NIOCORP DEVELOPMENTS LTD 10-Q

ITEM 1. FINANCIAL STATEMENTS Contents Page Condensed consolidated balance sheets as of September 30, 2022 and June 30, 2022 (unaudited) 2 Condensed consolidated statements of operations and comprehensive loss for the three months ended September 30, 2022 and 2021 (unaudited) 3 Condensed consolidated statements of cash flows for the three months ended September 30, 2022 and 2021 (unaudited) 4 Condensed consolidated statements of shareholders’ equity for the three months ended September 30, 2022 and 2021 (unaudited) 5 Notes to condensed consolidated financial statements (unaudited) 6 – 14 1 NioCorp Developments Ltd. Condensed Consolidated Balance Sheets (expressed in thousands of U.S. dollars, except share data) (unaudited) As of Note September 30, 2022 June 30, 2022 ASSETS Current Cash $ 3,192 $ 5,280 Prepaid expenses and other 189 402 Total current assets 3,381 5,682 Non-current Deferred transaction costs 5 2,809 - Deposits 35 35 Investment in equity securities 10 10 Right-of-use assets 76 94 Land and buildings, net 850 850 Mineral interests 16,085 16,085 Total assets $ 23,246 $ 22,756 LIABILITIES Current Accounts payable and accrued liabilities 6 $ 3,670 $ 817 Related party loan 9 2,000 2,000 Convertible debt 7 755 2,169 Operating lease liability 11 86 82 Total current liabilities 6,511 5,068 Non-current Operating lease liability - 23 Total liabilities 6,511 5,091 SHAREHOLDERS’ EQUITY Common shares, unlimited shares authorized; shares outstanding: 279,393,227 at September 30, 2022 and 276,670,606 at June 30, 2022 8 130,684 129,055 Accumulated deficit ( 112,951 ) ( 110,397 ) Accumulated other comprehensive loss ( 998 ) ( 993 ) Total shareholders’ equity 16,735 17,665 Total liabilities and equity $ 23,246 $ 22,756 The accompanying notes are an integral part of these condensed consolidated financial statements 2 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 September 30, Note 2022 2021 Operating expenses Employee related costs $ 293 $ 319 Professional fees 164 90 Exploration expenditures 10 1,288 621 Other operating expenses 337 226 Total operating expenses 2,082 1,256 Foreign exchange loss 173 225 Interest expense 300 605 Other (gain) loss on equity securities ( 1 ) 2 Loss before income taxes 2,554 2,088 Income tax benefit - - Net loss 4 $ 2,554 $ 2,088 Other comprehensive loss: Net loss $ 2,554 $ 2,088 Other comprehensive loss (gain): Reporting currency translation 5 ( 124 ) Total comprehensive loss $ 2,559 $ 1,964 Loss per common share, basic and diluted $ 0.01 $ 0.01 Weighted average common shares outstanding 277,926,316 258,023,048 The accompanying notes are an integral part of these condensed consolidated financial statements. 3 NioCorp Developments Ltd. Condensed Consolidated Statements of Cash Flows (expressed in thousands of U.S. dollars) (unaudited) For the three months ended September 30, 2022 2021 CASH FLOWS FROM OPERATING ACTIVITIES Net loss for the period $ ( 2,554 ) $ ( 2,088 ) Adjustments to reconcile net loss to net cash used in operations: Unrealized (gain) loss on equity securities ( 1 ) 2 Accretion of convertible debt 236 551 Noncash lease expense ( 2 ) ( 1 ) Depreciation 1 1 Foreign exchange loss 177 288 Total ( 2,143 ) ( 1,247 ) Change in working capital items: Prepaid expenses and other 209 ( 270 ) Accounts payable and accrued liabilities 196 ( 92 ) Net cash used in operating activities ( 1,738 ) ( 1,609 ) CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of land and buildings - ( 16 ) Net cash used in financing activities - ( 16 ) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issuance of common shares - 664 Share issue costs ( 21 ) - Related party debt repayments - ( 318 ) Net cash provided by financing activities ( 21 ) 346 Exchange rate effect on cash and cash equivalents ( 329 ) ( 170 ) Change in cash and cash equivalents during period ( 2,088 ) ( 1,449 ) Cash and cash equivalents, beginning of period 5,280 7,317 Cash and cash equivalent, end of period $ 3,192 $ 5,868 Supplemental cash flow information: Amounts paid for interest $ - $ 40 Amounts paid for income taxes - - Non-cash financing transactions: Conversions of debt for common shares $ 1,650 $ 1,350 Deferred transaction costs, accrued but not paid 2,809 - The accompanying notes are an integral part of these condensed consolidated financial statements. 