NIOCORP DEVELOPMENTS LTD 10-Q

ITEM 1A. RISK FACTORS You should carefully consider the risk factors discussed in Item 1A, “Risk Factors,” in the Company’s Annual Report on Form 10-K/A for the fiscal year ended June 30, 2022, which could materially affect the Company’s business, financial condition or future results. The information set forth in this Quarterly Report on Form 10-Q, including without limitation, the risk factors presented below, updates and should be read in conjunction with, the risk factors and information disclosed in the Company’s Annual Report on Form 10-K/A for the fiscal year ended June 30, 2022. 33 Failure to consummate the Transaction could negatively impact the price of our Common Shares and have a material adverse effect on our results of operations, cash flows and financial position. The consummation of the Transaction is 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, and amended on December 22, 2022, January 17, 2023, January 31, 2023, and February 6, 2023, and was declared effective by the SEC on February 8, 2023, (iii) receipt of approval for listing on Nasdaq of the Common Shares to be issued in connection with the Transaction, (iv) receipt of approval for listing on Nasdaq of the Warrants assumed from GXII, (v) receipt of approval from the TSX with respect to the issuance and listing of the 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. Many of the conditions to completion of the Transaction pursuant to the Business Combination Agreement are not within NioCorp’s or GXII’s control, and we cannot predict with any certainty when these conditions will be satisfied, if at all. Although NioCorp and GXII are working to complete the Transaction, satisfying the conditions to and completion of the Transaction may take longer, and could cost more, than we expect. For example, the requirements for obtaining the required stock exchange clearances and approvals could delay the completion of the Transaction for a period of time or prevent it from occurring. Any delay in completing the Transaction within the expected timeframe may adversely affect the benefits that we expect to achieve from the Transaction. If any of these conditions are not satisfied or waived, it is possible that the Business Combination Agreement may be terminated and the Transaction may not be completed. If the Transaction is not completed for any reason, including as a result of NioCorp’s shareholders or GXII’s stockholders failing to approve the applicable proposals or the Business Combination Agreement is otherwise terminated, our ongoing business may be materially adversely affected and, without realizing any of the benefits of having completed the Transaction, we would be subject to a number of risks, including the following: ● we may experience negative reactions from the financial markets, including negative impacts on the price of our Common Shares; ● we will still be required to pay certain significant costs relating to the Transaction, such as legal, accounting, financial advisor and printing fees; ● we may be required to pay a termination fee and reimburse GXII for certain of its expenses under the terms of the Business Combination Agreement; ● the Business Combination Agreement places certain restrictions on the conduct of the our business until the earlier of the termination of the Business Combination Agreement and the closing date of the Transaction, which restrictions may have delayed or prevented the us from undertaking business opportunities that, absent the Business Combination Agreement, may have been pursued; ● matters relating to the Transaction require substantial commitments of time and resources by management, which could have resulted in the distraction of management from ongoing business operations and pursuing other opportunities that could have been beneficial to us; and ● litigation related to any failure to complete the Transaction or related to any enforcement proceeding commenced against us to perform our obligations under the Business Combination Agreement. If the Transaction is not completed, any of the risks described above may materialize and they may have a material adverse effect on our results of operations, cash flows, financial position and the price of our Common Shares. 34 If the Transaction is consummated, the Combined Company may not realize all or any of the anticipated benefits expected as a result of the Transaction. The success of the Transaction, if consummated, will depend, in part, on the Combined Company’s ability to realize the anticipated benefits expected from the Transaction. In particular, a significant number of GXII shareholders may exercise their redemption rights in connection with the closing of the Transaction. In addition, the Business Combination Agreement does not make the consummation of the Transaction conditional on the entry into definitive documentation and consummation of the financing transactions contemplated by the LOIs with Yorkville, and there is no assurance that such financing transactions will be consummated. As a result, even if the minimum cash and net tangible asset conditions to closing set forth in the Business Combination Agreement are satisfied and the Transaction is consummated, after giving effect to (i) payments made to GXII stockholders who properly exercise their redemption rights and (ii) payments for potential taxes and certain expenses incurred by NioCorp and GXII in connection with the Transaction, to the extent not otherwise paid prior to the closing, the Combined Company may have less net cash proceeds available for general corporate purposes than anticipated. In addition, the listing of the Common Shares on Nasdaq may not provide the anticipated benefits of broader access to capital and financing alternatives or otherwise enhance NioCorp’s public profile. If the Combined Company is not successful in realizing these anticipated benefits, including the anticipated benefits of listing the Common Shares on the Nasdaq and the anticipated acceleration of financing efforts to advance, complete construction and commence operation of the Elk Creek Project, such consequences may adversely affect the Combined Company’s results of operations, cash flows, financial position and the price of our Common Shares. The Yorkville Financings are subject to satisfaction or waiver of several conditions. Completion of the Yorkville Financings are subject to the satisfaction of a number of conditions precedent, certain of which are outside of NioCorp’s control, including, but not limited