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UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For
the quarterly period ended
March 31, 2023
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the transition period from
to
Commission
file number:
000-55710

NioCorp Developments Ltd.
(Exact
Name of Registrant as Specified in its Charter)
British Columbia,
Canada |
|
98-1262185 |
(State
or other jurisdiction of incorporation or organization) |
|
(I.R.S.
Employer Identification No.) |
|
|
|
7000
South Yosemite Street,
Suite 115
Centennial,
CO
(Address
of Principal Executive Offices)
|
|
80112
(Zip
code)
|
|
|
|
Registrant’s
telephone number, including area code: (720)
334-7066 |
Securities
registered pursuant to Section 12(b) of the Act:
Title
of each class |
|
Trading
Symbol(s) |
|
Name
of each exchange on which registered |
Common Shares, without par value |
|
NB |
|
The Nasdaq Stock Market LLC |
Warrants, each exercisable for 1.11829212 Common
Shares |
|
NIOBW |
|
The Nasdaq Stock Market LLC |
Indicate
by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for
the past 90 days.
Yes ☒ No ☐
Indicate
by check mark whether the registrant has submitted electronically
every Interactive Data File required to be submitted pursuant to
Rule 405 of Regulation S-T (§232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant
was required to submit such files).
Yes ☒ No ☐
Indicate
by check mark whether the registrant is a large accelerated filer,
an accelerated filer, a non-accelerated filer, a smaller reporting
company or an emerging growth company. See the definitions of
“large accelerated filer,” “accelerated filer”, “smaller reporting
company” and “emerging growth company” in Rule 12b-2 of the
Exchange Act:
Large
Accelerated Filer |
☐ |
Accelerated
Filer |
☐ |
Non-Accelerated Filer |
☒ |
Smaller
Reporting Company |
☒ |
|
Emerging
Growth Company |
☐ |
If an
emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act). Yes ☐
No ☒
As of
May 30, 2023, the registrant had
30,396,120 Common Shares outstanding.
TABLE
OF CONTENTS
PART I — FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Contents
NioCorp Developments Ltd.
Condensed Consolidated
Balance Sheets
(expressed in thousands of U.S. dollars, except share data)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of |
|
|
|
Note |
|
|
March
31,
2023 |
|
|
June
30,
2022
|
|
ASSETS |
|
|
|
|
|
|
|
|
|
Current |
|
|
|
|
|
|
|
|
|
Cash |
|
|
|
|
$ |
7,145 |
|
|
$ |
5,280 |
|
Prepaid expenses and other |
|
|
|
|
|
96 |
|
|
|
402 |
|
Total
current assets |
|
|
|
|
|
7,241 |
|
|
|
5,682 |
|
Non-current |
|
|
|
|
|
|
|
|
|
|
|
Other assets |
|
|
|
|
|
35 |
|
|
|
35 |
|
Investment in equity securities |
|
|
|
|
|
7 |
|
|
|
10 |
|
Right-of-use assets |
|
|
|
|
|
248 |
|
|
|
94 |
|
Land and buildings, net |
|
6 |
|
|
|
840 |
|
|
|
850 |
|
Mineral interests |
|
|
|
|
|
16,085 |
|
|
|
16,085 |
|
Total
assets |
|
|
|
|
$ |
24,456 |
|
|
$ |
22,756 |
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES,
REDEEMABLE NONCONTROLLING INTEREST, AND SHAREHOLDERS’
EQUITY |
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities |
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities |
|
7 |
|
|
$ |
3,319 |
|
|
$ |
817 |
|
Related party loan |
|
11 |
|
|
|
1,289 |
|
|
|
2,000 |
|
Convertible debt |
|
8 |
|
|
|
- |
|
|
|
2,169 |
|
Operating lease liability |
|
13 |
|
|
|
70 |
|
|
|
82 |
|
Total
current liabilities |
|
|
|
|
|
4,678 |
|
|
|
5,068 |
|
Convertible debt |
|
8 |
|
|
|
12,263 |
|
|
|
- |
|
Warrant liabilities, at fair value |
|
8,10 |
|
|
|
5,303 |
|
|
|
- |
|
Earnout Shares liability, at fair value |
|
9 |
|
|
|
12,314 |
|
|
|
- |
|
Operating lease liability |
|
13 |
|
|
|
177 |
|
|
|
23 |
|
Total
liabilities |
|
|
|
|
|
34,735 |
|
|
|
5,091 |
|
Commitments
and contingencies |
|
|
|
|
|
|
|
|
|
|
|
Redeemable
noncontrolling interest |
|
9 |
|
|
|
2,233 |
|
|
|
- |
|
SHAREHOLDERS’
EQUITY |
|
|
|
|
|
|
|
|
|
|
|
Common shares, no par
value, unlimited
shares authorized; shares outstanding: 30,081,655 at March
31, 2023 and 27,667,060 at June
30, 2022 |
|
10 |
|
|
|
134,445 |
|
|
|
129,055 |
|
Accumulated deficit |
|
|
|
|
|
(146,046 |
) |
|
|
(110,397 |
) |
Accumulated other comprehensive loss |
|
|
|
|
|
(911 |
) |
|
|
(993 |
) |
Total
shareholders’ equity |
|
|
|
|
|
(12,512 |
) |
|
|
17,665 |
|
Total
liabilities, redeemable noncontrolling interest and
equity |
|
|
|
|
$ |
24,456 |
|
|
$ |
22,756 |
|
The accompanying notes are an integral part of these condensed
consolidated financial statements.
NioCorp Developments Ltd.
Condensed Consolidated
Statements of Operations and Comprehensive Loss
(expressed in thousands of U.S. dollars, except share and per share
data) (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For
the three months ended
March 31, |
|
|
For
the nine months ended
March 31, |
|
|
|
Note |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Operating
expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee
related costs |
|
|
|
|
$ |
1,405 |
|
|
$ |
308 |
|
|
$ |
1,989 |
|
|
$ |
1,859 |
|
Professional
fees |
|
|
|
|
|
157 |
|
|
|
16 |
|
|
|
583 |
|
|
|
530 |
|
Exploration
expenditures |
|
12 |
|
|
|
1,410 |
|
|
|
845 |
|
|
|
4,015 |
|
|
|
1,957 |
|
Other
operating expenses |
|
5 |
|
|
|
26,220 |
|
|
|
217 |
|
|
|
26,888 |
|
|
|
1,324 |
|
Total
operating expenses |
|
|
|
|
|
29,192 |
|
|
|
1,386 |
|
|
|
33,475 |
|
|
|
5,670 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change
in fair value of Earnout Shares liability |
|
9 |
|
|
|
(881 |
) |
|
|
- |
|
|
|
(881 |
) |
|
|
- |
|
Change
in fair value of warrant liability |
|
8,10 |
|
|
|
784 |
|
|
|
- |
|
|
|
868 |
|
|
|
- |
|
Loss
on debt extinguishment |
|
8 |
|
|
|
300 |
|
|
|
- |
|
|
|
1,922 |
|
|
|
- |
|
Foreign
exchange (gain) loss |
|
|
|
|
|
83 |
|
|
|
(66 |
) |
|
|
192 |
|
|
|
98 |
|
Interest
expense |
|
|
|
|
|
142 |
|
|
|
679 |
|
|
|
362 |
|
|
|
2,306 |
|
Gain
on sale of assets |
|
6 |
|
|
|
- |
|
|
|
- |
|
|
|
(13 |
) |
|
|
- |
|
Loss
on equity securities |
|
|
|
|
|
1 |
|
|
|
1 |
|
|
|
2 |
|
|
|
6 |
|
Income
tax benefit |
|
|
|
|
|
(186 |
) |
|
|
- |
|
|
|
(186 |
) |
|
|
- |
|
Net
loss |
|
|
|
|
|
29,435 |
|
|
|
2,000 |
|
|
|
35,741 |
|
|
|
8,080 |
|
Net
loss attributable to redeemable noncontrolling interest |
|
|
|
|
|
92 |
|
|
|
- |
|
|
|
92 |
|
|
|
- |
|
Net
loss attributable to the Company |
|
|
|
|
$ |
29,343 |
|
|
$ |
2,000 |
|
|
$ |
35,649 |
|
|
$ |
8,080 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
comprehensive loss: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss |
|
|
|
|
$ |
29,435 |
|
|
$ |
2,000 |
|
|
$ |
35,741 |
|
|
$ |
8,080 |
|
Other
comprehensive loss (gain): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reporting
currency translation |
|
|
|
|
|
(112 |
) |
|
|
38 |
|
|
|
(82 |
) |
|
|
(72 |
) |
Total
comprehensive loss |
|
|
|
|
|
29,323 |
|
|
|
2,038 |
|
|
|
35,659 |
|
|
|
8,008 |
|
Comprehensive
loss attributable to redeemable noncontrolling interest |
|
|
|
|
|
92 |
|
|
|
- |
|
|
|
92 |
|
|
|
- |
|
Comprehensive
loss attributable to the Company |
|
|
|
|
$ |
29,231 |
|
|
$ |
2,038 |
|
|
$ |
35,567 |
|
|
$ |
8,008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
per common share, basic and diluted |
|
2d |
|
|
$ |
1.00 |
|
|
$ |
0.08 |
|
|
$ |
1.26 |
|
|
$ |
0.31 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average common shares outstanding |
|
|
|
|
|
28,546,379 |
|
|
|
26,576,440 |
|
|
|
28,128,731 |
|
|
|
26,172,981 |
|
The accompanying notes are an integral part of these condensed
consolidated financial statements.
NioCorp
Developments Ltd.
Condensed Consolidated Statements of Cash Flows
(expressed
in thousands of U.S. dollars) (unaudited)
|
|
|
|
|
|
|
|
|
|
For the nine months
ended
March 31,
|
|
|
|
2023 |
|
|
2022 |
|
CASH
FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
|
|
|
|
Net loss for the period |
|
$ |
(35,741 |
) |
|
$ |
(8,080 |
) |
Adjustments to reconcile net loss to net cash used in
operations: |
|
|
|
|
|
|
|
|
Initial valuation of warrants |
|
|
3,848 |
|
|
|
- |
|
Change in fair value of warrants |
|
|
868 |
|
|
|
- |
|
Initial valuation of Earnout Shares liability |
|
|
13,195 |
|
|
|
- |
|
Change in fair value of Earnout Shares liability |
|
|
(881 |
) |
|
|
- |
|
Share-based compensation |
|
|
1,788 |
|
|
|
1,568 |
|
Fair value
of Commitment Shares issued |
|
|
650 |
|
|
|
- |
|
Accretion of convertible debt |
|
|
215 |
|
|
|
2,149 |
|
Loss on debt extinguishment |
|
|
1,422 |
|
|
|
- |
|
Foreign exchange loss |
|
|
200 |
|
|
|
148 |
|
Unrealized loss on equity securities |
|
|
2 |
|
|
|
6 |
|
Depreciation |
|
|
2 |
|
|
|
2 |
|
Gain on sale of assets |
|
|
(13 |
) |
|
|
- |
|
Noncash lease expense |
|
|
(12 |
) |
|
|
(5 |
) |
Total |
|
|
(14,457 |
) |
|
|
(4,212 |
) |
Change in working capital items: |
|
|
|
|
|
|
|
|
Prepaid expenses and other |
|
|
304 |
|
|
|
(516 |
) |
Accounts payable and accrued liabilities |
|
|
2,688 |
|
|
|
314 |
|
Net cash used in operating activities |
|
|
(11,465 |
) |
|
|
(4,414 |
) |
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
Acquisition of land and buildings |
|
|
- |
|
|
|
(16 |
) |
Proceeds from sale of assets |
|
|
21 |
|
|
|
- |
|
Net cash provided by (used in) investing activities |
|
|
21 |
|
|
|
(16 |
) |
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
Proceeds from issuance of common shares |
|
|
11 |
|
|
|
973 |
|
Share
issuance costs |
|
|
(21 |
) |
|
|
- |
|
Convertible debt repayment |
|
|
(515 |
) |
|
|
- |
|
Proceeds of debt issuance, net of costs |
|
|
14,857 |
|
|
|
- |
|
Related party debt draws |
|
|
1,130 |
|
|
|
- |
|
Related party debt repayments |
|
|
(1,841 |
) |
|
|
(318 |
) |
Net cash provided by financing activities |
|
|
13,621 |
|
|
|
655 |
|
Exchange rate effect on cash and cash equivalents |
|
|
(312 |
) |
|
|
(78 |
) |
Change in cash and cash equivalents during period |
|
|
1,865 |
|
|
|
(3,853 |
) |
Cash and cash equivalents, beginning of period |
|
|
5,280 |
|
|
|
7,317 |
|
Cash and cash equivalents, end of period |
|
$ |
7,145 |
|
|
$ |
3,464 |
|
|
|
|
|
|
|
|
|
|
Supplemental cash flow information: |
|
|
|
|
|
|
|
|
Amounts paid for interest |
|
$ |
239 |
|
|
$ |
40 |
|
Non-cash financing transactions: |
|
|
|
|
|
|
|
|
Conversions of debt for common shares |
|
$ |
1,950 |
|
|
$ |
6,622 |
|
The
accompanying notes are an integral part of these condensed
consolidated financial statements.
NioCorp
Developments Ltd.
Condensed Consolidated Statements of Shareholders’ Equity
and Redeemable Noncontrolling Interest
(expressed
in thousands of U.S. dollars, except per share amounts or as
otherwise stated) (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Nine Months Ended March 31, 2023 and 2022 |
|
|
|
Common
Shares
Outstanding
|
|
|
Common Stock |
|
|
Accumulated
Deficit
|
|
|
Accumulated
other
comprehensive
income
|
|
|
Total
shareholders’
equity
|
|
|
Redeemable
Noncontrolling
Interest
|
|
Balance,
June 30, 2021 |
|
|
25,637,991 |
|
|
$ |
113,882 |
|
|
$ |
(99,510 |
) |
|
$ |
(1,159 |
) |
|
$ |
13,213 |
|
|
$ |
- |
|
Exercise of
warrants |
|
|
87,175 |
|
|
|
543 |
|
|
|
- |
|
|
|
- |
|
|
|
543 |
|
|
|
- |
|
Exercise of
options |
|
|
192,653 |
|
|
|
430 |
|
|
|
- |
|
|
|
- |
|
|
|
430 |
|
|
|
- |
|
Debt
conversions |
|
|
890,550 |
|
|
|
6,622 |
|
|
|
- |
|
|
|
- |
|
|
|
6,622 |
|
|
|
- |
|
Share-based compensation |
|
|
- |
|
|
|
1,568 |
|
|
|
- |
|
|
|
- |
|
|
|
1,568 |
|
|
|
- |
|
Reporting currency translation |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
72 |
|
|
|
72 |
|
|
|
- |
|
Loss
for the period |
|
|
- |
|
|
|
- |
|
|
|
(8,080 |
) |
|
|
- |
|
|
|
(8,080 |
) |
|
|
- |
|
Balance,
March 31, 2022 |
|
|
26,808,369 |
|
|
$ |
123,045 |
|
|
$ |
(107,590 |
) |
|
$ |
(1,087 |
) |
|
$ |
14,368 |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
June 30, 2022 |
|
|
27,667,060 |
|
|
$ |
129,055 |
|
|
$ |
(110,397 |
) |
|
$ |
(993 |
) |
|
$ |
17,665 |
|
|
$ |
- |
|
Exercise of
options |
|
|
265,138 |
|
|
|
11 |
|
|
|
- |
|
|
|
- |
|
|
|
11 |
|
|
|
- |
|
Fair
value of Financing Warrants issued |
|
|
- |
|
|
|
3,337 |
|
|
|
- |
|
|
|
- |
|
|
|
3,337 |
|
|
|
- |
|
Common Shares issued in the GXII Transaction |
|
|
1,753,821 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Redeemable noncontrolling interest |
|
|
- |
|
|
|
(2,325 |
) |
|
|
- |
|
|
|
- |
|
|
|
(2,325 |
) |
|
|
2,325 |
|
Commitment
Shares issued |
|
|
81,213 |
|
|
|
650 |
|
|
|
- |
|
|
|
- |
|
|
|
650 |
|
|
|
- |
|
Debt
conversions |
|
|
314,423 |
|
|
|
1,950 |
|
|
|
- |
|
|
|
- |
|
|
|
1,950 |
|
|
|
- |
|
Share
issuance costs |
|
|
- |
|
|
|
(21 |
) |
|
|
- |
|
|
|
- |
|
|
|
(21 |
) |
|
|
- |
|
Share-based compensation |
|
|
- |
|
|
|
1,788 |
|
|
|
- |
|
|
|
- |
|
|
|
1,788 |
|
|
|
- |
|
Reporting currency translation |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
82 |
|
|
|
82 |
|
|
|
- |
|
Loss
for the period |
|
|
- |
|
|
|
- |
|
|
|
(35,649 |
) |
|
|
- |
|
|
|
(35,649 |
) |
|
|
(92 |
) |
Balance,
March 31, 2023 |
|
|
30,081,655 |
|
|
$ |
134,445 |
|
|
$ |
(146,046 |
) |
|
$ |
(911 |
) |
|
$ |
(12,512 |
) |
|
$ |
2,233 |
|
The
accompanying notes are an integral part of these condensed
consolidated financial statements.