4 NioCorp Developments Ltd. Condensed Consolidated Statements of Shareholders’ Equity (expressed in thousands of U.S. dollars, except for Common Shares outstanding) (unaudited) For the three months ended September 30, 2022 and 2021 Common Shares Outstanding Common Shares Accumulated Deficit Accumulated Other Comprehensive Loss Total Balance, June 30, 2021 256,379,931 $ 113,882 $ ( 99,510 ) $ ( 1,159 ) $ 13,213 Exercise of warrants 871,750 543 - - 543 Exercise of options 282,702 121 - - 121 Debt conversions 1,583,986 1,350 - - 1,350 Share issuance costs Reporting currency translation - - - 124 124 Loss for the period - - ( 2,088 ) - ( 2,088 ) Balance, September 30, 2021 259,118,369 $ 115,896 $ ( 101,598 ) $ ( 1,035 ) $ 13,263 Balance, June 30, 2022 276,670,606 $ 129,055 $ ( 110,397 ) $ ( 993 ) $ 17,665 Exercise of warrants Exercise of options Debt conversions 2,722,621 1,650 - - 1,650 Share issuance costs - ( 21 ) - - ( 21 ) Reporting currency translation - - - ( 5 ) ( 5 ) Loss for the period - - ( 2,554 ) - ( 2,554 ) Balance, September 30, 2022 279,393,227 $ 130,684 $ ( 112,951 ) $ ( 998 ) $ 16,735 The accompanying notes are an integral part of these condensed consolidated financial statements. 5 NioCorp Developments Ltd. Notes to the Condensed Consolidated Financial Statements September 30, 2022 (expressed in thousands of U.S. dollars, except per share amounts or as otherwise stated) (unaudited) 1. DESCRIPTION OF BUSINESS NioCorp Developments Ltd. (“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. These 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. 2. BASIS OF PREPARATION a) Basis of Preparation and Consolidation The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles of the United States of America (“US 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 reclassifications and normal recurring adjustments) for a fair statement of the financial position, results of operations, and cash flows at September 30, 2022, 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 US GAAP have been condensed or omitted pursuant to appropriate SEC rules and regulations. These interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended June 30, 2022. The interim results are not necessarily indicative of results for the full year ending June 30, 2023, or future operating periods. b) Recent Accounting Standards Issued and Adopted In August 2020, the FASB issued 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. 6 NioCorp Developments Ltd. Notes to the Condensed Consolidated Financial Statements September 30, 2022 (expressed in thousands of U.S. dollars, except per share amounts or as otherwise stated) (unaudited) 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. c) Use of Estimates The preparation of consolidated financial statements in conformity with US 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, and share-based compensation. The Company bases its estimates and assumptions on current facts, historical experience, and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between estimates and the actual results, future results of operations will be affected. d) Basic and Diluted Earnings per Share Basic net loss per share is computed by dividing net loss by the weighted average number of Common Shares outstanding during the period. Diluted net loss per share is computed by dividing the net loss by the weighted-average number of Common Share equivalents outstanding for the period determined using the treasury stock method or the if-converted method, as applicable. For purposes of this calculation, options to purchase Common Shares (“Options”) and warrants to purchase Common Shares (“Warrants”) are considered to be Common Share equivalents and are only included in the calculation of diluted net loss per share when their effect is dilutive. The following shares underlying Options, Warrants, and outstanding convertible debt were antidilutive due to a net loss in the periods presented and, therefore, were excluded from the dilutive securities computation as indicated below. Schedule of excluded from the dilutive securities For the three months ended September 30, Excluded potentially dilutive securities (1) : 2022 2021 Options 14,464,000 15,225,000 Warrants 18,516,253 13,470,118 Convertible debt 1,030,000 14,744,000 Total potential dilutive securities 34,010,253 43,439,118 ( 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. 