Quarterly Report (10-q)

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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

☐ 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

		Page
PART I — FINANCIAL INFORMATION

ITEM 1.	FINANCIAL STATEMENTS	1
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	28
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	39
ITEM 4.	CONTROLS AND PROCEDURES	39

PART II — OTHER INFORMATION

ITEM 1.	LEGAL PROCEEDINGS	41
ITEM 1A.	RISK FACTORS	41
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	43
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	43
ITEM 4.	MINE SAFETY DISCLOSURES	43
ITEM 5.	OTHER INFORMATION	43
ITEM 6.	EXHIBITS	43

SIGNATURES		45

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Contents

		Page
Condensed consolidated balance sheets as of March 31, 2023 and June 30, 2022 (unaudited)		2

Condensed consolidated statements of operations and comprehensive loss for the three and nine months ended March 31, 2023 and 2022 (unaudited)		3

Condensed consolidated statements of cash flows for the nine months ended March 31, 2023 and 2022 (unaudited)		4

Condensed consolidated statements of shareholders’ equity and redeemable noncontrolling interest for the three and nine months ended March 31, 2023 and 2022 (unaudited)		5-6

Notes to condensed consolidated financial statements (unaudited)		7 - 27

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
Loss before income taxes			29,621			2,000			35,927			8,080
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)

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.

BASIS OF PREPARATION

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.

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.

Use of Estimates

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.

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)

	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.

Reverse Stock Split

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.

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.

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.

3.	RESTATEMENTS

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		2,554		1,323			3,877
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		2,208		221			2,429
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		4,762		1,544			6,306
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
Loss before income taxes		1,816			184			2,000
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		7,234			846			8,080
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

4.	GOING CONCERN ISSUES

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.

5.	GXII TRANSACTION

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	%

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.

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.

ACCOUNTS 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)

8.	CONVERTIBLE DEBT

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)

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.

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:

		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

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.

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)

10.

COMMON SHARES

Stock Options

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.

Warrants

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:

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

	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)

13.

LEASES

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)

	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.

15.

SUBSEQUENT EVENTS

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.

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