NioCorp
Developments Ltd.
Condensed
Consolidated Statements of Shareholders’ Equity and Redeemable
Noncontrolling Interest
(expressed
in thousands of U.S. dollars, except per share amounts or as
otherwise stated) (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended March 31, 2023 and 2022 |
|
|
|
Common
Shares
Outstanding
|
|
|
Common Stock |
|
|
Accumulated
Deficit
|
|
|
Accumulated
other
comprehensive
income
|
|
|
Total
shareholders’
equity
|
|
|
Redeemable
noncontrolling
Interest
|
|
Balance,
December 31, 2021 |
|
|
26,402,696 |
|
|
$ |
120,936 |
|
|
$ |
(105,590 |
) |
|
$ |
(1,050 |
) |
|
$ |
14,296 |
|
|
$ |
- |
|
Exercise of
options |
|
|
90,692 |
|
|
|
9 |
|
|
|
- |
|
|
|
- |
|
|
|
9 |
|
|
|
- |
|
Debt
conversions |
|
|
314,981 |
|
|
|
2,100 |
|
|
|
- |
|
|
|
- |
|
|
|
2,100 |
|
|
|
- |
|
Reporting currency translation |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(37 |
) |
|
|
(37 |
) |
|
|
- |
|
Loss
for the period |
|
|
- |
|
|
|
- |
|
|
|
(2,000 |
) |
|
|
- |
|
|
|
(2,000 |
) |
|
|
- |
|
Balance,
March 31, 2022 |
|
|
26,808,369 |
|
|
$ |
123,045 |
|
|
$ |
(107,590 |
) |
|
$ |
(1,087 |
) |
|
$ |
14,368 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 2022 |
|
|
28,242,064 |
|
|
$ |
130,995 |
|
|
$ |
(116,703 |
) |
|
$ |
(1,023 |
) |
|
$ |
13,269 |
|
|
$ |
- |
|
Exercise of
options |
|
|
4,557 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Fair
value of Financing Warrants issued |
|
|
- |
|
|
|
3,337 |
|
|
|
- |
|
|
|
- |
|
|
|
3,337 |
|
|
|
- |
|
Common Shares issued in the GXII Transaction |
|
|
1,753,821 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Redeemable noncontrolling interest |
|
|
- |
|
|
|
(2,325 |
) |
|
|
- |
|
|
|
- |
|
|
|
(2,325 |
) |
|
|
2,325 |
|
Commitment
Shares issued |
|
|
81,213 |
|
|
|
650 |
|
|
|
- |
|
|
|
- |
|
|
|
650 |
|
|
|
- |
|
Share-based compensation |
|
|
- |
|
|
|
1,788 |
|
|
|
- |
|
|
|
- |
|
|
|
1,788 |
|
|
|
- |
|
Reporting currency translation |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
112 |
|
|
|
112 |
|
|
|
- |
|
Loss
for the period |
|
|
- |
|
|
|
- |
|
|
|
(29,343 |
) |
|
|
- |
|
|
|
(29,343 |
) |
|
|
(92 |
) |
Balance,
March 31, 2023 |
|
|
30,081,655 |
|
|
$ |
134,445 |
|
|
$ |
(146,046 |
) |
|
$ |
(911 |
) |
|
$ |
(12,512 |
) |
|
$ |
2,233 |
|
The
accompanying notes are an integral part of these condensed
consolidated financial statements.
NioCorp
Developments Ltd.
Notes to the Condensed Consolidated Financial
Statements
March
31, 2023
(expressed
in thousands of U.S. dollars, except per share amounts or as
otherwise stated) (unaudited)
|
1. |
DESCRIPTION OF BUSINESS |
NioCorp
Developments Ltd. (“we,” “us,” “our,” “NioCorp” or the “Company”)
was incorporated on February 27, 1987, under the laws of the
Province of British Columbia and currently operates in one reportable
operating segment consisting of exploration and development of
mineral deposits in North America, specifically, the Elk Creek
Niobium/Scandium/Titanium property (the “Elk Creek Project”)
located in southeastern Nebraska.
As further discussed in Notes 5, 8, and 9, on March 17, 2023 (the
“Closing Date”), the Company closed the GXII Transaction (as
defined below) with GX Acquisition Corp. II (“GXII”), pursuant to
the Business Combination Agreement, dated September 25, 2022 (the
“Business Combination Agreement”), among the Company, GXII and Big
Red Merger Sub Ltd (the “Closing”). At the Closing, the Company
also closed convertible debt financings (the “Yorkville Convertible
Debt Financing”) with YA II PN, Ltd., an investment fund managed by
Yorkville Advisors Global, LP (together with YA II PN, Ltd.,
“Yorkville”), and the standby equity purchase facility with
Yorkville (the “Yorkville Equity Facility Financing” and, together
with the Yorkville Convertible Debt Financing, the “Yorkville
Financings”) became effective. The transactions contemplated by the
Business Combination Agreement, including the GXII Transaction, the
Yorkville Financings and the Reverse Stock Split (as defined
below), are referred to, collectively, as the “Transactions.”
The GXII Transaction is being accounted for as an equity raise
transaction in accordance with generally accepted accounting
principles of the United States of America (“U.S. GAAP”). Under
this method of accounting, GXII is treated as the “acquired”
company for financial reporting purposes. Accordingly, the GXII
Transaction is treated as the equivalent of NioCorp issuing common
shares, no par value, of the Company (“Common Shares”) for the
assets and liabilities of GXII. The net assets of GXII are stated
at historical cost, with no goodwill or other intangible assets
recorded.
These
interim condensed consolidated financial statements have been
prepared on a going concern basis that contemplates the realization
of assets and discharge of liabilities at their carrying values in
the normal course of business for the foreseeable future. These
financial statements do not reflect any adjustments that may be
necessary if the Company is unable to continue as a going
concern.
The
Company currently earns no operating revenues and will require
additional capital in order to advance the Elk Creek Project to
construction and commercial operation. As further discussed in Note
4, these matters raised substantial doubt about the Company’s
ability to continue as a going concern, and the Company is
dependent upon the generation of profits from mineral properties,
obtaining additional financing and maintaining continued support
from its shareholders and creditors.
|
a) |
Basis of Preparation and Consolidation |
The
accompanying unaudited interim condensed consolidated financial
statements have been prepared in accordance with U.S. GAAP and the
rules and regulations of the Securities and Exchange Commission
(“SEC”). The interim condensed consolidated financial statements
include the consolidated accounts of the Company and its wholly
owned subsidiaries with all significant intercompany transactions
eliminated. The accounting policies followed in preparing these
interim condensed consolidated financial statements are those used
by the Company as set out in the audited consolidated financial
statements for the year ended June 30, 2022. Certain transactions
include reference to Canadian dollars (“C$”) where
applicable.
In
the opinion of management, all adjustments considered necessary
(including normal recurring adjustments) for a fair statement of
the financial position, results of operations, and cash flows at
March 31, 2023, and for all periods presented, have been included
in these interim condensed consolidated financial statements.
Certain information and footnote disclosures normally included in
the consolidated financial statements prepared in accordance with
U.S. GAAP have been condensed or omitted pursuant to appropriate
SEC rules and regulations. These interim condensed consolidated
financial statements should
NioCorp
Developments Ltd.
Notes
to the Condensed Consolidated Financial
Statements
March
31, 2023
(expressed
in thousands of U.S. dollars, except per share amounts or as
otherwise stated) (unaudited)
be
read in conjunction with the audited consolidated financial
statements for the year ended June 30, 2022. The interim results
are not necessarily indicative of results for the full year ending
June 30, 2023, or future operating periods.
|
b) |
Recent Accounting Standards |
Issued and Adopted
In
August 2020, the Financial Accounting Standards Board (the “FASB”)
issued Accounting Standards Update (“ASU”) No. 2020-06, Debt—Debt
with Conversion and Other Options (Subtopic 470-20) and Derivatives
and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40)
(“ASU 2020-06”), which simplifies the accounting for convertible
instruments. ASU 2020-06 removes certain accounting models which
separate the embedded conversion features from the host contract
for convertible instruments. Either a modified retrospective method
of transition or a fully retrospective method of transition is
permissible for the adoption of this standard. ASU 2020-06 is
effective for fiscal years beginning after December 15, 2021,
including interim periods within those fiscal years. The Company
adopted ASU 2020-06 on July 1, 2022, with no material effect on the
Company’ s current financial position, results of operations or
financial statement disclosures.
Issued and Not Effective
From
time to time, new accounting pronouncements are issued by the FASB
that are adopted by the Company as of the specified effective date.
Unless otherwise discussed, management believes that the impact of
recently issued standards did not or will not have a material
impact on the Company’s consolidated financial statements upon
adoption.
The preparation of consolidated financial statements in conformity
with U.S. GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities
at the date of the financial statements, and the reported amounts
of expenses during the reporting period. The Company regularly
evaluates estimates and assumptions related to the deferred income
tax asset valuations, convertible debt valuations, earnout
valuation, warrant liabilities, and share-based compensation. The
Company bases its estimates and assumptions on current facts,
historical experience, and various other factors that it believes
to be reasonable under the circumstances, the results of which form
the basis for making judgments about the other sources. The actual
results experienced by the Company may differ materially and
adversely from the Company’s estimates. To the extent there are
material differences between estimates and the actual results,
future results of operations will be affected.
|
d) |
Basic and Diluted Earnings per Share |
Basic earnings (loss) per share represents net earnings (loss)
attributable to common shareholders divided by the weighted average
number of Common Shares outstanding during the period. The Company
considers Vested Shares and Released Earnout Shares (each as
defined in Note 9), to be participating securities, requiring the
use of the two-class method. Diluted earnings per share represents
net earnings attributable to common shareholders divided by the
weighted average number of Common Shares outstanding, inclusive of
the dilutive impact of all potentially dilutive securities
outstanding during the period, as applicable.
The Company utilizes the weighted average method to determine the
impact of changes in a participating security on the calculation of
loss per share. The following table sets
forth the computation of the Company’s basic and diluted net loss
per share attributable to common shareholders for the three and
nine months ended March 31, 2023:
|
|
For the three months
ended March 31, |
|
|
For the nine months
ended March 31, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
29,435 |
|
|
$ |
2,000 |
|
|
$ |
35,741 |
|
|
$ |
8,080 |
|
Adjust: Net loss attributable to noncontrolling interest |
|
|
(56 |
) |
|
|
- |
|
|
|
(43 |
) |
|
|
- |
|
Net loss
available to participating securities |
|
|
29,379 |
|
|
|
2,000 |
|
|
|
35,698 |
|
|
|
8,080 |
|
Net loss attributable to Vested Shares |
|
|
(708 |
) |
|
|
- |
|
|
|
(271 |
) |
|
|
- |
|
Net loss attributed to common shareholders - basic and diluted |
|
$ |
28,671 |
|
|
$ |
2,000 |
|
|
$ |
35,427 |
|
|
$ |
8,080 |
|
Denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average shares outstanding – basic and diluted |
|
|
28,546,379 |
|
|
|
26,576,440 |
|
|
|
28,128,731 |
|
|
|
26,172,981 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per
Common Share outstanding – basic and diluted |
|
$ |
1.00 |
|
|
$ |
0.08 |
|
|
$ |
1.26 |
|
|
$ |
0.31 |
|
The following shares underlying Options, Warrants, outstanding
convertible debt and redeemable noncontrolling interest shares were
antidilutive due to a net loss in the periods presented and,
therefore, were excluded from the dilutive securities computation
for the three- and nine-month periods ended March 31, 2023 and
2022, as indicated below.
NioCorp
Developments Ltd.
Notes
to the Condensed Consolidated Financial
Statements
March
31, 2023
(expressed
in thousands of U.S. dollars, except per share amounts or as
otherwise stated) (unaudited)
Schedule of excluded from the
dilutive securities
|
|
For the three and nine
months ended
March 31, |
|
|
|
2023 |
|
|
2022 |
|
Excluded potentially dilutive
securities (1)(2): |
|
|
|
|
|
|
|
|
Options |
|
|
1,561,500 |
|
|
|
1,408,900 |
|
Warrants |
|
|
19,257,515 |
|
|
|
1,347,011 |
|
Convertible
debt |
|
|
2,723,500 |
|
|
|
632,900 |
|
Total potential dilutive
securities |
|
|
23,542,515 |
|
|
|
3,388,811 |
|
|
(1) |
The number of
shares is based on the maximum number of shares issuable on
exercise or conversion of the related securities as of the period
end. Such amounts have not been adjusted for the treasury
stock method or weighted average outstanding calculations as
required if the securities were dilutive. |
|
(2) |
Earnout Shares (as defined below) are excluded as
the vesting terms were not met as of the end of the reporting
period. |
On
March 17, 2023, the Company effected a reverse stock split (the
“Reverse Stock Split”) on the basis of one (1) post-Reverse Stock
Split Common Share for every ten (10) pre-Reverse Stock Split
Common Shares issued and outstanding, with any fractional shares
resulting from the Reverse Stock Split rounded down to the nearest
whole share. Immediately after the Reverse Stock Split, there were
30,000,442
Common Shares issued and outstanding. All references to share and
per share amounts (excluding authorized shares) in the consolidated
financial statements and accompanying notes have been retroactively
restated to reflect the Reverse Stock Split.
|
f) |
Redeemable Noncontrolling Interest |
Redeemable
Noncontrolling Interest refers to non-controlling interest
associated with the Vested Shares that are redeemable upon the
occurrence of an event that is not solely within the Company’s
control and is reported in the mezzanine section between total
liabilities and shareholders’ deficit, as temporary equity in the
Company’s consolidated balance sheets. The Company adjusts the
Redeemable Noncontrolling Interest balance to reflect its estimate
of the maximum redemption amount each reporting period. The
Company’s non-controlling interest is redeemable at fair value, and
no adjustment to the earnings per share numerator is required
because redemption at fair value is not considered an economic
distribution different from other common stockholders.
|
g) |
Foreign Currency Translation and Functional Currency
Conversion |
Items
included in these interim condensed consolidated financial
statements of each of the Company and the Company’s consolidated
subsidiaries are measured using the currency of the primary
economic environment in which the entities operate (the “functional
currency”). Prior to March 17, 2023, the Company’s functional
currency was the Canadian dollar. Translation gains and losses from
the application of the U.S. dollar as the reporting currency during
the period that the Canadian dollar was the functional currency are
included as part of cumulative currency translation adjustment,
which is reported as a component of shareholders’ equity under
accumulated other comprehensive loss.