3. RESTATEMENT 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. 7 . NioCorp Developments Ltd. Notes to the Condensed Consolidated Financial Statements September 30, 2022 (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) Restatement Impacts to the Condensed Consolidated Statement of Operations and Comprehensive Loss (unaudited) For the Three Months Ended September 30, 2021 For the three months ended September 30, 2021 As Previously Reported Restatement Impacts Restated Foreign exchange loss $ 210 $ 15 $ 225 Interest expense 492 113 605 Loss before income taxes 1,960 128 2,088 Net loss 1,960 128 2,088 Reporting currency translation ( 109 ) ( 15 ) ( 124 ) Total comprehensive loss 1,851 113 1,964 Restatement Impacts to the Condensed Consolidated Statement of Cash Flows (unaudited) Restatement Impacts to the Condensed Consolidated Statement of Cash Flows (unaudited) For the Three Months Ended September 30, 2021 As Previously Reported Restatement Impacts Restated CASH FLOWS FROM OPERATING ACTIVITIES Total loss for the period $ ( 1,960 ) $ ( 128 ) $ ( 2,088 ) Accretion of convertible debt 438 113 551 Foreign exchange loss 273 15 288 Restatement Impact to the Condensed Consolidated Statement of Shareholders' Equity (unaudited) Restatement Impacts to the Condensed Consolidated Statement of Shareholders' Equity (unaudited) For the Three Months Ended September 30, 2021 As Previously Reported Restatement Impacts Restated June 30, 2021 opening balance adjustments: 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 ( 1,960 ) ( 128 ) ( 2,088 ) Reporting currency translation 109 15 124 September 30, 2021 ending balance adjustments: Deficit ( 101,036 ) ( 562 ) ( 101,598 ) Accumulated other comprehensive loss ( 1,034 ) ( 1 ) ( 1,035 ) Total equity 13,826 ( 563 ) 13,263 8 NioCorp Developments Ltd. Notes to the Condensed Consolidated Financial Statements September 30, 2022 (expressed in thousands of U.S. dollars, except per share amounts or as otherwise stated) (unaudited) 4. GOING CONCERN ISSUES The Company incurred a loss of $ 2,554 for the three months ended September 30, 2022 (2021 - $ 2,088 ) and had a working capital deficit of $ 3,130 and an accumulated deficit of $ 112,951 as of September 30, 2022. As a development stage issuer, the Company has not yet commenced its mining operations and accordingly does not generate any revenue. As of September 30, 2022, the Company had cash of $ 3,192 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 historically averaged approximately $ 1,265 per quarter over the preceding three-year period, is dependent on management’s ability to secure additional financing. Management is actively pursuing 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 proposed business combination and potential financing packages discussed in Note 13, the Company did not have any further funding commitments or arrangements for additional financing as of September 30, 2022. These 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. Since March 2020, several measures have been implemented in the United States, Canada, and the rest of the world in response to the increased impact from the novel coronavirus (“COVID-19”) pandemic and subsequent COVID-19 variants. In addition, recent worldwide events have created general global economic uncertainty as well as uncertainty in capital markets, supply chain disruptions, increased interest rates, 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. DEFERRED TRANSACTION COSTS The Company has deferred third-party costs, including legal fees, other professional and consulting fees, and due diligence fees, incurred in connection with the proposed transaction discussed in Note 13. These costs are deferred until closing, at which time a portion of the costs will be recorded against convertible debt to be entered into in connection with the proposed transaction, with the remainder treated as a reduction to the value of Common Shares issued. 6. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES Schedule of account payable and accrued liabilities As of Note September 30, 2022 June 30, 2022 Accounts payable, trade $ 2,904 $ 115 Accounts payable accruals 467 654 Consent accrual 13 200 - Interest payable to related party 9 51 - Other accruals 48 48 Total accounts payable and accrued liabilities $ 3,670 $ 817 9 NioCorp Developments Ltd. Notes to the Condensed Consolidated Financial Statements September 30, 2022 (expressed in thousands of U.S. dollars, except per share amounts or as otherwise stated) (unaudited) 7. CONVERTIBLE DEBT Changes in the convertible security (the “Lind III Convertible Security”) issued to Lind Global Asset Management III, LLC, are as follows: Lind III Convertible Security Balance, June 30, 2022 $ 2,169 Accretion expense 236 Conversions ( 1,650 ) Balance, September 30, 2022 $ 755 Based on the Company’s closing Common Share price of C$ 1.43 as of September 30, 2022, conversion of the remaining Lind III Convertible Security undiscounted face value of $ 815 (including accrued interest) would require the issuance of approximately 1,030,000 Common Shares. For each C$ 0.01 change in the fair value of one Common Share, the total Common Shares the Company would be obligated to issue would change by approximately 8,000 shares. 8. COMMON SHARES a) Stock Options Schedule of stock option Number of Options Weighted Average Exercise Price Balance, June 30, 2022 14,464,000 C$ 0.83 Granted - - Exercised - - Cancelled/expired - - Balance, September 30, 2022 14,464,000 C$ 0.83 The following table summarizes information about Options outstanding at September 30, 2022: Schedule of information about stock options outstanding Exercise Price Expiry Date Number Outstanding Aggregate Intrinsic Value Number Exercisable Aggregate Intrinsic Value C$ 0.47 November 9, 2022 2,804,000 C$ 2,692 2,804,000 C$ 2,692 C$ 0.84 September 18, 2023 1,050,000 619 1,050,000 619 C$ 0.54 November 15, 2023 3,785,000 3,369 3,785,000 3,369 C$ 0.75 December 14, 2023 1,825,000 1,241 1,825,000 1,241 C$ 0.75 December 16, 2023 525,000 357 525,000 357 C$ 1.36 December 17, 2024 3,975,000 278 3,975,000 278 C$ 1.10 May 30, 2025 500,000 165 500,000 165 14,464,000 C$ 8,721 14,464,000 C$ 8,721 The aggregate intrinsic value in the preceding table represents the total intrinsic value, based on the Company’s closing Common Share price of C$ 1.43 as of September 30, 2022, that would have been received by the Option holders had all Option holders exercised their Options as of that date. There were no in-the-money Options vested and exercisable as of September 30, 2022. As of September 30, 2022, there was $ 0 of unrecognized compensation cost related to unvested share-based compensation arrangements granted under the Option plans. 10 NioCorp Developments Ltd. Notes to the Condensed Consolidated Financial Statements September 30, 2022 (expressed in thousands of U.S. dollars, except per share amounts or as otherwise stated) (unaudited) b) Warrants Schedule of warrant transactions Number of Warrants Weighted Average Exercise Price Balance, June 30, 2022 18,516,253 C$ 1.16 Granted - - Exercised - - Cancelled/expired - - Balance, September 30, 2022 18,516,253 C$ 1.16 At September 30, 2022, the Company had outstanding exercisable Common Share purchase warrants (“Warrants”), as follows: Schedule of outstanding exercisable warrants Number Exercise Price Expiry Date 500,000 C$ 0.80 December 18, 2022 4,412,118 C$ 1.63 May 10, 2023 5,046,135 C$ 1.10 June 30, 2024 8,558,000 C$ 0.97 February 19, 2025 18,516,253 9. 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. As of September 30, 2022, the principal amount outstanding under the Smith Credit Facility was $ 2,000 and accounts payable and accrued liabilities as of September 30, 2022, include accrued interest of $ 51 payable under the Smith Credit Facility. 10. EXPLORATION EXPENDITURES Schedule of exploration expenditures For the Three Months Ended September 30, 2022 2021 Technical studies and engineering $ 141 $ 50 Field management and other 154 124 Metallurgical development 993 436 Geologists and field staff - 11 Total $ 1,288 $ 621 11 NioCorp Developments Ltd. Notes to the Condensed Consolidated Financial Statements September 30, 2022 (expressed in thousands of U.S. dollars, except per share amounts or as otherwise stated) (unaudited) 11. LEASES The Company incurred lease costs as follows: For the Three Months Ended September 30, 2022 2021 Operating Lease Cost: Fixed rent expense $ 21 $ 21 Variable rent expense 3 2 Short term lease cost 2 5 Sublease income ( 6 ) ( 5 ) Net lease cost – other operating expense 20 23 The maturities of lease liabilities are as follows at September 30, 2022: Fiscal Year Lease Maturities Total lease payments – through September 2023 $ 93 Less portion of payments representing interest ( 7 ) Present value of lease payments – current lease liability $ 86 12. FAIR VALUE MEASUREMENTS The Company measures the fair value of financial assets and liabilities based on US 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 September 30, 2022, 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. 