--------------------------------------------------------------
|Notes to the Consolidated Financial
  Statements              
|For the years ended July 31, 2015, 2014, and 2013             
|(Expressed in
      Canadian Dollars, unless otherwise stated)

The Company's domestic tax rate during
the year ended July 31, 2015 was 26% (2014  26%; 2013  25.33%) and the
effective tax rate was nil (2014  nil; 2013  nil).

As at July 31, 2015, the Company had
the following balances in respect of which no deferred tax assets had been
recognized:

| |                      |   |            |  |   | Resource  |  |   | Equipment | 
| | -------------------- | - | ---------- |  | - | --------- |  | - | --------- | 
| | Expiry:              |   | Tax losses |  |   | pools     |  |   | and other | 
| | Within one year      | $ | 137,000    |  | $ |          |  | $ |          | 
| | One to five years    |   | 10,000     |  |   |          |  |   | 42,000    | 
| | After five years     |   | 5,180,000  |  |   |          |  |   | 82,000    | 
| | No
      expiry date |   |           |  |   | 4,347,000 |  |   | 114,000   | 
| |                      | $ | 5,327,000  |  | $ | 4,347,000 |  | $ | 238,000   | 

|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:                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|(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.                                                                                                                                                                                                                                                                                                                      

---

|Quartz Mountain Resources Ltd.                                
|--------------------------------------------------------------
|Notes to the Consolidated Financial
  Statements              
|For the years ended July 31, 2015, 2014, and 2013             
|(Expressed in
      Canadian Dollars, unless otherwise stated)

The following obligations existed at
July 31, 2015:

| |                                                      |   |           |  |   | Payments due by period | 
| | ---------------------------------------------------- | - | --------- |  | - | ---------------------- | 
| |                                                      |   |           |  |   | Less than 1            | 
| |                                                      |   | Total     |  |   | year                   | 
| | Amounts payable and other
      liabilities (note 6) | $ | 4,062     |  | $ | 4,062                  | 
| | Convertible debenture (note 7)                       |   | 500,000   |  |   | 50,000                 | 
| | Due to related parties (note 9)                      |   | 2,973,276 |  |   | 2,973,276              | 
| | Total                                                | $ | 3,477,338 |  | $ | 3,027,338              | 

The following obligations existed at
July 31, 2014:

| |                                                      |   |           |  |   | Payments due by period | 
| | ---------------------------------------------------- | - | --------- |  | - | ---------------------- | 
| |                                                      |   |           |  |   | Less than 1            | 
| |                                                      |   | Total     |  |   | year                   | 
| | Amounts payable and other
      liabilities (note 6) | $ | 6,844     |  | $ | 6,844                  | 
| | Convertible debenture (note 7)                       |   | 600,000   |  |   | 600,000                | 
| | Due to related HDSI (note 9)                         |   | 2,957,075 |  |   |                       | 
| | Total                                                | $ | 3,563,919 |  | $ | 606,844                | 

|(c) | 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.
|    |                                                                                                                                                                                                                                                                                           
|(d) | 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, 2015.

---

|Quartz Mountain Resources Ltd.                                
|--------------------------------------------------------------
|Notes to the Consolidated Financial
  Statements              
|For the years ended July 31, 2015, 2014, and 2013             
|(Expressed in
      Canadian Dollars, unless otherwise stated)

The Company is not subject to any
externally imposed equity requirements.

|(e) | Fair Value                                                                                                
|--- | ----------------------------------------------------------------------------------------------------------
|    |                                                                                                           
|    | The fair value of the Company's financial assets and
      liabilities approximate their carrying
amounts.

---