The
Company re-assessed its functional currency and determined that on
March 17, 2023, its functional currency changed from the Canadian
dollar to the U.S. dollar based on significant changes in economic
facts and circumstances in our organization. The change in
functional currency was accounted for prospectively from March 17,
2023 and prior-period financial statements were not restated for
the change in functional currency.
NioCorp
Developments Ltd.
Notes
to the Condensed Consolidated Financial
Statements
March
31, 2023
(expressed
in thousands of U.S. dollars, except per share amounts or as
otherwise stated) (unaudited)
For
both monetary and non-monetary assets and liabilities, translated
balances as of March 17, 2023 became the new accounting basis. The
exchange rate on the date of change became the historical rate at
which non-monetary assets and liabilities were translated in
subsequent periods. There was no effect on the cumulative
translation adjustment on the consolidated basis. Previously
recorded cumulative translation adjustments were not reversed. For
periods commencing after March 17, 2023, monetary assets and
liabilities denominated in foreign currencies are translated into
U.S. dollars using exchange rates in effect at the balance sheet
date. Opening balances related to non-monetary assets and
liabilities are based on prior period translated amounts, and
non-monetary assets and non-monetary liabilities incurred after
March 17, 2023 are translated at the approximate exchange rate
prevailing at the date of the transaction. Revenue and expense
transactions are translated at the approximate exchange rate in
effect at the time of the transactions. Foreign exchange gains and
losses are included in the statement of operations and
comprehensive loss as foreign exchange gains.
The
functional currency for the Company’s Canadian subsidiary, 0896800
BC Ltd., which has no independent operations from its parent, also
changed from the Canadian dollar to the U.S. dollar. The functional
currency for Elk Creek Resources Corp. remains as the U.S.
dollar.
On February 16, 2021, the Company entered into a Convertible
Security Funding Agreement (as amended by Amendment #1 to the
Convertible Security Funding Agreement dated December 2, 2021, the
“CSFA”) with Lind Global Asset Management III, LLC (“Lind”),
pursuant to which the Company issued a convertible security to Lind
(the “Lind III Convertible Security”). Pursuant to the CSFA, Lind
had certain consent and participation rights applicable in
connection with the GXII Transaction and the Yorkville Financings.
As more fully discussed in Note 8, on September 25, 2022, the
Company and Lind, entered into an agreement (the “Lind Consent”),
which modified certain aspects of the CSFA. The Company originally
accounted for the Lind Consent under Accounting Standards
Codification (“ASC”) Topic 450, Contingencies. In connection with
the preparation of the Company’s financial statements for the
period ended March 31, 2023, the Audit Committee, in consultation
with the Company’s management, determined that the Lind Consent
should have been evaluated using ASC Topic 470 – Debt (“ASC 470”),
which requires an evaluation of the contract amendment under
applicable ASC debt modification guidance. This error impacted the
Company’s condensed consolidated balance sheets as of September 30,
2022 and December 31, 2022 and condensed consolidated statements of
operations and comprehensive loss and condensed consolidated
statements of shareholders’ equity for the periods ended September
30, 2022 and December 31, 2022, as well as certain notes thereto.
The identification of the need for the restatement arose during the
Company’s quarterly close for the quarter ended March 31, 2023.
The Company performed a comparison of the discounted cash flows of
the Lind III Convertible Security pursuant to the original CSFA and
pursuant to the CSFA as amended by the Lind Consent and determined
that a debt extinguishment loss of $201 had occurred.
Further, ASC 470 requires that the minimum estimated Consent
Payment (as defined below) of $200 also be included in the
calculation of the gain or loss on debt extinguishment. The Company
also evaluated the Contingent Consent Warrant (as defined below)
feature included in the Lind Consent and determined that the
Contingent Consent Warrants meet the criteria to be considered
separate, freestanding instruments, should be accounted for as a
liability under ASC Topic 480, Distinguishing Liabilities from
Equity (“ASC 480”), and should be booked at fair value on the date
of the Lind Consent, with subsequent changes in valuation recorded
as a non-operating gain or loss in the statement of operations. The
following table summarizes the components of the initial loss on
extinguishment:
Schedule Of Extinguishment Of
Debt
|
|
Amount
|
|
Minimum Consent Payment at inception |
|
$ |
200 |
|
Debt
extinguishment fair value adjustment |
|
|
201 |
|
Initial fair value of Contingent Consent Warrants |
|
|
1,221 |
|
Total loss
on debt extinguishment |
|
$ |
1,622 |
|
These interim financial statements as of and for the three and nine
months ended March 31, 2023 include the impacts of this
restatement.
The following tables disclose the impacts of the restatement on the
previously filed Quarterly Reports on Form 10-Q for the reporting
periods ended September 30, 2022 and December 31, 2022.
Restatement
Impacts to the Condensed Consolidated Balance Sheet
(unaudited)
As of September 30, 2022
|
|
|
|
|
|
|
|
|
|
|
|
As Previously Reported |
|
|
Restatement Impacts |
|
|
Restated |
|
Deferred
transaction costs |
|
$ |
2,809 |
|
|
$ |
(200 |
) |
|
$ |
2,609 |
|
Total assets |
|
|
23,246 |
|
|
|
(200 |
) |
|
|
23,046 |
|
Convertible debt |
|
|
755 |
|
|
|
159 |
|
|
|
914 |
|
Total current
liabilities |
|
|
6,511 |
|
|
|
159 |
|
|
|
6,670 |
|
Warrant liability |
|
|
- |
|
|
|
964 |
|
|
|
964 |
|
Total liabilities |
|
|
6,511 |
|
|
|
1,123 |
|
|
|
7,634 |
|
Accumulated deficit |
|
|
(112,951 |
) |
|
|
(1,323 |
) |
|
|
(114,274 |
) |
Total shareholders’
equity |
|
|
16,735 |
|
|
|
(1,323 |
) |
|
|
15,412 |
|
Total liabilities and
equity |
|
|
23,246 |
|
|
|
(200 |
) |
|
|
23,046 |
|
Restatement
Impacts to the Condensed Consolidated Statement of Operations and
Comprehensive Loss (unaudited)
For the Three Months Ended September 30, 2022
|
|
As
Previously Reported |
|
|
Restatement
Impacts |
|
|
Restated |
|
Interest
expense |
|
$ |
300 |
|
|
$ |
(42 |
) |
|
$ |
258 |
|
Loss
on debt extinguishment |
|
|
- |
|
|
|
1,622 |
|
|
|
1,622 |
|
Change
in fair value of warrant liability |
|
|
- |
|
|
|
(257 |
) |
|
|
(257 |
) |
Loss
before income taxes |
|
|
|
|
|
|
|
|
|
Net
loss |
|
|
2,554 |
|
|
|
1,323 |
|
|
|
3,877 |
|
Total
comprehensive loss |
|
|
2,559 |
|
|
|
1,323 |
|
|
|
3,882 |
|
Loss
per share |
|
$ |
0.09 |
|
|
$ |
0.05 |
|
|
$ |
0.14 |
|
Weighted
average shares outstanding, on post-reverse stock split
basis |
|
|
27,792,632 |
|
|
|
- |
|
|
|
27,792,632 |
|
Restatement
Impacts to the Condensed Consolidated Statement of Cash Flows
(unaudited)
For the Three Months Ended September 30, 2022
|
|
As Previously Reported |
|
|
Restatement Impacts |
|
|
Restated |
|
CASH FLOWS FROM OPERATING
ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for
the period |
|
$ |
(2,554 |
) |
|
$ |
(1,323 |
) |
|
$ |
(3,877 |
) |
Accretion of convertible debt |
|
|
236 |
|
|
|
(42 |
) |
|
|
194 |
|
Loss on debt extinguishment |
|
|
- |
|
|
|
1,622 |
|
|
|
1,622 |
|
Change in fair value of warrant
liability |
|
|
- |
|
|
|
(257 |
) |
|
|
(257 |
) |
Restatement Impacts to
the Condensed Consolidated Statement of Shareholders’ Equity
(unaudited)
As of September 30, 2022
|
|
|
|
Common
Shares |
|
|
Accumulated
Deficit |
|
|
Accumulated
Other
Comprehensive
Loss |
|
|
Total |
|
As
Previously Reported |
Balance, June 30,
2022 |
|
|
|
$ |
129,055 |
|
|
$ |
(110,397 |
) |
|
$ |
(993 |
) |
|
$ |
17,665 |
|
Debt
conversions |
|
|
|
|
1,650 |
|
|
|
- |
|
|
|
- |
|
|
|
1,650 |
|
Share issuance costs |
|
|
|
|
(21 |
) |
|
|
- |
|
|
|
- |
|
|
|
(21 |
) |
Reporting
currency translation |
|
|
|
|
- |
|
|
|
- |
|
|
|
(5 |
) |
|
|
(5 |
) |
Loss
for the period As restated (a) |
|
|
|
|
- |
|
|
|
(2,554 |
) |
|
|
- |
|
|
|
(2,554 |
) |
Balance, September 30, 2022 As
restated (a) |
|
|
|
$ |
130,684 |
|
|
$ |
(112,951 |
) |
|
$ |
(998 |
) |
|
$ |
16,735 |
|
Restatement Impacts |
Balance, June 30, 2022 |
|
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
Loss for the
period As restated (a) |
|
|
|
|
- |
|
|
|
(1,323 |
) |
|
|
- |
|
|
|
(1,323 |
) |
Balance, September 30, 2022 As
restated (a) |
|
|
|
$ |
- |
|
|
$ |
(1,323 |
) |
|
$ |
- |
|
|
$ |
(1,323 |
) |
As
Adjusted |
Balance, June 30, 2022 |
|
|
|
$ |
129,055 |
|
|
$ |
(110,397 |
) |
|
$ |
(993 |
) |
|
$ |
17,665 |
|
Debt conversions |
|
|
|
|
1,650 |
|
|
|
- |
|
|
|
- |
|
|
|
1,650 |
|
Share issuance costs |
|
|
|
|
(21 |
) |
|
|
- |
|
|
|
- |
|
|
|
(21 |
) |
Reporting currency translation |
|
|
|
|
- |
|
|
|
- |
|
|
|
(5 |
) |
|
|
(5 |
) |
Loss for the
period As restated (a) |
|
|
|
|
- |
|
|
|
(3,877 |
) |
|
|
- |
|
|
|
(3,877 |
) |
Balance, September 30, 2022 As
restated (a) |
|
|
|
$ |
130,684 |
|
|
$ |
(114,274 |
) |
|
$ |
(998 |
) |
|
$ |
15,412 |
|
Restatement Impacts to the Condensed Consolidated Balance Sheet
(unaudited)
As of December 31, 2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As Previously
Reported |
|
|
|
Restatement
Impacts |
|
|
|
Restated |
|
Deferred
transaction costs |
|
$ |
4,338 |
|
|
$ |
(200 |
) |
|
$ |
4,138 |
|
Total assets |
|
|
21,901 |
|
|
|
(200 |
) |
|
|
21,701 |
|
Convertible debt |
|
|
502 |
|
|
|
39 |
|
|
|
541 |
|
Total current
liabilities |
|
|
7,088 |
|
|
|
39 |
|
|
|
7,127 |
|
Warrant liability |
|
|
- |
|
|
|
1,305 |
|
|
|
1,305 |
|
Total liabilities |
|
|
7,088 |
|
|
|
1,344 |
|
|
|
8,432 |
|
Accumulated deficit |
|
|
(115,159 |
) |
|
|
(1,544 |
) |
|
|
(116,703 |
) |
Total shareholders’
equity |
|
|
14,813 |
|
|
|
(1,544 |
) |
|
|
13,269 |
|
Total liabilities and
equity |
|
|
21,901 |
|
|
|
(200 |
) |
|
|
21,701 |
|
Restatement Impacts to the Condensed Consolidated Statement of
Operations and Comprehensive Loss (unaudited)
For the Three Months Ended December 31, 2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As
Previously Reported |
|
|
|
Restatement
Impacts |
|
|
|
Restated |
|
Interest
expense (income) |
|
$ |
82 |
|
|
$ |
(120 |
) |
|
$ |
(38 |
) |
Change
in fair value of warrant liability |
|
|
- |
|
|
|
341 |
|
|
|
341 |
|
Loss
before income taxes |
|
|
|
|
|
|
|
|
|
Net
loss |
|
|
2,208 |
|
|
|
221 |
|
|
|
2,429 |
|
Total
comprehensive loss |
|
|
2,233 |
|
|
|
221 |
|
|
|
2,454 |
|
Loss
per share |
|
$ |
0.08 |
|
|
$ |
0.01 |
|
|
$ |
0.09 |
|
Weighted
average shares outstanding, on post-reverse stock split
basis |
|
|
28,056,263 |
|
|
|
- |
|
|
|
28,056,263 |
|
Restatement Impacts to the Condensed Consolidated Statement of
Operations and Comprehensive Loss (unaudited)
For the Six Months Ended December 31, 2022
|
|
|
As
Previously Reported |
|
|
|
Restatement
Impacts |
|
|
|
Restated |
|
Interest
expense |
|
$ |
382 |
|
|
$ |
(162 |
) |
|
$ |
220 |
|
Loss
on debt extinguishment |
|
|
- |
|
|
|
1,622 |
|
|
|
1,622 |
|
Change
in fair value of warrant liability |
|
|
- |
|
|
|
84 |
|
|
|
84 |
|
Loss
before income taxes |
|
|
|
|
|
|
|
|
|
Net
loss |
|
|
4,762 |
|
|
|
1,544 |
|
|
|
6,306 |
|
Total
comprehensive loss |
|
|
4,792 |
|
|
|
1,544 |
|
|
|
6,336 |
|
Loss
per share |
|
$ |
0.17 |
|
|
$ |
0.06 |
|
|
$ |
0.23 |
|
Weighted
average shares outstanding, on post-reverse stock split
basis |
|
|
27,924,227 |
|
|
|
- |
|
|
|
27,924,227 |
|
Restatement Impacts to the Condensed Consolidated Statement of
Cash Flows (unaudited)
For the Six Months Ended December 31, 2022
|
|
As Previously Reported |
|
|
Restatement Impacts |
|
|
Restated |
|
CASH FLOWS FROM OPERATING
ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the
period |
|
$ |
(4,762 |
) |
|
$ |
(1,544 |
) |
|
$ |
(6,306 |
) |
Accretion of
convertible debt |
|
|
283 |
|
|
|
(162 |
) |
|
|
121 |
|
Loss on debt
extinguishment |
|
|
- |
|
|
|
1,622 |
|
|
|
1,622 |
|
Change in
financial instrument fair value |
|
|
- |
|
|
|
84 |
|
|
|
84 |
|
Restatement Impacts to the Condensed Consolidated Statement of
Shareholders’ Equity (unaudited)
For the Three Months Ended December 31, 2022
|
|
|
|
Common
Shares |
|
|
Accumulated
Deficit |
|
|
Accumulated
Other
Comprehensive
Loss |
|
|
Total |
|
As
Previously Reported |
Balance, September 30,
2022 |
|
|
|
$ |
130,684 |
|
|
$ |
(112,951 |
) |
|
$ |
(998 |
) |
|
$ |
16,735 |
|
Exercise of options |
|
|
|
|
11 |
|
|
|
- |
|
|
|
|
|
|
|
11 |
|
Debt conversions |
|
|
|
|
300 |
|
|
|
- |
|
|
|
- |
|
|
|
300 |
|
Reporting currency translation |
|
|
|
|
- |
|
|
|
- |
|
|
|
(25 |
) |
|
|
(25 |
) |
Loss for the
period As restated (a) |