12 NioCorp Developments Ltd. Notes to the Condensed Consolidated Financial Statements September 30, 2022 (expressed in thousands of U.S. dollars, except per share amounts or as otherwise stated) (unaudited) Schedule of fair values determined by level 3 inputs are unobservable data As of September 30, 2022 Total Level 1 Level 2 Level 3 Assets: Cash and cash equivalents $ 3,192 $ 3,192 $ - $ - Equity securities 10 10 - - Total $ 3,202 $ 3,202 $ - $ - As of June 30, 2022 Total Level 1 Level 2 Level 3 Assets: Cash and cash equivalents $ 5,280 $ 5,280 $ - $ - Equity securities 10 10 - - Total $ 5,290 $ 5,290 $ - $ - The Lind III Convertible Security discussed in Note 7 was initially recorded at fair value, which represented a nonrecurring fair value measurement using a Level 3 input. At September 30, 2022 and June 30, 2022, the estimated fair value of this instrument approximated carrying value given that the instrument was issued in fiscal 2021 and has a short time period until maturity. 13. PROPOSED TRANSACTION On September 25, 2022, the Company, GX Acquisition Corp. II, a Delaware corporation (“GXII”), and Big Red Merger Sub Ltd (“Merger Sub”), a Delaware corporation incorporated in September 2022, and a direct, wholly owned subsidiary of the Company, entered into a business combination agreement (the “Business Combination Agreement”). Pursuant to the Business Combination Agreement, as the result of a series of transactions, GXII will become a subsidiary of the Company (as successor by merger to the Company’s subsidiary, Elk Creek Resources Corporation, a Delaware corporation (“ECRC”)), with the pre-combination public shareholders of GXII receiving Common Shares based on a fixed exchange ratio of 11.1829212 (the “Exchange Ratio”) Common Shares for each GXII Class A common share held and not redeemed, and the GXII founders receiving shares in GXII (as successor by merger to ECRC) based on the Exchange Ratio. Pursuant to the Business Combination Agreement, after closing, the GXII founders will have the right to exchange such shares for Common Shares on a one-for-one basis under certain conditions. Pursuant to the Business Combination Agreement, the Company will also assume the obligations under the issued and outstanding GXII warrants, which will be converted into warrants exercisable into Common Shares following closing of the Transaction. The Business Combination Agreement contemplates that the Company will undertake a reverse stock split of the Common Shares at the time of close in connection with an expected cross-listing to the Nasdaq Stock Market (“Nasdaq”). In addition, pursuant to the Business Combination Agreement, post-closing, the Company’s Board will include two directors from pre-combination GXII. The transactions contemplated by the Business Combination Agreement and the ancillary agreements thereto are referred to collectively as the “Transaction.” As currently structured, the Business Combination Agreement is expected to be accounted for as a recapitalization in accordance with GAAP. Under this method of accounting, GXII will be treated as the “acquired” company for financial reporting purposes. Accordingly, the transaction is treated as the equivalent of NioCorp issuing Common Shares for the net assets of GXII, accompanied by a recapitalization. The net assets of GXII will be stated at historical cost, with no goodwill or other intangible assets recorded. In addition, in connection with the entry into the Business Combination Agreement, the Company announced the signing of non-binding letters of intent (“LOIs”) for two separate financing packages with Yorkville Advisors Global, LP (“Yorkville”). Subject to entering into definitive agreements, these financings could provide the Company with access to up to an additional $ 81.0 million to help advance the Elk Creek Project. The financings contemplated by the LOIs include $ 16.0 million in convertible debentures that are expected to be funded at the closing of the Transaction, and subject to certain limitations can be repaid