QUARTZ MOUNTAIN RESOURCES LTD.

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED OCTOBER 31, 2014 AND 2013

Unaudited

(Expressed in Canadian Dollars, unless otherwise stated)

Notice to Readers

In accordance with subsection 4.3(3) of National Instrument 51-102, management of the Company advises that the Company's auditors have not performed a review of these condensed interim consolidated financial statements.

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

		October 31			July 31
		2014			2014
		(Unaudited)
ASSETS
Current assets
Cash and cash equivalents (note 3)	$	934,716		$	1,025,320
Amounts receivable and other assets (note 4)		31,036			11,504
Total current assets		965,752			1,036,824
Non-current assets
Restricted cash		–			38,563
Amounts receivable and other assets (note 4)		8,295			8,295
Mineral property interests (note 5)		891,628			891,628
Total non-current assets		899,923			938,486
Total assets	$	1,865,675		$	1,975,310
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)
Current liabilities
Amounts payable and other liabilities	$	14,349		$	6,844
Convertible debenture (note 7)		–			600,000
Current portion of long term debt (note 7)		50,000			–
Due to a related party (note 8)		3,081,478			2,957,075
Total current liabilities		3,145,827			3,563,919
Long term debt (note 7)		500,000			–
Total long-term liabilities		500,000			–
Shareholders' equity (deficiency)
Share capital (note 6)		26,050,118			26,050,118
Reserves (notes 6)		592,011			592,011
Accumulated deficit		(28,422,281	)		(28,230,738	)
Total shareholders' deficiency		(1,780,152	)		(1,588,609	)
Total liabilities and shareholders' equity	$	1,865,675		$	1,975,310
Nature and continuance of operations (note 1)
Commitments (note 7)

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

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

QUARTZ MOUNTAIN RESOURCES LTD.
Condensed Consolidated Interim Statements of Loss and Comprehensive Loss
(Unaudited - Expressed in Canadian Dollars, except for number of shares and loss per share)

		Three months ended October 31
		2014			2013
Expenses: (note 9)
Exploration and evaluation	$	4,553		$	236,237
Assays and analysis		2,948			20,431
Drilling		–			90,773
Geological		920			60,342
Graphics		85			1,972
Property payments		–			208
Site activities		–			25,019
Sustainability		600			17,182
Transportation		–			4,770
Travel and accommodation		–			15,540
General and administration		175,999			165,237
Conferences and travel		–			4,554
Legal, accounting and audit		30,291			1,276
Office and administration		136,616			149,820
Regulatory, trust and filing		7,514			6,766
Shareholder communications		1,578			2,821
Loss from operations		(180,552	)		(401,474	)
Interest income		3,195			1,381
Interest expense (note 7)		(13,531	)		(9,074	)
Foreign exchange loss		(655	)		(492	)
Flow-through share premium		–			35,639
Loss and comprehensive loss for the period	$	(191,543	)	$	(374,020	)
Basic and diluted loss per common share	$	(0.01	)	$	(0.01	)
Weighted average number of common shares outstanding		27,299,513			27,299,513

The accompanying notes are an integral part of these condensed consolidated interim financial state

QUARTZ MOUNTAIN RESOURCES LTD.
Condensed Consolidated Interim Statements of Changes in Equity (Deficiency)
(Unaudited - Expressed in Canadian Dollars, except number of common shares)

	Share Capital				Reserve
										Total
					Equity-settled					shareholders'
					share-based		Accumulated			equity
	Number		Share Capital		payments		deficit			(deficiency)
Balance at August 1, 2013	27,299,513	$	26,050,118	$	592,011	$	(27,365,311	)	$	(723,182	)
Loss for the period	–		–		–		(374,020	)		(374,020	)
Balance at October 31, 2013	27,299,513	$	26,050,118	$	592,011	$	(27,739,331	)	$	(1,097,202	)
Balance at August 1, 2014	27,299,513	$	26,050,118	$	592,011	$	(28,230,738	)	$	(1,588,609	)
Loss for the period	–		–		–		(191,543	)		(191,543	)
Balance at October 31, 2014	27,299,513	$	26,050,118	$	592,011	$	(28,422,281	)	$	(1,780,152	)