|
|
|
|
- |
|
|
|
(2,208 |
) |
|
|
- |
|
|
|
(2,208 |
) |
Balance, December 31, 2022 As
restated (a) |
|
|
|
$ |
130,995 |
|
|
$ |
(115,159 |
) |
|
$ |
(1,023 |
) |
|
$ |
14,813 |
|
Restatement Impacts |
Balance, September 30, 2022 |
|
|
|
$ |
- |
|
|
$ |
(1,323 |
) |
|
$ |
- |
|
|
$ |
(1,323 |
) |
Loss for the
period As restated (a) |
|
|
|
|
- |
|
|
|
(221 |
) |
|
|
- |
|
|
|
(221 |
) |
Balance, December 31, 2022 As
restated (a) |
|
|
|
$ |
- |
|
|
$ |
(1,544 |
) |
|
$ |
- |
|
|
$ |
(1,544 |
) |
As
Adjusted |
Balance, September 30, 2022 |
|
|
|
$ |
130,684 |
|
|
$ |
(114,274 |
) |
|
$ |
(998 |
) |
|
$ |
15,412 |
|
Exercise of options |
|
|
|
|
11 |
|
|
|
- |
|
|
|
|
|
|
|
11 |
|
Debt conversions |
|
|
|
|
300 |
|
|
|
- |
|
|
|
- |
|
|
|
300 |
|
Reporting currency translation |
|
|
|
|
- |
|
|
|
- |
|
|
|
(25 |
) |
|
|
(25 |
) |
Loss for the
period As restated (a) |
|
|
|
|
- |
|
|
|
(2,429 |
) |
|
|
- |
|
|
|
(2,429 |
) |
Balance, December 31, 2022 As
restated (a) |
|
|
|
$ |
130,995 |
|
|
$ |
(116,703 |
) |
|
$ |
(1,023 |
) |
|
$ |
13,269 |
|
Restatement Impacts to the Condensed Consolidated Statement of
Shareholders’ Equity (unaudited)
For the Six Months Ended December 31, 2022
|
|
|
|
Common
Shares |
|
|
Accumulated
Deficit |
|
|
Accumulated
Other Comprehensive Loss |
|
|
Total |
|
As
Previously Reported |
Balance, June 30, 2022 |
|
|
|
$ |
129,055 |
|
|
$ |
(110,397 |
) |
|
$ |
(993 |
) |
|
$ |
17,665 |
|
Exercise of
warrants |
|
|
|
|
11 |
|
|
|
- |
|
|
|
- |
|
|
|
11 |
|
Debt
conversions |
|
|
|
|
1,950 |
|
|
|
- |
|
|
|
- |
|
|
|
1,950 |
|
Share issuance
costs |
|
|
|
|
(21 |
) |
|
|
- |
|
|
|
- |
|
|
|
(21 |
) |
Reporting currency translation |
|
|
|
|
- |
|
|
|
- |
|
|
|
(30 |
) |
|
|
(30 |
) |
Loss for the period As restated (a) |
|
|
|
|
- |
|
|
|
(4,762 |
) |
|
|
- |
|
|
|
(4,762 |
) |
Balance, December 31, 2022 As restated (a) |
|
|
|
$ |
130,995 |
|
|
$ |
(115,159 |
) |
|
$ |
(1,023 |
) |
|
$ |
14,813 |
|
Restatement Impacts |
Balance, June 30, 2022 |
|
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
Loss for the
period As restated (a) |
|
|
|
|
- |
|
|
|
(1,544 |
) |
|
|
- |
|
|
|
(1,544 |
) |
Balance, December 31, 2022 As
restated (a) |
|
|
|
$ |
- |
|
|
$ |
(1,544 |
) |
|
$ |
- |
|
|
$ |
(1,544 |
) |
As
Adjusted |
Balance, June 30, 2022 |
|
|
|
$ |
129,055 |
|
|
$ |
(110,397 |
) |
|
$ |
(993 |
) |
|
$ |
17,665 |
|
Exercise of warrants |
|
|
|
|
11 |
|
|
|
- |
|
|
|
- |
|
|
|
11 |
|
Debt conversions |
|
|
|
|
1,950 |
|
|
|
- |
|
|
|
- |
|
|
|
1,950 |
|
Share issuance costs |
|
|
|
|
(21 |
) |
|
|
- |
|
|
|
- |
|
|
|
(21 |
) |
Reporting currency translation |
|
|
|
|
- |
|
|
|
- |
|
|
|
(30 |
) |
|
|
(30 |
) |
Loss for the
period As restated (a) |
|
|
|
|
- |
|
|
|
(6,306 |
) |
|
|
- |
|
|
|
(6,306 |
) |
Balance, December 31, 2022 As
restated (a) |
|
|
|
$ |
130,995 |
|
|
$ |
(116,703 |
) |
|
$ |
(1,023 |
) |
|
$ |
13,269 |
|
As
previously reported, the Company restated its consolidated balance
sheets as of June 30, 2022 and 2021, and consolidated statements of
operations and comprehensive income, equity and cash flows for the
years ended June 30, 2022 and 2021. In addition, the restatement
impacted the first, second and third quarters of our fiscal year
ended June 30, 2022. The summarized restatement impacts for the
comparable interim period in fiscal year 2022 are presented below.
The restatement corrects errors related to the accounting for the
unamortized deferred financing costs and debt discounts upon
extinguishments of debt related to debt conversions.
NioCorp
Developments Ltd.
Notes
to the Condensed Consolidated Financial
Statements
March
31, 2023
(expressed
in thousands of U.S. dollars, except per share amounts or as
otherwise stated) (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Restatement
Impacts to the Condensed Consolidated Statement of Operations and
Comprehensive Loss (unaudited) For the Three Months Ended March 31,
2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As
Previously Reported |
|
|
|
Restatement
Impacts |
|
|
|
Restated |
|
Foreign
exchange gain |
|
$ |
(48 |
) |
|
$ |
(18 |
) |
|
$ |
(66 |
) |
Interest
expense |
|
|
477 |
|
|
|
202 |
|
|
|
679 |
|
Net
loss |
|
|
1,816 |
|
|
|
184 |
|
|
|
2,000 |
|
Reporting
currency translation |
|
|
18 |
|
|
|
20 |
|
|
|
38 |
|
Total
comprehensive loss |
|
|
1,834 |
|
|
|
204 |
|
|
|
2,038 |
|
Loss
per share |
|
$ |
0.07 |
|
|
$ |
0.01 |
|
|
$ |
0.08 |
|
Weighted
average shares outstanding, on post-reverse stock split
basis |
|
|
26,576,440 |
|
|
|
- |
|
|
|
26,576,440 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Restatement Impacts to the Condensed Consolidated Statement
of Shareholders’ Equity (unaudited) |
For the Three Months
Ended March 31, 2022
|
|
|
|
|
As
Previously Reported |
|
|
|
Restatement
Impacts |
|
|
|
Restated |
|
December
31, 2021 opening balance adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
Deficit |
|
$ |
(104,494 |
) |
|
$ |
(1,096 |
) |
|
$ |
(105,590 |
) |
Accumulated other comprehensive loss |
|
|
(1,049 |
) |
|
|
- |
|
|
|
(1,049 |
) |
Total Shareholders’ equity |
|
|
15,392 |
|
|
|
(1,096 |
) |
|
|
14,296 |
|
Activity adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
Loss
for the period |
|
|
(1,816 |
) |
|
|
(184 |
) |
|
|
(2,000 |
) |
Reporting currency translation |
|
|
(18 |
) |
|
|
(20 |
) |
|
|
(38 |
) |
March 31,
2022 ending balance adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
Deficit |
|
|
(106,310 |
) |
|
|
(1,280 |
) |
|
|
(107,590 |
) |
Accumulated other comprehensive loss |
|
|
(1,067 |
) |
|
|
(20 |
) |
|
|
(1,087 |
) |
Total equity |
|
|
15,668 |
|
|
|
(1,300 |
) |
|
|
14,368 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Restatement Impacts to the Condensed Consolidated Statement of
Operations and Comprehensive Loss (unaudited) |
For
the Nine Months Ended March 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As
Previously Reported |
|
|
|
Restatement
Impacts |
|
|
|
Restated |
|
Foreign
exchange loss |
|
$ |
101 |
|
|
$ |
(3 |
) |
|
$ |
98 |
|
Interest
expense |
|
|
1,457 |
|
|
|
849 |
|
|
|
2,306 |
|
Loss
before income taxes |
|
|
|
|
|
|
|
|
|
Net
loss |
|
|
7,234 |
|
|
|
846 |
|
|
|
8,080 |
|
Reporting
currency translation |
|
|
(76 |
) |
|
|
4 |
|
|
|
(72 |
) |
Total
comprehensive loss |
|
|
7,158 |
|
|
|
850 |
|
|
|
8,008 |
|
Loss
per share |
|
$ |
0.28 |
|
|
$ |
0.03 |
|
|
$ |
0.31 |
|
Weighted
average shares outstanding, on post-reverse stock split
basis |
|
|
26,172,981 |
|
|
|
- |
|
|
|
26,172,981 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Restatement Impacts to the Condensed Consolidated Statement
of Cash Flows (unaudited) |
For the Nine Months
Ended March 31, 2022
|
|
|
|
|
As
Previously Reported |
|
|
|
Restatement
Impacts |
|
|
|
Restated |
|
CASH
FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
Total loss for the period |
|
$ |
(7,234 |
) |
|
$ |
(846 |
) |
|
$ |
(8,080 |
) |
Accretion of convertible debt |
|
|
1,300 |
|
|
|
849 |
|
|
|
2,149 |
|
Foreign exchange loss |
|
|
151 |
|
|
|
(3 |
) |
|
|
148 |
|
NioCorp
Developments Ltd.
Notes
to the Condensed Consolidated Financial
Statements
March
31, 2023
(expressed
in thousands of U.S. dollars, except per share amounts or as
otherwise stated) (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Restatement Impacts to the Condensed Consolidated Statement of
Shareholders’ Equity (unaudited) |
For the Nine Months Ended March 31,
2022 |
|
|
|
|
Deficit |
|
|
|
Restatement
Impacts |
|
|
|
Restated |
|
June 30,
2021 balances as previously reported |
|
|
|
|
|
|
|
|
|
|
|
|
Deficit |
|
$ |
(99,076 |
) |
|
$ |
(434 |
) |
|
$ |
(99,510 |
) |
Accumulated other comprehensive loss |
|
|
(1,143 |
) |
|
|
(16 |
) |
|
|
(1,159 |
) |
Total Shareholders’ equity |
|
|
13,663 |
|
|
|
(450 |
) |
|
|
13,213 |
|
Activity adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
Loss
for the period |
|
|
(7,234 |
) |
|
|
(846 |
) |
|
|
(8,080 |
) |
Reporting currency translation |
|
|
76 |
|
|
|
(4 |
) |
|
|
72 |
|
March 31,
2022 ending balance adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
Deficit |
|
|
(106,310 |
) |
|
|
(1,280 |
) |
|
|
(107,590 |
) |
Accumulated other comprehensive loss |
|
|
(1,067 |
) |
|
|
(20 |
) |
|
|
(1,087 |
) |
Total equity |
|
|
15,668 |
|
|
|
(1,300 |
) |
|
|
14,368 |
|
The
Company incurred a loss of $35,649 for the nine months ended March 31,
2023 (2022 - $8,080) and had an
accumulated deficit of $146,046 as of March 31, 2023. As
a development stage issuer, the Company has not yet commenced its
mining operations and accordingly does not generate any revenue. As
of March 31, 2023, the Company had cash of $7,145, which may not be sufficient to fund
normal operations for the next twelve months without deferring
payment on certain liabilities or raising additional funds. In
addition, the Company will be required to raise additional funds
for construction and commencement of operations. These factors
raise substantial doubt about the Company’s ability to continue as
a going concern.
The
Company’s ability to continue operations and fund its expenditures,
which have averaged approximately $1,929
per quarter over the preceding three-year period, is dependent on
management’s ability to secure additional financing. NioCorp
expects to have access to up to $61,600 in net proceeds from the
Yorkville Equity Facility Financing over the next three years, as
discussed in Note 8. In addition, the Company may pursue additional
sources of financing, and while it has been successful in doing so
in the past, there can be no assurance it will be able to do so in
the future. Other than the potential issuance of Common Shares
under the Yorkville Equity Facility Financing Agreement, the
Company did not have any further funding commitments or
arrangements for additional financing as of March 31, 2023. These
interim condensed consolidated financial statements do not give
effect to any adjustments required to realize the Company’s assets
and discharge its liabilities in other than the normal course of
business and at amounts different from those reflected in the
accompanying financial statements.
Recent
worldwide events have created general global economic uncertainty
as well as uncertainty in capital markets, supply chain
disruptions, increased interest rates and inflation, and the
potential for geographic recessions. We believe this could have an
adverse impact on our ability to obtain financing, development
plans, results of operations, financial position, and cash flows
during the current fiscal year. The full extent to which these
events and our precautionary measures may continue to impact our
business will depend on future developments, which continue to be
highly uncertain and cannot be predicted at this time.
Pursuant
to the Business Combination Agreement, the following transactions
(collectively, the “GXII Transaction”) occurred on the Closing
Date:
|
● |
As a
result of a series of transactions, GXII became an indirect,
majority-owned subsidiary of NioCorp and changed its name to “Elk
Creek Resources Corp” (“ECRC”). |
|
● |
As
the parent company of the merged entity, NioCorp issued 1,753,821
post-Reverse Stock Split Common
Shares in exchange for all of the Class A shares of GXII
issued and outstanding immediately prior to the Closing, including
83,770 Common Shares issued to BTIG, LLC in exchange for Class A
shares of GXII that it received as partial payment for advisory
services. |
|
● |
All
of the Class B shares of GXII issued and outstanding immediately
prior to the Closing (after giving effect to the surrender of
certain Class B shares of GXII in accordance with the Sponsor
Support Agreement, dated September 25, 2022 (the “Sponsor Support
Agreement”), among GX Sponsor II LLC (the “Sponsor”), GXII, NioCorp
and the other persons party thereto) were converted into 7,957,404
shares of Class B common stock of GXII (now known as ECRC) as the
surviving entity of the mergers that occurred on the Closing Date
as part of the GXII Transaction. Pursuant to the Business
Combination Agreement, the Sponsor Support Agreement and the
Exchange Agreement, dated as of March 17, 2023 (as amended,
supplemented or otherwise modified, the “Exchange Agreement”), by
and among NioCorp, ECRC and the Sponsor, after the Closing, the
shares of Class B common stock of ECRC are exchangeable into Common
Shares on a one-for-one basis, subject to certain equitable
adjustments, under certain conditions. See Note 9 for additional
information regarding the Class B common stock of ECRC. |
|
● |
NioCorp
assumed GXII’s obligations under the agreement (the “GXII Warrant
Agreement”) governing the GXII share purchase warrants (the “GXII
Warrants”) and issued an aggregate of 15,666,626 warrants (the
“NioCorp Assumed Warrants”) to purchase up to an aggregate of
17,519,864 Common Shares.