by the Company in either cash or Common Shares, and a standby equity purchase facility pursuant to which the Company will have the ability to 13 NioCorp Developments Ltd. Notes to the Condensed Consolidated Financial Statements September 30, 2022 (expressed in thousands of U.S. dollars, except per share amounts or as otherwise stated) (unaudited) require Yorkville, subject to the conditions set out in the definitive agreements, to purchase up to $ 65.0 million of its Common Shares. The proposed Transaction is expected to close in the first calendar quarter of 2023, subject to the satisfaction or waiver of certain customary closing conditions contained in the Business Combination Agreement, including, among other things, (i) obtaining required approvals of the Transaction and related matters by the respective shareholders of NioCorp and GXII, (ii) the effectiveness of the registration statement on Form S-4 that the Company originally filed on November 7, 2022, (iii) receipt of approval for listing on Nasdaq of the NioCorp Common Shares to be issued in connection with the Transaction, (iv) receipt of approval for listing on Nasdaq of the NioCorp warrants to be issued in exchange for the GXII warrants that NioCorp has agreed to assume, (v) receipt of approval from the TSX with respect to the issuance and listing of the NioCorp Common Shares issuable in connection with the Transaction, (vi) that NioCorp and its subsidiaries (including GXII, as successor by merger to ECRC) will have at least $ 5.000001 million of net tangible assets upon the consummation of the Transaction, after giving effect to any redemptions by GXII public stockholders and after payment of underwriters’ fees or commissions, (vii) that, at closing, NioCorp and its subsidiaries (including GXII, as successor by merger to ECRC) will have received cash in an amount equal to or greater than $ 15.0 million, subject to certain adjustments, and (viii) the absence of any injunctions enjoining or prohibiting the consummation of the Business Combination Agreement. The proposed additional financings contemplated by the LOIs will also be subject to the approval of the TSX and the Company’s shareholders. On September 25, 2022, the Company and Lind entered into an agreement (the “Lind Consent”), which included the following principal terms: (i) the consent of Lind to the Transaction and Yorkville financing transactions, including all actions taken by NioCorp as set out in the Business Combination Agreement to permit the completion of the Transaction; (ii) the consent of Lind to NioCorp’s expected Nasdaq listing and the consolidation of the NioCorp 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 proposed standby equity purchase agreement between NioCorp and Yorkville; and (iv) the waiver of Lind of certain restrictive covenants in the Lind III Convertible Security. As consideration for entering into the Lind Consent, Lind received, amongst other things: (i) the right to receive payment of $ 500 , which will be reduced to $ 200 if the Transaction have not been consummated on or before April 30, 2023 (collectively, the Consent Payment”); (ii) an extension of its existing participation rights under the Lind III Convertible Security 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 “Consent Warrants”) if on the date that is eighteen months following consummation of the Transaction, the closing trading price of the NioCorp Common Shares on the TSX or such other stock exchange on which such shares may then be listed, is less than C$ 1.00 , subject to adjustments. The number of Consent Warrants to be issued is based on the Canadian dollar equivalent (based on the then current Canadian to US dollar exchange rate as reported by Bloomberg, LP) of $ 5.0 million divided by the five-day VWAP of NioCorp Common Shares on the date of issuance. Further, the number of 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 Consent Warrants. The final Consent Payment value and the issuance of Consent Warrants under the Lind Consent, if any, are subject to shareholders’ approval of the Transaction, an event which is outside of management control. Therefore, pending shareholders’ approval of the Transaction, the Company has included the minimum $ 200 payment at September 30, 2022, as an accrued liability (see Note 6) with a corresponding increase in deferred transaction costs. 14