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

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

		Three months ended October 31
		2014			2013
Cash flows from operating activities:
Loss for the period	$	(191,543	)	$	(374,020	)
Adjusted for:
Flow-through share premium		–			(35,639	)
Interest expense		13,531			9,074
Interest income		(3,195	)		(1,381	)
Restricted cash		38,563			78,796
Changes in non-cash working capital items:
Amounts receivable and other assets		(19,532	)		(19,293	)
Amounts payable and other liabilities		9,097			(118,204	)
Due to a related party		124,403			132,912
Net cash used in operating activities		(28,676	)		(327,755	)
Cash flows from investing activities:
Disposition of mineral property		–			225,000
Interest received		3,195			1,381
Net cash provided by investing activities		3,195			226,381
Cash flows from financing activities:
Repayment of convertible debenture (note 7)		(50,000	)		–
Interest paid on convertible debenture (note 7)		(15,123	)		(6,016	)
Net cash used in financing activities		(65,123	)		(6,016	)
Decrease in cash and cash equivalents		(90,604	)		(107,390	)
Cash and cash equivalents, beginning of period		1,025,320			706,393
Cash and cash equivalents, end of period	$	934,716		$	599,003
Supplementary cash flow information:
Property payments receivable from Amarc Resources Ltd. agreement (note 5		–			189,636
	$	–		$	189,636

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

Quartz Mountain Resources Ltd.

Notes to the Condensed Consolidated Interim Financial Statements

For the three months ended October 31, 2014 and 2013

(Unaudited – Expressed in Canadian Dollars, unless otherwise stated)

1.	NATURE AND CONTINUANCE OF OPERATIONS
	Quartz Mountain Resources Ltd. ("Quartz Mountain") 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 (“BC”), Canada. The Company is primarily engaged in the acquisition and exploration of mineral properties.
	These condensed consolidated interim financial statements (the "Financial Statements") of the Company as at and for the three months ended October 31, 2014 include the financial statements of Quartz Mountain Resources Ltd. and those of its wholly-owned subsidiary, Wavecrest Resources Inc. (together referred to as the "Company"). Quartz Mountain Resources Ltd. is the ultimate parent entity of the Company.
	The Company is in the process of acquiring and exploring mineral property interests (note 5). 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, the future profitable production of any mine and the proceeds from the disposition of the mineral property interest.
	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. At October 31, 2014, the Company had cash and cash equivalents of $0.93 million, and a working capital deficit of $2.2 million. The Company had current liabilities of $3.2 million, of which $3.1 million is payable to Hunter Dickinson Services Inc. ("HDSI"), a related party (note 8(b)). The Company has received confirmation from HDSI that, HDSI will not demand, prior to November 1, 2015, payment of amounts outstanding as of the reporting date and will continue to provide services to the Company.
	During the current period, the Company entered into an agreement with the holder of its convertible debenture to restructure the payment terms of the debenture (note 7). Management believes that it is able to maintain its mineral rights in good standing for the next 12 month period. Additional debt or equity financing, or joint ventures will be required to fund exploration or development programs. The Company has a reasonable expectation that additional funds will be available when necessary to meet ongoing exploration and development costs. However, there can be no assurance that the Company will continue to obtain additional financial resources and/or achieve profitability or positive cash flows. If the Company is unable to obtain adequate additional financing, the Company will be required to re-evaluate its planned expenditures until additional funds can be raised through financing activities. These material uncertainties cast significant doubt on the ability of the Company to continue as a going concern.
	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 Condensed Consolidated Interim Financial Statements

For the three months ended October 31, 2014 and 2013

(Unaudited – Expressed in Canadian Dollars, unless otherwise stated)