See Note 10b for additional information regarding the NioCorp
Assumed Warrants. |
NioCorp
Developments Ltd.
Notes
to the Condensed Consolidated Financial
Statements
March
31, 2023
(expressed
in thousands of U.S. dollars, except per share amounts or as
otherwise stated) (unaudited)
After
the distribution of funds to GXII redeeming shareholders and prior
to paying transaction costs incurred by GXII, $15,676 became available to the
Company. The
following table summarizes the elements of the GXII Transaction
allocated to the Consolidated Statements of
Operations:
|
|
|
Amount |
|
Gross cash proceeds,
net of transaction costs incurred by GXII |
|
$ |
2,168 |
|
Less: |
|
|
|
|
Net liabilities assumed |
|
|
392 |
|
Warrants assumed at fair value |
|
|
3,848 |
|
Earnout Shares assumed at fair
value |
|
|
13,195 |
|
Transaction
costs expensed |
|
|
6,309 |
|
Net costs
allocated to other operating expense |
|
$ |
21,576 |
|
The number of Common Shares issued and outstanding immediately
following the consummation of the Transactions were as
follows:
|
|
Common Shares |
|
|
Percentage |
|
Legacy NioCorp
Shareholders |
|
|
28,246,621 |
|
|
|
93.90 |
% |
Former GXII Class A
Shareholders1 |
|
|
1,753,821 |
|
|
|
5.83 |
% |
Other2 |
|
|
81,213 |
|
|
|
0.27 |
% |
Total Common
Shares Outstanding Upon Completion of Transactions |
|
|
30,081,655 |
|
|
|
100 |
% |
|
1 |
Includes 83,770 Common Shares
issued to BTIG, LLC in exchange for Class A shares of GXII that it
received as partial payment for advisory services. |
|
2 |
Represents Commitment Shares (as defined below)
issued under the Yorkville Equity Facility Financing
Agreement. |
In
connection with the GXII Transaction, the Company also closed the
Yorkville Convertible Debt Financing and the Yorkville Equity
Facility Financing, as discussed in Note 8.
6. |
LAND AND BUILDINGS, NET |
In
October 2022, the Company entered into an agreement with the State
of Nebraska (the “State”) to sell a strip of Company-owned land
totaling approximately 1.27 acres located
adjacent to State Highway 50 in connection with highway
improvements to be completed by the State, for $21, inclusive of estimated fence
replacement costs. The Company recorded a gain of $13 associated with this
sale.
|
7. |
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES |
Schedule of account payable and
accrued liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of |
|
|
|
Note |
|
|
March
31,
2023
|
|
|
June
30,
2022
|
|
Accounts payable, trade |
|
|
|
|
$ |
926 |
|
|
$ |
115 |
|
Accounts payable accruals |
|
|
|
|
|
2,055 |
|
|
|
654 |
|
Taxes payable |
|
|
|
|
|
259 |
|
|
|
- |
|
Interest and fees payable to related party |
|
11 |
|
|
|
31 |
|
|
|
- |
|
Other accruals |
|
|
|
|
|
48 |
|
|
|
48 |
|
Total accounts payable and accrued liabilities |
|
|
|
|
$ |
3,319 |
|
|
$ |
817 |
|
NioCorp
Developments Ltd.
Notes
to the Condensed Consolidated Financial
Statements
March
31, 2023
(expressed
in thousands of U.S. dollars, except per share amounts or as
otherwise stated) (unaudited)
Lind III Convertible Security
Changes in the
Lind III Convertible Security are as follows:
|
|
Lind III
Convertible
Security |
|
Balance, June 30,
2022 |
|
$ |
2,169 |
|
Fair value increase due to debt
extinguishment |
|
|
201 |
|
Accretion expense |
|
|
95 |
|
Conversions |
|
|
(1,950 |
) |
Payment at
maturity |
|
|
(515 |
) |
Balance, March 31, 2023 |
|
$ |
- |
|
On September 25, 2022, the Company and Lind entered into the Lind
Consent, which included the following principal terms: (i) the
consent of Lind to the GXII Transaction disclosed in Note 5 and
Yorkville Financings disclosed in Note 8, including all actions
taken by NioCorp as set out in the Business Combination Agreement
to permit the completion of the Transactions; (ii) the consent of
Lind to NioCorp’s expected cross-listing to The Nasdaq Stock Market
LLC (“Nasdaq”) and the consolidation of the Common Shares in order
to meet the minimum listing requirements thereof; (iii) the waiver
of Lind of its participation right for up to 15% of the total
offering in the Yorkville Equity Facility Financing; and (iv) the
waiver of Lind of certain restrictive covenants in the CSFA.
As consideration for entering into the Lind Consent, Lind received,
amongst other things: (i) the right to receive a payment of $500,
which would have been reduced to $200 if the Transactions had not
been consummated on or before April 30, 2023 (collectively, the
“Consent Payment”); (ii) an extension of its existing participation
rights under the CSFA in future financings of NioCorp for a further
two-year period, subject to certain exceptions as well as an
extension of such participation rights beyond the additional
two-year period if Yorkville or any affiliate is a party to any
such applicable transaction; and (iii) the right to receive
additional Warrants (the “Contingent Consent Warrants”) if on the
date that is 18 months following the Closing Date, the closing
trading price of the Common Shares on the Toronto Stock Exchange
(the “TSX”) or such other stock exchange on which such shares may
then be listed, is less than C$10.00 (on a post-Reverse Stock Split
basis), subject to adjustments. The number of Contingent Consent
Warrants to be issued, if any, is based on the Canadian dollar
equivalent (based on the then current Canadian to US dollar
exchange rate as reported by Bloomberg, LP) of $5,000 divided by
the five-day volume weighted average price of the Common Shares on
the date of issuance. Further, the number of Contingent Consent
Warrants issued will be proportionately adjusted based on the
percentage of Warrants currently held by Lind that are exercised,
if any, prior to the issuance of any Contingent Consent Warrants.
The Lind Consent was signed as an amendment to the existing
CSFA.
Management determined that the Lind Consent should have been
evaluated using ASC 470, which requires an evaluation of the
contract amendment under debt modification guidance. The Company
performed a comparison of the discounted cash flows of the Lind III
Convertible Security pursuant to the existing CSFA and pursuant to
the CSFA as amended by the Lind Consent and determined that a debt
extinguishment loss of $201 had occurred. Further, ASC 470 requires
that the minimum estimated Consent Payment of $200 also be included
in the calculation of the gain or loss on debt extinguishment. The
Company also evaluated the Contingent Consent Warrant feature
included in the Lind Consent and determined that the Contingent
Consent Warrants meet the criteria to be considered separate,
freestanding instruments, should be accounted for as a liability
under ASC 480, and should be booked at fair value on the date of
the Lind Consent, with subsequent changes in valuation recorded as
a non-operating gain or loss in the statement of operations. The
following table summarizes the components of the initial loss on
extinguishment:
NioCorp
Developments Ltd.
Notes
to the Condensed Consolidated Financial
Statements
March
31, 2023
(expressed
in thousands of U.S. dollars, except per share amounts or as
otherwise stated) (unaudited)
The following table
summarizes the components of the initial loss on
extinguishment:
Component of loss |
|
Amount |
|
Minimum Consent Payment at inception |
|
$ |
200 |
|
Loss on debt extinguishment
|
|
|
201 |
|
Initial fair value of Contingent Consent Warrants |
|
|
1,221 |
|
Initial loss on debt extinguishment |
|
$ |
1,622 |
|
Changes in the fair value of the Contingent Consent Warrants are
presented below:
|
|
Amount |
|
Initial valuation, September 25, 2022 |
|
$ |
1,221 |
|
Change in valuation |
|
|
(257 |
) |
Valuation at September 30, 2022 |
|
|
964 |
|
Change in valuation |
|
|
341 |
|
Valuation at December 31, 2022 |
|
|
1,305 |
|
Change in valuation |
|
|
220 |
|
Valuation at March 31, 2023 |
|
$ |
1,525 |
|
The
Contingent Consent Warrants are classified as a Level 3 financial
instrument and were valued utilizing a Monte Carlo simulation
pricing model, which calculates multiple potential outcomes for
future share prices based on historic volatility of the Common
Shares to determine the probability of issuance at 18 months
following the applicable valuation date and to determine the value
of the Contingent Consent Warrants. The following table discloses
the primary inputs into the Monte Carlo model at each valuation
date, and the probability of issuance calculated by the
model.
Schedule of valuation date and
the probability calculated.
Key Valuation Input |
|
September 25,
2022(1)
|
|
|
September 30,
2022(1)
|
|
|
December 31,
2022(1)
|
|
|
March 31,
2023
|
|
Share price on valuation
date |
|
$ |
7.82 |
|
|
$ |
10.40 |
|
|
$ |
7.40 |
|
|
$ |
6.36 |
|
Volatility |
|
|
62.4 |
% |
|
|
63.4 |
% |
|
|
63.5 |
% |
|
|
71.3 |
% |
Risk free rate |
|
|
3.93 |
% |
|
|
4.04 |
% |
|
|
3.98 |
% |
|
|
3.59 |
% |
Probability of issuance |
|
|
59.4 |
% |
|
|
45.5 |
% |
|
|
62.5 |
% |
|
|
64.5 |
% |
(1) |
|
– Share price adjusted to reflect the Reverse
Stock Split. |
The
$300 loss on debt extinguishment booked in the quarter ended March
31, 2023 represents the difference between our accrual of the
minimum Consent Payment at September 25, 2022 and the actual
payment made on March 17, 2023. Loss on debt extinguishment is
presented as a non-operating expense in the Company’s consolidated
statements of operations and comprehensive loss. This accounting
also resulted in a decrease in the amount of accretion to be
recognized over the remaining life of the Lind III Convertible
Security through February 2023. Accretion expenses are disclosed as
a part of interest expense, which is not included as a component of
operating costs.
Yorkville Convertible Debentures
In connection with the GXII Transaction, on January 26, 2023,
NioCorp entered into definitive agreements with respect to the
Yorkville Financings, including a Securities Purchase Agreement,
dated January 26, 2023 (as amended the “Yorkville Convertible Debt
Financing Agreement”), between the Company and Yorkville, and a
Standby Equity Purchase Agreement, dated January 26, 2023 (the
“Yorkville Equity Facility Financing Agreement”), between the
Company and Yorkville.
Pursuant
to the Yorkville Convertible Debt Financing Agreement, at the
Closing, Yorkville advanced a total amount of $15,360 to NioCorp in
consideration of the issuance by NioCorp to Yorkville of (i)
$16,000 aggregate
principal amount of unsecured convertible debentures (the
“Convertible Debentures”) and (ii) Common Share purchase warrants,
exercisable for up to 1,789,267 Common Shares
for cash or, if at any time there is no effective registration
statement registering, or no current prospectus available for, the
resale of the underlying Common Shares, on a cashless basis, at the
option of the holder, at a price per Common Share of approximately
$8.9422, subject to
adjustment to give effect to any stock dividend, stock split,
reverse stock split or similar transaction (the “Financing
Warrants”).
Each
Convertible Debenture issued under the Yorkville Convertible Debt
Financing is an unsecured obligation of NioCorp, has an 18-month term from the Closing Date, which
may be extended for one six-month period in certain circumstances
at the option of NioCorp, and incurs a simple interest rate
obligation of 5.0% per annum
NioCorp Developments Ltd.
Notes to the Condensed Consolidated Financial Statements
March 31, 2023
(expressed in thousands of U.S. dollars, except per share amounts
or as otherwise stated) (unaudited)
(which
will increase to 15.0% per annum upon the
occurrence of an event of default). The outstanding principal
amount of, accrued and unpaid interest, if any, on, and premium, if
any, on the Convertible Debentures must be paid by NioCorp in cash
when the same becomes due and payable under the terms of the
Convertible Debentures at their stated maturity, upon their
redemption or otherwise.
Subject
to certain limitations contained within the Yorkville Convertible
Debt Financing Agreement and the Convertible Debentures, including
those as described below, holders of the Convertible Debentures
will be entitled to convert the principal amount of, and accrued
and unpaid interest, if any, on each Convertible Debenture, in
whole or in part, from time to time over their term, into a number
of Common Shares equal to the quotient of the principal amount and
accrued and unpaid interest, if any, being converted divided by the
Conversion Price. The “Conversion Price” means, as of any
Conversion Date (as defined below) or other date of determination,
the greater of (i) 90% of the average of the daily U.S. dollar
volume-weighted average price of the Common Shares on the principal
U.S. market for the Common Shares as reported by Bloomberg
Financial Markets during the five consecutive trading days
immediately preceding the date on which the holder exercises its
conversion right in accordance with the requirements of the
Yorkville Convertible Debt Financing Agreement (the “Conversion
Date”) or other date of determination, but not lower than the Floor
Price (as defined below), and (ii) the five-day volume-weighted
average price of the Common Shares on the TSX (or on the principal
U.S. market if the majority of the trading volume and value of the
Common Shares occurred on Nasdaq during the relevant period) for
the five consecutive trading days immediately prior to the
Conversion Date or other date of determination less the maximum
applicable discount allowed by the TSX. The “Floor Price” means a
price of $2.1435 per share, which is equal to the lesser of (a) 30%
of the average of the daily volume-weighted average price of the
Common Shares on the principal U.S. market for the Common Shares as
reported by Bloomberg Financial Markets during the five consecutive
trading days immediately preceding the Debenture Closing and (b)
30% of the average of the volume-weighted average price of the
Common Shares on the principal U.S. market for the Common Shares as
reported by Bloomberg Financial Markets during the five consecutive
trading days immediately following the Debenture Closing, subject
to certain adjustments to give effect to any stock dividend, stock
split, reverse stock split, recapitalization or similar
event.
The
terms of the Convertible Debentures restrict the number of
Convertible Debentures that may be converted during each calendar
month by Yorkville at a Conversion Price below a fixed price equal
to the quotient of (i) $10.00 divided by (ii) 1.11829212 (being the
number of Common Shares that were exchanged for each share of GXII
at the Closing, after giving effect to the Reverse Stock Split),
subject to adjustment to give effect to any stock dividend, stock
split, reverse stock split, recapitalization or similar event. The
Convertible Debentures are subject to customary anti-dilution
adjustments.
The
terms of the Convertible Debentures restrict the conversion of
Convertible Debentures by Yorkville if such a conversion would
cause Yorkville to exceed certain beneficial ownership thresholds
in NioCorp or such a conversion would cause the aggregate number of
Common Shares issued pursuant to the Yorkville Convertible Debt
Financing Agreement to exceed the thresholds for issuance of Common
Shares under the rules of the TSX and Nasdaq, unless prior
shareholder approval is obtained.
Pursuant to the terms of the Convertible Debentures, following
certain trigger events, and until a subsequent cure event, NioCorp
will be required to redeem $1,125 aggregate principal amount of
Convertible Debentures (the “Triggered Principal Amount”) each
month by making cash payments to the Investors, on a pro rata
basis, in an amount equal to the Triggered Principal Amount, plus
accrued and unpaid interest thereon, if any, plus a redemption
premium of 7% of the Triggered Principal Amount. Such monthly
prepayments under the terms of the Convertible Debentures are
triggered (i) at the time when NioCorp has issued 95% of the total
amount of Common Shares pursuant to the Yorkville Convertible Debt
Financing that it may issue under applicable TSX and Nasdaq rules
or (ii) when NioCorp has delayed or suspended the effectiveness or
use of the Convertible Debt Financing Registration Statement for
more than 20 consecutive calendar days, and such monthly prepayment
obligations will continue until, with respect to (i) above,
shareholder approval is obtained or, with respect to (ii) above,
the Investors may once again resell Common Shares under the
Convertible Debt Financing Registration Statement,
respectively.