to, the approval by our shareholders of the issuance of the Common Shares in connection with the Yorkville Equity Facility Financing, approve by the our shareholders of the issuance of Common Shares in connection with the Yorkville Convertible Debt Financing, and other customary conditions. A substantial delay in obtaining satisfactory approvals and/or the imposition of unfavorable terms or conditions in the approvals to be obtained could result in the termination of the Yorkville Equity Facility Financing Agreement or the Yorkville Convertible Debt Financing Agreement. There can be no certainty, nor can NioCorp provide any assurance, that these conditions will be satisfied or, if satisfied, when they will be satisfied. If the Yorkville Equity Facility Financing or the Yorkville Convertible Debt Financing are not completed: (i) certain costs related to the Yorkville Equity Facility Financing Agreement and the Yorkville Convertible Debt Facility Agreement, such as legal, accounting and financial advisory fees, must be paid by NioCorp even if the Yorkville Financings are not completed; (ii) NioCorp may not be successful in finding another financing opportunity that is of equal or greater benefit to NioCorp; and (iii) the time and attention of NioCorp’s management will have been diverted away from the conduct of NioCorp’s business. We may not be able to consummate the Yorkville Financings in a timely manner or at all, which could have a material adverse effect on the Company. Even if the Yorkville Financings are consummated, we face significant related risks, and we may not recognize the full value of the Yorkville Financings. Completion of the Yorkville Financings is subject to the satisfaction of a number of conditions precedent, certain of which are outside of NioCorp’s control, including, but not limited to, the approval by our shareholders of the issuances of the Common Shares in connection with the Yorkville Equity Facility Financing and upon the conversion of the Convertible Debentures and the exercise of the Financing Warrants. A failure in obtaining necessary approvals and/or a failure to satisfy other conditions precedent could result in the termination of the Yorkville Equity Facility Financing Agreement and the Yorkville Convertible Debt Financing Agreement. There can be no certainty, nor can NioCorp provide any assurance, that these conditions will be satisfied or, if satisfied, when they will be satisfied. If the Yorkville Equity Facility Financing or the Yorkville Convertible Debt Financing are not completed: (i) certain costs related to the Yorkville Equity Facility Financing Agreement and the Yorkville Convertible Debt Facility Agreement, such as legal, accounting and financial advisory fees, must be paid by NioCorp even if the Yorkville Financings are not completed; (ii) NioCorp may not be successful in finding another financing opportunity that is of equal or greater benefit to NioCorp; (iii) the time and attention of NioCorp’s management will have been diverted away from the conduct of NioCorp’s business; and (iv) we may not be able to complete the proposed Transactions, each of which could have a material adverse effect on the Company. 35 Even if the Yorkville Financings are consummated, we may not recognize or the full value of the Yorkville Financings. Specifically, our ability to sell shares to Yorkville pursuant to the Yorkville Equity Facility Financing Agreement is subject to certain restrictions and limitations, which may prevent us from selling the full Commitment Amount prior to the expiration of the Commitment Period. As a result, there can be no assurance that NioCorp will receive all or even a significant portion of the proceeds that it expects to receive in connection with the Yorkville Equity Facility Financing. Further, holders of the Financing Warrants will have the ability to exercise them on a cashless basis. Accordingly, we may not receive any proceeds from the exercise of the Financing Warrants. If the Yorkville Financings are consummated, we will incur significant additional debt upon the issuance of the Convertible Debentures. Notwithstanding whether we are able to recognize the full value of the Yorkville Financings, we will become obligated to repay or issue Common Shares upon settlement of the full $16.0 million aggregate principal amount of Convertible Debentures that we have agreed to issue pursuant to the Yorkville Convertible Debt Financing Agreement. Such significant additional debt could adversely affect our business, which may prevent us from fulfilling our obligations with respect to our existing debt or obtaining future financing. Further, the Yorkville Convertible Debt Financing Agreement restricts us from pursuing certain variable rate financing transactions, which could impair our ability to obtain additional financing on terms that are favorable, or at all. Our inability to obtain additional financing on terms that are favorable, or at all, could have a material adverse effect on our financial condition, results of operations and prospects. Last, if the Yorkville Financings are consummated, a significant number of Common Shares would become potentially issuable under the Yorkville Equity Facility Financing Agreement and upon the conversion of the Convertible Debentures and the exercise of the Financing Warrants. Additionally, the lower the market or trading price of our Common Shares in the future, the greater the number of Common Shares potentially issuable under the Yorkville Equity Facility Financing Agreement and upon the conversion of the Convertible Debentures and the exercise of the Financing Warrants, would become. Factors both within and beyond our control could cause the market or trading price of our Common Shares to decline, even significantly, in the future. As a result, existing shareholders will have their positions significantly diluted by the potential increase in additional outstanding Common Shares due to the issuance of Common Shares under the Yorkville Equity Facility Financing Agreement and upon the conversion of the Convertible Debentures and the exercise of the Financing Warrants. If the Yorkville Financings are completed, and subject to the terms of the Yorkville Equity Facility Financing Agreement and the Yorkville Convertible Debt Financing Agreement, as applicable, the potential issuances of Common Shares thereunder, the sale of Common Shares in the public market from time to time, and any disclosures to be made by us relating thereto, could depress the market price for the Common Shares.