2. SIGNIFICANT ACCOUNTING POLICIES

(a)	Statement of compliance
	These Financial Statements have been prepared in accordance with International Accounting Standards 34, Interim Financial Reporting ("IAS 34"), as issued by the International Accounting Standards Board ("IASB") and its interpretations. Accordingly, they do not include all of the information and note disclosures as required by International Financial Reporting Standards ("IFRS") for annual financial statements. Unless stated otherwise, the accounting policies and methods of computation applied by the Company in these Financial Statements are the same as those applied by the Company in its most recent annual consolidated financial statements which are filed on the Company's profile on SEDAR at www.sedar.com. These Financial Statements should be read in conjunction with the Company’s financial statements as at and for the year ended July 31, 2014. Results for the period ended October 31, 2014 are not necessarily indicative of future results.
	Issuance of these Financial Statements was authorized by the Company’s Board of Directors on December 11, 2014.
(b)	Basis of presentation
	These Financial Statements have been prepared on a historical cost basis. 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 these Financial Statements in conformity with IAS 34 requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. Actual results may differ from such estimates.
	In preparing these Financial Statements, significant judgements made by management in applying the Company's accounting policies and the key sources of estimation uncertainty were consistent with those applied to the consolidated financial statements as at and for the year ended July 31, 2014.
(d)	Accounting standards, interpretations and amendments to existing standards
	Effective August 1, 2014, the Company adopted new and revised IFRS that were issued by the IASB. The application of these new and revised IFRS has not had any material impact on the amounts reported for the current and prior periods but may affect the accounting for future transactions or arrangements.

Quartz Mountain Resources Ltd.

Notes to the Condensed Consolidated Interim Financial Statements

For the three months ended October 31, 2014 and 2013

(Unaudited – Expressed in Canadian Dollars, unless otherwise stated)

Accounting standards issued but not yet effective

Effective for annual periods beginning on or after January 1, 2016

• Annual improvements to IFRS 2012 – 2014 Cycle

Effective for annual periods beginning on or after 1 January 2017

• IFRS 15 Revenue from Contracts with Customers

Effective for annual periods beginning on or after 1 January 2018

• IFRS 9, Financial Instruments – Classification and measurement

The Company has not early-adopted these revised standards and is currently assessing the impact that these standards will have on the Company's financial statements.

3.	CASH AND CASH EQUIVALENTS
	The Company maintain its cash and cash equivalents in business and saving accounts.
4.	AMOUNTS RECEIVABLE AND OTHER ASSETS

		October 31,		July 31,
		2014		2014
Current:
Sales tax receivable	$	6,363	$	4,834
Prepaid insurance		24,673		6,670
Total	$	31,036	$	11,504
Non-current:
British Columbia Mineral Exploration Tax Credit	$	8,295	$	8,295

5. MINERAL PROPERTY INTERESTS

		October 31,		July 31,
		2014		2014
Galaxie Project (note 5(a))	$	891,627	$	891,627
Angel's Camp royalty (note 5(b))		1		1
Total	$	891,628	$	891,628

Quartz Mountain Resources Ltd.

Notes to the Condensed Consolidated Interim Financial Statements

For the three months ended October 31, 2014 and 2013

(Unaudited – Expressed in Canadian Dollars, unless otherwise stated)

(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 Gnat Pass Property and Hotailuh Slope mineral claims. 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.
(c)	Angel's Camp Property
	The Company retains a 1% net smelter return royalty payable to the Company on any production from the Angel's Camp property located in Lake County, Oregon. The Angel's Camp property is currently held by Alamos Gold Inc.
	The royalty has been recorded at a nominal amount of $1.