NioCorp Developments Ltd.
Notes to the Condensed Consolidated Financial Statements
March 31, 2023
(expressed in thousands of U.S. dollars, except per share amounts
or as otherwise stated) (unaudited)
The
Convertible Debentures may also be redeemed at NioCorp’s option at
any time and from time to time over their term at a redemption
price equal to 110% of the principal amount
being redeemed, plus accrued and unpaid interest, if
any.
In
conjunction with the issuance of the Convertible Debentures,
NioCorp issued to Yorkville 1,789,267
Common Share purchase warrants entitling Yorkville to purchase
Common Shares (the “Financing Warrants”) at an exercise price of
approximately $8.9422 per
Common Share (the “Exercise Price”), subject to adjustment to give
effect to any stock dividend, stock split, reverse stock split
recapitalization or similar event.
The
Financing Warrants are exercisable, in whole or in part, but not in
increments of less than $50 aggregate
Exercise Price (unless the remaining aggregate Exercise Price is
less than $50), beginning on May 4, 2023, and may be exercised at
any time prior to their expiration. Holders of the Financing
Warrants may exercise their Financing Warrants, at their election,
by paying the Exercise Price in cash or, if at any time there is no
effective registration statement registering, or no current
prospectus available for, the resale of the underlying Common
Shares, on a cashless exercise basis. 1/12th of the Financing
Warrants will expire on each of the first 12 monthly anniversaries
of the date that is six months following the Closing
Date.
The
Financing Warrants have customary anti-dilution adjustments to be
determined in accordance with the requirements of the applicable
stock exchanges, including the TSX.
The
terms of the Financing Warrants restrict the exercise of Financing
Warrants by Yorkville if such an exercise would cause Yorkville to
exceed certain beneficial ownership thresholds in NioCorp or such
an exercise would cause the aggregate number of Common Shares
issued pursuant to the Yorkville Convertible Debt Financing
Agreement to exceed the thresholds for issuance of Common Shares
under the rules of the TSX and Nasdaq, unless prior shareholder
approval is obtained.
The Financing Warrants were originally recorded as a $2,794
contingent liability on January 26, 2023, and were subsequently
marked to market through March 16, 2023 ($3,337). The change in
fair value during this period resulted in a loss of $633, which was
booked to change in fair value of warrant liability in the
Statement of Operations and Comprehensive Loss. The Financing
Warrants were reclassified to shareholders equity on March 17,
2023, in connection with the closing of the Convertible Debentures
as noted below.
The
Company allocated the net proceeds of $15,360 from the
Convertible Debentures as follows:
|
● |
$2,704 was booked to Common Shares,
representing the initial fair value of the Financing Warrant
tranches on January 26, 2023 based on the Black Scholes pricing
model using a risk-free interest rate of 4.33%, an expected dividend yield of
0%, a volatility of 64.6%, and an expected life of 6 months to 18
months. |
|
● |
$12,656 was booked to the
convertible debt liability. In addition, transaction costs of
$503 were recognized as a direct
deduction from the debt liability, resulting in a net opening
balance of $12,153. This balance will be accreted to face value of
the Convertible Debentures at maturity using the effective interest
method and recorded as non-cash interest expense in the
consolidated statement of operations. |
Changes in the Convertible Debentures are as
follows:
|
|
|
Amount |
|
Opening balance, March 17, 2023 |
|
|
12,153 |
|
Accretion
expense |
|
|
110 |
|
Balance, March 31, 2023 |
|
$ |
12,263 |
|
The Convertible Debentures contain events of default customary for
instruments of their type (with customary grace periods, as
applicable) and provide that, upon the occurrence of an event of
default arising from certain events of bankruptcy or insolvency
with respect to NioCorp, all outstanding Convertible Debentures
will become due and payable immediately without further action or
notice. If any other type of event of default occurs and is
continuing, then any holder may declare all of its Convertible
Debentures to be due and payable immediately. The Company obtained
a waiver from Yorkville with respect to any acceleration rights it
may have under the Convertible Debentures in connection with the
restatements of the Company's financial statements for the periods
ended September 30, 2022 and December 31, 2021 and the delay in
filing the Company's Quarterly Report on Form 10-Q for the
quarterly period ended March 31, 2023.
Based
on the Company’s closing Common Share price of $6.36 as of March 31,
2023, conversion of the remaining Convertible Debenture balance,
including accrued interest, would require the issuance
of
NioCorp Developments Ltd.
Notes to the Condensed Consolidated Financial Statements
March 31, 2023
(expressed in thousands of U.S. dollars, except per share amounts
or as otherwise stated) (unaudited)
approximately 2,723,500
Common Shares. For each $0.10 change in the fair value of one
Common Share, the total shares the Company would be obligated to
issue would change by approximately 42,300 shares.
The
Yorkville Convertible Debt Financing Agreement also contains
certain covenants that, among other things, limit NioCorp’s ability
to use the proceeds from the Yorkville Convertible Debt Financing
to repay related party debt or to enter into any variable rate
transaction other than with Yorkville, subject to certain
exceptions.
Yorkville Equity Facility Financing
Concurrent
with the closing of the Recapitalization Transaction, the Yorkville
Equity Facility Financing became effective. Pursuant to the
Yorkville Equity Facility Financing Agreement, Yorkville has
committed to purchase up to $65,000 of Common Shares (the
“Commitment Amount”), at NioCorp’s direction from time to time for
a period commencing upon the Closing Date and ending on the
earliest of (i) the first day of the month next following the
36-month anniversary of the Closing, (ii) the date on which
Yorkville shall have made payment of the full Commitment Amount and
(iii) the date that the Yorkville Equity Facility Financing
Agreement otherwise terminates in accordance with its terms (the
“Commitment Period”), subject to certain limitations and the
satisfaction of the conditions in the Yorkville Equity Facility
Financing Agreement. The Common Shares that may be sold pursuant to
the Yorkville Equity Facility Financing Agreement would be
purchased by Yorkville at a purchase price equal to 97% of the daily
volume-weighted average price of the Common Shares on Nasdaq or
such other principal U.S. market for the Common Shares if the
Common Shares are ever listed or traded on the New York Stock
Exchange or the NYSE American as reported by Bloomberg Financial
Markets (or, if not available, a similar service provider of
national recognized standing) during the applicable pricing period,
which is a period during a single trading day or a period of three
consecutive trading days, at the Company’s option and subject to
certain restrictions, in each case, defined based on when an
Advance Notice (as defined in the Yorkville Equity Facility
Financing Agreement) is submitted, subject to certain
limitations.
Pursuant
to the terms of the Yorkville Equity Facility Financing Agreement,
NioCorp issued 81,213 of Common Shares (the
“Commitment Shares”) valued at $650 to Yorkville as
consideration for its irrevocable commitment to purchase Common
Shares under the Yorkville Equity Facility Financing Agreement.
Additionally, NioCorp is required to pay Yorkville an aggregate
cash fee of $1,500 (the “Cash Fee”), including
$500 that NioCorp paid on the
Closing Date and the remainder that it will pay in installments
over a 12-month period
following the Closing Date, provided that, it will have the right
to prepay without penalty all or part of the remaining installments
of the Cash Fee at any time. In addition, legal and other costs of
$496 were incurred in connection with the
Yorkville Equity Facility Financing and were expensed on the
effective date. As of March 31, 2023, no Common Shares had been
issued under the Yorkville Equity Facility Financing Agreement. The
following amounts related to the Yorkville Equity Facility
Financing Agreement were expensed as other operating costs during
the quarter ended March 31, 2023:
Schedule of expenses as other
operating costs
|
|
|
Amount
|
|
Yorkville Cash Fee |
|
$ |
1,500 |
|
Fair value of Commitment Shares
issued |
|
|
650 |
|
Legal and
other related costs |
|
|
496 |
|
Net costs
expensed to other operating expense |
|
$ |
2,646 |
|
|
9. |
CLASS B COMMON STOCK OF ECRC |
Pursuant
to the Business Combination Agreement, the Sponsor Support
Agreement, and the Exchange Agreement, after the Closing, the GXII
founders have the right to exchange shares of Class B common stock
of ECRC for Common Shares on a one-for-one basis, subject to
certain equitable adjustments, under certain conditions. All
7,957,404
shares of Class B common stock of ECRC that were issued in
connection with the Closing were issued and outstanding as of March
31, 2023. Of the issued and outstanding shares of Class B
common stock of ECRC, 4,565,808 shares (the “Vested
Shares”) were vested as of the Closing Date and are exchangeable at
any time, and from time to time, until the tenth anniversary of the
Closing Date (the “Ten-Year Anniversary”) and 3,391,596 shares (the “Earnout
Shares”) are exchangeable until the Ten-Year Anniversary, subject
to certain vesting conditions. Under certain circumstances, and
subject to certain exceptions, NioCorp may instead settle all or a
portion of any exchange pursuant to the terms of the Exchange
Agreement in cash, in lieu of Common Shares, based on a
volume-weighted average price of Common Shares.
All
of the shares of Class B common stock of ECRC are subject to the
Amended and Restated Registration Rights Agreement, dated as of
March 17, 2023 (the “Registration Rights and Lock-up Agreement”),
among NioCorp, GXII, the Sponsor, the pre-Closing directors and
officers of NioCorp and the other parties thereto, including the
members of the Sponsor. Pursuant to Registration Rights and Lock-up
Agreement, all shares of
NioCorp Developments Ltd.
Notes to the Condensed Consolidated Financial Statements
March 31, 2023
(expressed in thousands of U.S. dollars, except per share amounts
or as otherwise stated) (unaudited)
Class B
common Stock of ECRC (including the Vested Shares and the Released
Earnout Shares) are subject to certain
“lock-up” restrictions on transfer beginning upon the Closing and
ending upon the earlier of (i) one year after the Closing and (ii)
the date on which the trading price of Common Shares exceeds
certain thresholds or the date on which NioCorp completes a
transaction that results in all of NioCorp’s shareholders having
the right to exchange their Common Shares for cash, securities or
other property. Both Vested Shares and Released Earnout
Shares may be exchanged by the holders into Common Shares at
any time. Under the Exchange Agreement, all Vested Shares and
Earnout Shares must be exchanged for Common Shares by the Ten-Year
Anniversary except for Released Earnout Shares that have been
vested for a period of fewer than twenty-four months as of the
Ten-Year Anniversary. Such Released Earnout Shares will be
forfeited if not exchanged for Common Shares by the date that is
twenty-four months after the vesting date.
Vested
Shares
As
the exchange of Vested Shares are contingently redeemable at the
option of the noncontrolling interest shareholders, the Company
classifies the carrying amount of the redeemable noncontrolling
interest in the mezzanine section on the consolidated balance
sheet, which is presented above the equity section and below
liabilities. The redeemable noncontrolling interests are classified
as a Level 1 financial instrument and are measured at the fair
value of the Company’s Common Shares at each reporting period.
Adjustments to the carrying value of the redeemable noncontrolling
interest are recorded through retained earnings.
Earnout
Shares
The Earnout Shares vest (the
“Released Earnout Shares”) in two equal tranches based upon
achieving market share price milestones of approximately $12.00 per
Common Share and approximately $15.00 per Common Share,
respectively, prior to the Ten-Year Anniversary, or upon a change
in control as defined in the underlying agreement. These
shares will be forfeited if the market share price milestones or an
acceleration event is not reached prior to the Ten-Year
Anniversary. At such time that the Earnout Shares shall become
vested, and therefore, become Released Earnout Shares, the shares
will be transferred to the redeemable noncontrolling interest in
the mezzanine section of the consolidated balance sheet.
The Earnout Shares were classified as a liability due to failure to
meet the equity classification criteria under ASC 815-40, as Level
3 instruments under the fair value hierarchy and are considered a
financial liability under ASC 480, Distinguishing Liabilities from
Equity. The Earnout Shares were measured at fair value on the
Closing Date with subsequent changes in fair value recorded in
earnings. The Earnout Shares were valued utilizing a Monte Carlo
simulation pricing model, which calculates multiple potential
outcomes for future share prices and establishes current fair value
based on the most likely outcome. The following table discloses the
primary inputs into the Monte Carlo models.
The following table
discloses the primary inputs into the Monte Carlo
models.
Key
Valuation Input
|
|
Transaction
Close
|
|
March
31, 2023
|
Closing
Common Share price |
|
$7.00 |
|
$6.36 |
Term
(expiry) |
|
March 17, 2033 |
|
March 17, 2033 |
Implied
volatility of Public Warrants |
|
19.5% |
|
23.5% |
Risk-free
rate |
|
3.39% |
|
3.48% |
The following
table sets forth a summary of the changes in the fair value of the
Earnout Shares liability for the period ended March 31,
2023:
|
|
Amount |
|
Fair value as of March
17, 2023 |
|
$ |
13,195 |
|
Change in fair
value |
|
|
(881 |
) |
Fair value as
of March 31, 2023 |
|
$ |
12,314 |
|
NioCorp Developments Ltd.
Notes to the Condensed Consolidated Financial Statements
March 31, 2023
(expressed in thousands of U.S. dollars, except per share amounts
or as otherwise stated) (unaudited)
Schedule of stock
option
|
|
|
Number of
Options |
|
|
Weighted
Average Exercise Price |
|
Balance,
June 30, 2022 |
|
|
|
1,446,400 |
|
|
C$ |
8.30 |
|
Granted |
|
|
|
578,000 |
|
|
|
9.52 |
|
Exercised |
|
|
|
(265,129 |
) |
|
|
4.99 |
|
Cancelled/expired |
|
|
|
(197,771 |
) |
|
|
5.09 |
|
Balance,
March 31, 2023 |
|
|
|
1,561,500 |
|
|
C$ |
9.69 |
|
The following table summarizes information about Options
outstanding at March 31, 2023:
Exercise
Price |
|
|
Expiry
Date |
|
Number
Outstanding |
|
|
Aggregate
Intrinsic Value |
|
|
Number
Exercisable |
|
|
Aggregate
Intrinsic Value |
|
C$ |
8.40 |
|
|
September 18, 2023 |
|
|
105,000 |
|
|
C$ |
18 |
|
|
|
105,000 |
|
|
C$ |
18 |
|
C$ |
5.40 |
|
|
November 15, 2023 |
|
|
208,500 |
|
|
|
661 |
|
|
|
208,500 |
|
|
|
661 |
|
C$ |
7.50 |
|
|
December 14, 2023 |
|
|
170,000 |
|
|
|
182 |
|
|
|
170,000 |
|
|
|
182 |
|
C$ |
7.50 |
|
|
December 16, 2023 |
|
|
52,500 |
|
|
|
56 |
|
|
|
52,500 |
|
|
|
56 |
|
C$ |
13.60 |
|
|
December 17, 2024 |
|
|
397,500 |
|
|
|
- |
|
|
|
397,500 |
|
|
|
- |
|
C$ |
11.00 |
|
|
May 30, 2025 |
|
|
50,000 |
|
|
|
- |
|
|
|
50,000 |
|
|
|
- |
|
C$ |
9.52 |
|
|
March 27, 2026 |
|
|
578,000 |
|
|
|
- |
|
|
|
578,000 |
|
|
|
- |
|
|
|
|
|
|
|
|
1,561,500 |
|
|
C$ |
917 |
|
|
|
1,561,500 |
|
|
C$ |
917 |
|
The
aggregate intrinsic value in the preceding table represents the
total intrinsic value, based on the Company’s closing Common Share
price of C$8.57 as of March 31, 2023, that would
have been received by the Option holders had all Option holders
exercised their Options as of that date. As of March 31, 2023,
there was $0 of unrecognized
compensation cost related to unvested share-based compensation
arrangements granted under the Option plans.
Schedule of warrant
transactions
|
|
|
Number
of Warrants |
|
|
Weighted
Average Exercise Price |
|
Balance,
June 30, 2022 |
|
|
|
1,851,622 |
|
|
$ |
8.99 |
|
Granted
(1) |
|
|
|
17,455,893 |
|
|
|
11.24 |
|
Exercised |
|
|
|
- |
|
|
|
- |
|
Cancelled/expired |
|
|
|
(50,000 |
) |
|
|
5.91 |
|
Balance,
March 31, 2023 |
|
|
|
19,257,515 |
|
|
$ |
10.99 |
|
|
(1) |
Includes
15,666,626 NioCorp Assumed Warrants assumed in connection with the
Closing of the Transactions discussed below. |
At
March 31, 2023, the Company had outstanding exercisable Warrants,
as follows:
Schedule of outstanding
exercisable warrants
NioCorp Developments Ltd.
Notes to the Condensed Consolidated Financial Statements
March 31, 2023
(expressed in thousands of U.S. dollars, except per share amounts
or as otherwise stated) (unaudited)
Number |
|
|
Exercise
Price |
|
|
Expiry
Date |
441,211 |
|
|
C$ |
16.30 |
|
|
May 10, 2023 |
504,611 |
|
|
C$ |
11.00 |
|
|
June 30, 2024 |
855,800 |
|
|
C$ |
9.70 |
|
|
February 19, 2025 |
1,789,267 |
|
|
US$ |
8.94 |
|
|
(1) |
15,666,626 |
|
|
US$ |
11.50 |
|
|
March 17, 2028 |
19,257,515 |
|
|
|
|
|
|
|
(1) |
Represents the Financing Warrants, 1/12th of which will expire on
each of the first 12 monthly anniversaries of the date that is six
months following the Closing Date. |
In
connection with the Closing, pursuant to the Business Combination
Agreement, the Company assumed the GXII Warrant Agreement and each
GXII Warrant thereunder that was issued and outstanding immediately
prior to the Closing Date was converted into one NioCorp Assumed
Warrant pursuant to the GXII Warrant Agreement, as amended by an
Assignment, Assumption and Amendment Agreement, dated March 17,
2023, among the Company, GXII, Continental Stock Transfer &
Trust Company, as the existing warrant agent, and Computershare
Inc. and its affiliate, Computershare Trust Company, N.A, together
as the successor warrant agent (the “NioCorp Assumed Warrant
Agreement”). In connection with the Closing, NioCorp issued (a)
9,999,959
public NioCorp Assumed Warrants (the “Public Warrants”) in respect
of the GXII Warrants that were publicly traded prior to the Closing
and (b) 5,666,667
NioCorp Assumed Warrants (the “Private Warrants”) to the Sponsor in
respect of the GXII Warrants that it held prior to the Closing,
which NioCorp Assumed Warrants were subsequently distributed by the
Sponsor to its members in connection with the Closing.
Each NioCorp Assumed Warrant
entitles the holder to the right to purchase 1.11829212 Common
Shares at an exercise price of $11.50 per 1.11829212 Common Shares
(subject to adjustments for stock splits, stock dividends,
reorganizations, recapitalizations and the like). No
fractional shares will be issued upon exercise of any NioCorp
Assumed Warrants, and fractional shares that would otherwise be due
to the exercising holder will be rounded down to the nearest whole
Common Share. In no event will the Company be required to net cash
settle any NioCorp Assumed Warrant.
Public
Warrants
The Company may elect to redeem the Public Warrants subject to
certain conditions, in whole and not in part, at a price of $0.01
per Public Warrant if (i) 30 days’ prior written notice of
redemption is provided to the holders, (ii) the last reported sale
price of the Common Shares equals or exceeds approximately $16.10
per share (as adjusted for stock splits, stock dividends,
reorganizations, recapitalizations and the like) for any 20 trading
days within a 30-trading day period ending on the third business
day prior to the date on which the Company sends the notice of
redemption to the warrant holders and (iii) there is an effective
registration statement covering the Common Shares issuable upon
exercise of the Public Warrants, and a current prospectus relating
thereto, available through the redemption date. Upon issuance of a
redemption notice by the Company, the warrant holders will have
until the redemption date to exercise for cash, or, at the
Company’s election, on a cashless basis. The Public Warrants are
not precluded from equity classification and are accounted for as
such on the date of issuance, and each balance sheet date
thereafter. Because the Transactions resulted in an excess of
liabilities over assets acquired, no value was ascribed to the
Public Warrants.
Private
Warrants
The Private Warrants: (i) will be exercisable either for cash or on
a cashless basis at the holder’s option and (ii) will not be
redeemable by the Company, in either case as long as the Private
Warrants are held by the Sponsor, its members or any of their
permitted transferees (as prescribed in the NioCorp Assumed Warrant
Agreement). In accordance with the NioCorp Assumed Warrant
Agreement, any Private Warrants that are held by someone other than
the Sponsor, its members or any their permitted transferees are
treated as Public Warrants.
The
Company accounts for the Private Warrants assumed in the
Transactions in accordance with the guidance contained in ASC
815-40. Such guidance provides that because the Private Warrants do
not meet the criteria for equity treatment thereunder, each Private
Warrant must be recorded as a liability. This liability is subject
to re-measurement at each balance sheet date. With each such
re-measurement, the warrant liability will be adjusted to its
current fair value, with the change in fair value recognized in the
Company’s statement of operations. The Company will reassess the
classification at each balance sheet date.
The Company classifies Private Warrants as Level 2 instruments
under the fair value hierarchy and estimated the fair value using a
Black Scholes model with the following
assumptions:
NioCorp Developments Ltd.
Notes to the Condensed Consolidated Financial Statements
March 31, 2023
(expressed in thousands of U.S. dollars, except per share amounts
or as otherwise stated) (unaudited)
Key Valuation
Input |
|
March 17,
2023 |
|
|
March 31,
2023 |
|
Stock price on
valuation date |
|
$ |
7.00 |
|
|
$ |
6.36 |
|
Strike price |
|
$ |
10.28 |
|
|
$ |
10.28 |
|
Implied volatility of Public
Warrants |
|
|
19.5 |
% |
|
|
23.5 |
% |
Risk free rate |
|
|
3.47 |
% |
|
|
3.61 |
% |
Dividend yield |
|
|
0 |
% |
|
|
0 |
% |
Changes in the fair value of the Private Warrants are shown
below:
|
|
Amount
|
|
Initial valuation,
March 17, 2023 |
|
$ |
3,848 |
|
Change in valuation |
|
|
(70 |
) |
Valuation at
March 31, 2023 |
|
$ |
3,778 |
|
|
11. |
RELATED PARTY
TRANSACTIONS AND BALANCES |
Borrowings
under the non-revolving credit facility agreement (the “Smith
Credit Facility”) with Mark Smith, Chief Executive Officer,
President, and Executive Chairman of NioCorp, bear interest at a
rate of 10% and drawdowns from the Smith
Credit Facility are subject to a 2.5% establishment fee. Amounts
outstanding under the Smith Credit Facility are secured by all of
the Company’s assets pursuant to a general security agreement. The
Smith Credit Facility contains financial and non-financial
covenants customary for a facility of its size and nature. The
maturity date for the Smith Credit Facility is June 30, 2023. On
February 28, 2023, the Smith Credit facility was amended to
increase the borrowing limit to $4,000 from the previous limit of
$3,500. The Company subsequently
drew down $1,130, leaving an available balance
under the Smith Credit Facility of $52.
On March 22, 2023, the Company repaid Mr. Smith $2,000,
representing $159 of interest and $1,841 of principal borrowed
under the Smith Credit Facility. This repayment was made out of
funds transferred to the Company from the GXII trust account on the
Closing Date. As of March 31, 2023, the principal amount
outstanding under the Smith Credit Facility was $1,289 and accounts
payable and accrued liabilities as of March 31, 2023, include
accrued interest of $3 and $28 of origination fees payable under
the Smith Credit Facility.
|
12. |
EXPLORATION
EXPENDITURES |
Schedule of
exploration expenditures
|
|
For the Three Months
Ended
March 31, |
|
|
For the Nine Months
Ended
March 31, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Technical studies and engineering |
|
$ |
85 |
|
|
$ |
45 |
|
|
$ |
222 |
|
|
$ |
179 |
|
Field
management and other |
|
|
195 |
|
|
|
139 |
|
|
|
588 |
|
|
|
420 |
|
Metallurgical
development |
|
|
1,130 |
|
|
|
625 |
|
|
|
3,203 |
|
|
|
1,211 |
|
Geologists and field staff |
|
|
- |
|
|
|
36 |
|
|
|
2 |
|
|
|
147 |
|
Total |
|
$ |
1,410 |
|
|
$ |
845 |
|
|
$ |
4,015 |
|
|
$ |
1,957 |
|
NioCorp Developments Ltd.
Notes to the Condensed Consolidated
Financial Statements
March 31, 2023
(expressed in thousands of U.S. dollars,
except per share amounts or as otherwise stated) (unaudited)
The
Company incurred lease costs as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months
Ended
March 31, |
|
|
For the Nine Months
Ended
March 31, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Operating Lease Cost: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed
rent expense |
|
$ |
15 |
|
|
$ |
23 |
|
|
$ |
60 |
|
|
$ |
66 |
|
Variable rent
expense |
|
|
3 |
|
|
|
2 |
|
|
|
9 |
|
|
|
7 |
|
Short-term lease
cost |
|
|
3 |
|
|
|
4 |
|
|
|
7 |
|
|
|
12 |
|
Sublease
income |
|
|
(6 |
) |
|
|
(8 |
) |
|
|
(24 |
) |
|
|
(23 |
) |
Net lease cost –
other operating expense |
|
$ |
15 |
|
|
$ |
21 |
|
|
$ |
52 |
|
|
$ |
62 |
|
The maturities of lease liabilities are as follows at March 31,
2023:
|
|
Future Lease
Maturities |
|
Total remaining lease payments |
|
$ |
338 |
|
Less portion of payments representing interest |
|
|
(91 |
) |
Present
value of lease payments |
|
|
247 |
|
Less current portion of lease payments |
|
|
(70 |
) |
Non current lease liability |
|
|
177 |
|
Effective
February 21, 2023, the Company executed an amendment to its
existing office lease agreement, extending the lease for 39 months
through January 31, 2027.
|
14. |
FAIR VALUE
MEASUREMENTS |
The
Company measures the fair value of financial assets and liabilities
based on U.S. GAAP guidance which defines fair value, establishes a
framework for measuring fair value, and expands disclosures about
fair value measurements.
The
Company classifies financial assets and liabilities as
held-for-trading, available-for-sale, held-to-maturity, loans and
receivables, or other financial liabilities depending on their
nature. Financial assets and financial liabilities are recognized
at fair value on their initial recognition.
Financial
assets and liabilities classified as held-for-trading are measured
at fair value, with gains and losses recognized in net income.
Financial assets classified as held-to-maturity, loans and
receivables, and financial liabilities other than those classified
as held-for-trading are measured at amortized cost, using the
effective interest method of amortization. Financial assets
classified as available-for-sale, including investments in equity
securities, are measured at fair value, with unrealized gains and
losses being recognized in income.
Financial
instruments including receivables, accounts payable and accrued
liabilities, and related party loans are carried at amortized cost,
which management believes approximates fair value due to the
short-term nature of these instruments.
The
following tables present information about the assets and
liabilities that are measured at fair value on a recurring basis as
of March 31, 2023, and June 30, 2022, respectively, and indicate
the fair value hierarchy of the valuation techniques the Company
utilized to determine such fair value. In general, fair values
determined by Level 1 inputs utilize quoted prices (unadjusted) in
active markets for identical instruments. Fair values determined by
Level 2 inputs utilize data points that are observable, such as
quoted prices, interest rates, and yield curves. Fair values
determined by Level 3 inputs are unobservable data points for the
financial instrument and include situations where there is little,
if any, market activity for the instrument.
NioCorp Developments Ltd.
Notes to the Condensed Consolidated Financial Statements
March 31, 2023
(expressed in thousands of U.S. dollars, except per share amounts
or as otherwise stated) (unaudited)
Schedule of fair values
determined by level 3 inputs are unobservable
data
|
|
As of March 31,
2023 |
|
|
|
Total |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
7,145 |
|
|
$ |
7,145 |
|
|
$ |
- |
|
|
$ |
- |
|
Investment in equity securities |
|
|
7 |
|
|
|
7 |
|
|
|
- |
|
|
|
- |
|
Total |
|
$ |
7,152 |
|
|
$ |
7,152 |
|
|
$ |
- |
|
|
$ |
- |
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnout Shares liability
|
|
$ |
12,314 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
12,314 |
|
Warrants liabilities |
|
|
5,303 |
|
|
|
- |
|
|
|
3,778 |
|
|
|
1,525 |
|
Total |
|
$ |
17,617 |
|
|
$ |
- |
|
|
$ |
3,778 |
|
|
$ |
13,839 |
|
|
|
As of June 30,
2022 |
|
|
|
Total |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
5,280 |
|
|
$ |
5,280 |
|
|
$ |
- |
|
|
$ |
- |
|
Investment in equity securities |
|
|
10 |
|
|
|
10 |
|
|
|
- |
|
|
|
- |
|
Total |
|
$ |
5,290 |
|
|
$ |
5,290 |
|
|
$ |
- |
|
|
$ |
- |
|
The
Yorkville Convertible Debt
Financing discussed in Note 8 was initially recorded at fair
value, which represented a nonrecurring fair value measurement
using a Level 3 input. At March 31, 2023, the estimated fair value
of this instrument approximated carrying value given that the
instrument was issued in March 2023 and has a short time period
until maturity.
On
April 28, 2023, the Company issued and sold 314,465 Common Shares in a
registered direct offering at a price of $6.36 per share. Net
proceeds to the Company from the offering were approximately
$1,800. NioCorp intends to use the net
proceeds from the offering for working capital and general
corporate purposes, including to advance its efforts to launch
construction of the Elk Creek Project and move it to commercial
operation.
|
ITEM
2. |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS |
The
following discussion and analysis should be read in conjunction
with our unaudited interim condensed consolidated financial
statements as of, and for the three and nine months ended March 31,
2023, and the related notes thereto, which have been prepared in
accordance with generally accepted accounting principles in the
United States (“U.S. GAAP”). This discussion and analysis
contains forward-looking statements and forward-looking information
that involve risks, uncertainties, and assumptions. Our actual
results may differ materially from those anticipated in these
forward-looking statements and information as a result of many
factors, including, but not limited to, those set forth elsewhere
in this Quarterly Report on Form 10-Q. See “Note Regarding
Forward-Looking Statements” below.
All
currency amounts are stated in thousands of U.S. dollars
unless noted otherwise.
As
used in this report, unless the context otherwise indicates,
references to “we,” “our,” the “Company,” “NioCorp,” and “us” refer
to NioCorp Developments Ltd. and its subsidiaries,
collectively.