6. CAPITAL AND RESERVES

(a)	Authorized and issued share capital
	At October 31, 2014 and July 31, 2014, the authorized share capital of the Company comprised an unlimited number of common and preferred shares without par value.
	The Company has no preferred shares issued and outstanding. All issued shares are fully paid.
(b)	Equity-Settled Share-Based Payments
	The following summarizes the changes in the Company's share purchase options for the periods ended October 31, 2014 and 2013:

Number of options with exercise price of $0.45	Three months ended October 31,
	2014		2013
Options outstanding at beginning of period	1,587,000		1,705,800
Forfeited during the period	(4,500	)	(67,500	)
Options outstanding and exercisable at the end of period	1,582,500		1,638,300

The weighted average contractual remaining life of the share purchase options outstanding and exercisable at October 31, 2014 was 1.3 years (July 31, 2014 – 1.5 years).

Quartz Mountain Resources Ltd.

Notes to the Condensed Consolidated Interim Financial Statements

For the three months ended October 31, 2014 and 2013

(Unaudited – Expressed in Canadian Dollars, unless otherwise stated)

7.	LONG TERM DEBT
	Pursuant to the purchase of the Gnat Pass Property (note 5(a)) in fiscal 2013, the Company issued an unsecured $650,000 convertible debenture (the "Debenture") to a 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, is 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.
	Effective October 1, 2014, the Company and Bearclaw amended the terms of the Debenture pursuant to which, on October 8, 2014, the Company made a payment of $50,000 to Bearclaw against the principal sum of the Debenture and the remaining balance of $550,000 (the “Principal Sum”) is now payable in equal annual installments of $50,000, commencing on January 31, 2015 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 will bear 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 greater of (i) the volume-weighted average trading price (VWAP) 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 Automatic Conversion and 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. Except 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.

Quartz Mountain Resources Ltd.

Notes to the Condensed Consolidated Interim Financial Statements

For the three months ended October 31, 2014 and 2013

(Unaudited – Expressed in Canadian Dollars, unless otherwise stated)

As at October 31, 2014, long-term debt repayments over the next five years are as follows:

Fiscal year		Payments (principal
		and interest)
2015 (after the current quarter)	$	79,394
2016		86,051
2017		82,209
2018		78,459
2019		74,709
2020		71,010
Remaining		298,555
Total	$	770,387

8. RELATED PARTY BALANCES AND TRANSACTIONS

(a)	Transactions with Key Management Personnel
	Key management personnel are those individuals that have the authority and responsibility for planning, directing and controlling the activities of the Company, directly or indirectly, and by definition include the directors of the Company.
	During the period ended October 31, 2014 and 2013, the Company compensated key management personnel as follows:

		Three months ended
		October 31
		2014		2013
Short-term employee benefits	$	50,103	$	38,598

	Short-term employee benefits include salaries, directors’ fees and amounts paid to HDSI (note 8(b)) for services provided to the Company by certain HDSI personnel who serve as executive directors and 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. 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.

Quartz Mountain Resources Ltd.

Notes to the Condensed Consolidated Interim Financial Statements

For the three months ended October 31, 2014 and 2013

(Unaudited – Expressed in Canadian Dollars, unless otherwise stated)

Transactions with HDSI were as follows:

		Three months ended October 31
		2014		2013
Services received based on management services agreement	$	98,033	$	206,385
Reimbursement of third party expenses		20,446		14,579

Outstanding balances were as follows:

		October 31,		July 31, 2014
		2014
Balance payable to HDSI	$	3,081,478	$	2,957,075

HDSI has agreed not to demand repayment of these unsecured amounts prior to November 1, 2015.

9.	EMPLOYEES BENEFIT EXPENSES
	Employees' salaries and benefits included in various expenses are as follows:

		Three months ended
		October 31
		2014		2013
Exploration and evaluation	$	1,665	$	82,857
General and administration		107,520		129,588
Total	$	109,185	$	212,445

	General and administration expenses include equity-settled share-based payments expense.
10.	OPERATING SEGMENTS
	The Company operates in a single reportable operating segment – the acquisition, exploration and development of mineral properties.