Note
Regarding Forward-Looking Statements
This
Quarterly Report on Form 10-Q and the exhibits attached hereto
contain “forward-looking statements” within the meaning of Section
27A of the Securities Act of 1933, as amended (the “Securities
Act”), and Section 21E of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), and “forward-looking information”
within the meaning of applicable Canadian securities legislation
(collectively, “forward-looking statements”). Such forward-looking
statements concern our anticipated results and developments in the
operations of the Company in future periods, planned exploration
activities, the adequacy of the Company’s financial resources, and
other events or conditions that may occur in the future.
Forward-looking
statements have been based upon our current business and operating
plans, as approved by the Company’s Board of Directors, and may
include statements regarding the anticipated benefits of the
Transactions (as defined below), including NioCorp’s ability to
access the full amount of the expected net proceeds of the
Yorkville Equity Facility Financing Agreement (as defined below)
over the next three years; NioCorp’s ability to receive a final
commitment of financing from the Export-Import Bank of the United
States (“EXIM”); anticipated benefits of the listing of NioCorp’s
common shares, without par value (the “Common Shares”), on The
Nasdaq Stock Market LLC (“Nasdaq”); the financial and business
performance of NioCorp; NioCorp’s anticipated results and
developments in the operations of NioCorp in future periods;
NioCorp’s planned exploration activities; the adequacy of NioCorp’s
financial resources; NioCorp’s ability to secure sufficient project
financing to complete construction and commence operation of the
Elk Creek Project; NioCorp’s expectation and ability to produce
niobium, scandium, and titanium at the Elk Creek Project; the
outcome of current recovery process improvement testing, and
NioCorp’s expectation that such process improvements could lead to
greater efficiencies and cost savings in the Elk Creek Project; the
Elk Creek Project’s ability to produce multiple critical metals;
the Elk Creek Project’s projected ore production and mining
operations over its expected mine life; the completion of the
demonstration plant and technical and economic analyses on the
potential addition of magnetic rare earth oxides to NioCorp’s
planned product suite; the exercise of options to purchase
additional land parcels; the execution of contracts with
engineering, procurement and construction companies; NioCorp’s
ongoing evaluation of the impact of inflation, supply chain issues
and geopolitical unrest on the Elk Creek Project’s economic model;
the impact of health epidemics, including the COVID-19 pandemic, on
NioCorp’s business and the actions NioCorp may take in response
thereto; and the creation of full time and contract construction
jobs over the construction period of the Elk Creek
Project.
Forward-looking
statements are frequently, but not always, identified by words such
as “expects,” “anticipates,” “believes,” “intends,” “estimates,”
“potential,” “possible,” and similar expressions, or statements
that events, conditions, or results “will,” “may,” “could,” or
“should” (or the negative and grammatical variations of any of
these terms) occur or be achieved. Any statements that express or
involve discussions with respect to predictions, expectations,
beliefs, plans, projections, objectives, assumptions, or future
events or performance (often, but not always, using words or
phrases such as “expects” or “does not expect,” “is expected,”
“anticipates” or “does not anticipate,” “plans,” “estimates,” or
“intends,” or stating that certain actions, events, or results
“may,” “could,” “would,” “might,” or “will” be taken, occur or be
achieved) are not statements of historical fact and may be
forward-looking statements. Such forward-looking statements reflect
the Company’s current views with respect to future
events
and are subject to certain known and unknown risks, uncertainties,
and assumptions. Many factors could cause actual results,
performance, or achievements to be materially different from any
future results, performance, or achievements that may be expressed
or implied by such forward-looking statements, including, among
others, risks related to the following: NioCorp’s ability to
recognize the anticipated benefits of the Transactions, including
NioCorp’s ability to access the full amount of the expected net
proceeds under the Yorkville Equity Facility Financing Agreement
over the next three years; unexpected costs related to the
Transactions; the outcome of any legal proceedings that may be
instituted against NioCorp following closing of the Transactions;
NioCorp’s ability to receive a final commitment of financing from
EXIM on the anticipated timeline, on acceptable terms, or at all;
NioCorp’s ability to continue to meet Nasdaq listing standards;
NioCorp’s ability to operate as a going concern; risks relating to
the Common Shares, including price volatility, lack of dividend
payments and dilution or the perception of the likelihood any of
the foregoing; NioCorp’s requirement of significant additional
capital; the extent to which NioCorp’s level of indebtedness and/or
the terms contained in agreements governing NioCorp’s indebtedness
or the Yorkville Equity Facility Financing Agreement may impair
NioCorp’s ability to obtain additional financing; covenants
contained in agreements with NioCorp’s secured creditors that may
affect its assets; NioCorp’s limited operating history; NioCorp’s
history of losses; the restatement of NioCorp’s consolidated
financial statements as of and for the fiscal years ended June 30,
2022 and 2021 and the interim periods ended September 30, 2021,
December 31, 2021, March 31, 2022, September 30, 2022, and December
31, 2022 and the impact of such restatement on NioCorp’s future
financial statements and other financial measures; the material
weaknesses in NioCorp’s internal control over financial reporting,
NioCorp’s efforts to remediate such material weaknesses and the
timing of remediation; the possibility that NioCorp may qualify as
a PFIC under the Code; the potential that the Transactions could
result in NioCorp becoming subject to materially adverse U.S.
federal income tax consequences as a result of the application of
Section 7874 and related sections of the Code; cost increases for
NioCorp’s exploration and, if warranted, development projects; a
disruption in, or failure of, NioCorp’s information technology
systems, including those related to cybersecurity; equipment and
supply shortages; current and future offtake agreements, joint
ventures, and partnerships; NioCorp’s ability to attract qualified
management; the effects of the COVID-19 pandemic or other global
health crises on NioCorp’s business plans, financial condition and
liquidity; estimates of mineral resources and reserves; mineral
exploration and production activities; feasibility study results;
the results of metallurgical testing; changes in demand for and
price of commodities (such as fuel and electricity) and currencies;
competition in the mining industry; changes or disruptions in the
securities markets; legislative, political or economic
developments, including changes in federal and/or state laws that
may significantly affect the mining industry; the impacts of
climate change, as well as actions taken or required by governments
related to strengthening resilience in the face of potential
impacts from climate change; the need to obtain permits and comply
with laws and regulations and other regulatory requirements; the
timing and reliability of sampling and assay data; the possibility
that actual results of work may differ from
projections/expectations or may not realize the perceived potential
of NioCorp’s projects; risks of accidents, equipment breakdowns,
and labor disputes or other unanticipated difficulties or
interruptions; the possibility of cost overruns or unanticipated
expenses in development programs; operating or technical
difficulties in connection with exploration, mining, or development
activities; the management of the water balance at the Elk Creek
Project site; land reclamation requirements related to the Elk
Creek Project; the speculative nature of mineral exploration and
development, including the risks of diminishing quantities of
grades of reserves and resources; claims on the title to NioCorp’s
properties; potential future litigation; and NioCorp’s lack of
insurance covering all of NioCorp’s operations.
Should
one or more of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect, actual results may vary
materially from those described herein. This list is not exhaustive
of the factors that may affect any of the Company’s forward-looking
statements. Forward-looking statements are statements about the
future and are inherently uncertain, and actual achievements of the
Company or other future events or conditions may differ materially
from those reflected in the forward-looking statements due to a
variety of risks, uncertainties, and other factors, including
without limitation those discussed under the heading “Risk Factors”
in our Annual Report on Form 10-K/A for the fiscal year ended June
30, 2022, as well as other factors described elsewhere in this
report and the Company’s other reports filed with the Securities
and Exchange Commission (“SEC”).
The
Company’s forward-looking statements contained in this Quarterly
Report on Form 10-Q are based on the beliefs, expectations, and
opinions of management as of the date of this report. The Company
does not assume any obligation to update forward-looking statements
if circumstances or management’s beliefs, expectations, or opinions
should change, except as required by law. For the reasons set forth
above, investors should not attribute undue certainty to, or place
undue reliance on, forward-looking statements.
Qualified
Person
All
technical and scientific information that forms the basis for the
Elk Creek Project disclosure included in this Quarterly Report on
Form 10-Q has been reviewed and approved by Scott Honan, M.Sc.,
SME-RM, NioCorp’s Chief Operating Officer. Mr. Honan is a
“Qualified Person” as such term is defined in National Instrument
43-101 – Standards of Disclosure for Mineral Projects and subpart
1300 of Regulation S-K.
Company
Overview
NioCorp
is developing the Elk Creek Project, located in southeast Nebraska.
The Elk Creek Project is an advanced Niobium, Scandium and Titanium
development stage property. The Company is evaluating the potential
to produce several Rare Earth byproducts from the Elk Creek
Project. Niobium is used to produce various superalloys that are
extensively used in high performance aircraft and jet turbines. It
also is used in High-Strength, Low-Alloy steel, a stronger steel
used in automobiles, bridges, structural systems, buildings,
pipelines, and other applications that generally increases strength
and/or reduces weight, which can result in environmental benefits,
including reduced fuel consumption and material usage and fewer air
emissions. Scandium can be combined with aluminum to make
high-performance alloys with increased strength and improved
corrosion resistance. Scandium also is a critical component of
advanced solid oxide fuel cells, an environmentally preferred
technology for high-reliability, distributed electricity
generation. Titanium is a component of various superalloys and
other applications that are used for aerospace applications,
weapons systems, protective armor, medical implants, and many
others. It also is used in pigments for paper, paint, and plastics.
Rare Earths are critical to electrification and decarbonization
initiatives and can be used to manufacture the strongest permanent
magnets commercially available.
Our
primary business strategy is to advance our Elk Creek Project to
commercial production. We are focused on obtaining additional funds
to carry out our near-term planned work programs associated with
securing the project financing necessary to complete mine
development and construction of the Elk Creek Project.
Recent
Corporate Events
The
Transactions
The
GXII Transaction
On March 17, 2023 (the “Closing Date”), the Company closed the GXII
Transaction (as defined below) with GX Acquisition Corp. II
("GXII"), pursuant to the Business Combination Agreement, dated
September 25, 2022 (the “Business Combination Agreement”), among
the Company, GXII and Big Red Merger Sub Ltd (the “Closing”). The
GXII Transaction is being accounted for as an equity raise
transaction in accordance with U.S. GAAP. At the Closing, the
following transactions (collectively, the “GXII Transaction”)
occurred:
|
● |
As a
result of a series of transactions, GXII became an indirect,
majority-owned subsidiary of NioCorp and changed its name to “Elk
Creek Resources Corp” (“ECRC”). |
|
● |
As the parent company of the merged entity,
NioCorp issued 1,753,821 post-Reverse Stock Split (as defined
below) Common Shares in exchange for all of the Class A shares of
GXII issued and outstanding immediately prior to the Closing,
including 83,770 Common Shares issued to BTIG, LLC in exchange for
Class A shares of GXII that it received as partial payment for
advisory services. |
|
● |
All of the Class B shares of GXII issued and
outstanding immediately prior to the Closing (after giving effect
to the surrender of certain Class B shares of GXII in accordance
with the Sponsor Support Agreement, dated September 25, 2022 (the
“Sponsor Support Agreement”), among GX Sponsor II LLC (the
“Sponsor”), GXII, NioCorp and the other persons party thereto) were
converted into 7,957,404 shares of Class B common stock of GXII
(now known as ECRC) as the surviving entity of the mergers that
occurred on the Closing Date as part of the GXII Transaction.
Pursuant to the Business Combination Agreement, the Sponsor Support
Agreement and the Exchange Agreement, dated as of March 17, 2023
(as amended, supplemented or otherwise modified, the “Exchange
Agreement”), by and among NioCorp, ECRC and the Sponsor, after the
Closing, the shares of Class B common stock of ECRC are
exchangeable into Common Shares on a one-for-one basis, subject to
certain equitable adjustments, under certain conditions. Of the
issued and outstanding shares of Class B common stock of ECRC,
4,565,808 shares (the “Vested Shares”) were vested as of the
Closing Date and are exchangeable at any time, and from time to
time, until the tenth anniversary of the Closing Date (the
“Ten-Year Anniversary”) and 3,391,596 shares (the “Earnout Shares”)
are exchangeable until the Ten-Year Anniversary, subject to certain
vesting conditions. See Note 9 for additional information regarding
the Class B common stock of ECRC. |
|
● |
NioCorp assumed GXII’s obligations under the
agreement governing the GXII share purchase warrants (the “GXII
Warrants”) and issued an aggregate of 15,666,626 warrants (the
“NioCorp Assumed Warrants”) to purchase up to an aggregate of
17,519,864 Common Shares. The NioCorp Assumed Warrants issued at
the Closing consisted of (a) 9,999,959 public NioCorp Assumed
Warrants (the “Public Warrants”) that were issued in respect of the
GXII Warrants that were publicly traded prior to the Closing and
(b) 5,666,667 NioCorp Assumed Warrants (the “Private Warrants”)
that were issued to the Sponsor in respect of the GXII Warrants
that it held prior to the Closing, which NioCorp Assumed Warrants
were subsequently distributed by the Sponsor to its members in
connection with the Closing. See Note 10b for additional
information regarding the NioCorp Assumed Warrants. |
On the Closing Date, the Company also effected a reverse stock
split (the “Reverse Stock Split”) on the basis of one (1)
post-Reverse Stock Split Common Share for every ten (10)
pre-Reverse Stock Split Common Shares issued and outstanding, with
any fractional shares resulting from the Reverse Stock Split
rounded down to the nearest whole share.
The transactions contemplated by the Business Combination
Agreement, including the GXII Transaction, the Yorkville
Convertible Debt Facility Financing (as defined below), the
Yorkville Equity Facility Financing (as defined below) and the
Reverse Stock Split, are referred to, collectively, as the
“Transactions.”
The number
of Common Shares issued and outstanding immediately following the
consummation of the Transactions were as follows:
|
|
Common Shares |
|
|
Percentage |
|
Legacy NioCorp
Shareholders |
|
|
28,246,621 |
|
|
|
93.90 |
% |
Former GXII Class A
Shareholders1 |
|
|
1,753,821 |
|
|
|
5.83 |
% |
Other2 |
|
|
81,213 |
|
|
|
0.27 |
% |
Total Common Shares Outstanding
Upon Completion of Transactions |
|
|
30,081,655 |
|
|
|
100 |
% |
|
1
– |
Includes
83,770 Common Shares issued to BTIG, LLC in exchange for Class A
shares of GXII that it received as partial payment for advisory
services. |
|
2 - |
Represents Commitment Shares (as defined below)
issued under the Yorkville Equity Facility Financing
Agreement. |
After consideration of GXII expenses incurred in connection with
the Transactions, the Company acquired net cash of $2,168, and
assumed net liabilities of approximately $392, Private Warrant
liabilities of $3,848, and the Earnout Shares liability of $13,195.
The Company incurred expenses related to the Transactions of
$6,309, all of which were recorded as other operating expenses.
In
addition, in connection with the Transactions, the Common Shares
and the NioCorp Assumed Warrants were listed for trading on The
Nasdaq Stock Market LLC (“Nasdaq”). The Common Shares and the
NioCorp Assumed Warrants began trading on The Nasdaq Global Market
and The Nasdaq Capital Market, respectively, on March 21, 2023,
under the symbols “NB” and “NIOBW,” respectively. The Common Shares
continued to trade on the Toronto Stock Exchange (“TSX”) under the
symbol “NB,” and began trading on the TSX on a post-Reverse Stock
Split basis on March 21, 2023. The Common Shares ceased being
quoted on the OTC Markets in connection with the commencement of
trading on The Nasdaq Global Market.
Yorkville
Financings