What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2023-05-30 compared with 2023-02-13 · 162 added, 149 removed, 0 unchanged (100% of the section changed)

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.

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

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;

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.

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.

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.

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.

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

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.

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.

Company may not realize all or any of the anticipated benefits expected as a result of the Transaction.

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 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

Company’s results of operations, cash flows, financial position and the price of our Common Shares.

may not recognize the full value of the Yorkville Equity Facility Financing Agreement and may not receive any proceeds from the

exercise of the Financing Warrants, the NioCorp Assumed Warrants and our other outstanding Warrants, and the potential adverse

effect on the prevailing market prices for our Common Shares as a result of sales, or the perception of future sales, of Common

Shares could adversely affect our ability to raise additional capital.

we have entered into the Yorkville Equity Facility Financing Agreement, we may not recognize the full value thereof.

Specifically,

our ability to sell Common 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

Our ability to recognize the full value of the Yorkville Equity Facility Financing Agreement may be further impeded by

the potential negative pressure on the market price of our Common Shares as a result of sales, or the perception of future sales,

of Common Shares by us or by other security holders.

As a result, there can be no assurance that we will receive all or even a

significant portion of the proceeds that we expect to receive in connection with the Yorkville Equity Facility Financing Agreement.

addition, upon exercise, we will receive the cash exercise price of the Financing Warrants, the NioCorp Assumed Warrants and our

other outstanding Warrants (assuming, with respect to the Financing Warrants and the NioCorp Assumed Warrants, that they are not

exercised on a cashless basis).

We believe the likelihood that holders of the Financing Warrants, the NioCorp Assumed Warrants

or other outstanding Warrants will exercise their Financing Warrants, NioCorp Assumed Warrants or other outstanding Warrants,

and therefore, the amount of cash proceeds that we would receive, is, among other things, dependent upon the market price of our

Common Shares.

For so long as the market price for our Common Shares is less than the applicable exercise price of the Financing

Warrants, NioCorp Assumed Warrants or other outstanding Warrants, we believe such holders will be unlikely to exercise their Financing

Warrants, NioCorp Assumed Warrants or other outstanding Warrants.

The potential adverse effect on the prevailing market price

of our Common Shares as a result of sales of Common Shares by us or by other security holders, or the perception that such sales

may occur, could keep the market price for our Common Shares below the applicable exercise price of the Financing Warrants, the

NioCorp Assumed Warrants or other outstanding Warrants.

Accordingly, the holders of the Financing Warrants, the NioCorp Assumed

Warrants or other outstanding Warrants may not exercise their Financing Warrants, NioCorp Assumed Warrants or other outstanding

Warrants before they expire, and we may not receive any proceeds from the exercise of the Financing Warrants, the NioCorp Assumed

Warrants or other outstanding Warrants.

incurred significant debt in connection with the Transactions, including upon issuance of the Convertible Debentures, and we require

significant additional capital to operate our business.

For example, notwithstanding whether we are able to recognize the full

value of the Yorkville Equity Facility Financing Agreement or receive the cash exercise price of the Financing Warrants, the NioCorp

Assumed Warrants or other outstanding Warrants, we are obligated to repay or issue Common Shares upon settlement of the full $16.0

million aggregate principal amount of the Convertible Debentures.

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.

In addition, if the market

price of the Common Shares were to drop as a result of sales, or the perception of future sales, of Common Shares by us or by

other security holders, this might impede our ability to raise additional capital.

Our inability to obtain

financing on terms that are favorable, or at all, could have a material adverse effect on our financial condition, results of

operations and prospects.

may be a “passive foreign investment company” for the current taxable year and for one or more future taxable years,

which may result in materially adverse U.S.

federal income tax consequences for U.S.

NioCorp is a passive foreign investment company (“PFIC”) for any taxable year, or portion thereof, that is included

in the holding period of a U.S.

Holder (as defined in “Certain United States Federal Income Tax Considerations” included

in Exhibit 99.1 to the Company’s Current Report on Form 8-K to which this “Risks Related to Our Common Shares”

is filed as an exhibit) of Common Shares, such U.S.

Holder may be subject to certain adverse U.S.

federal income tax consequences

and additional reporting requirements.

NioCorp believes it was classified as a PFIC during its taxable years ended June 30, 2022

and June 30, 2021 and, based on the current composition of its income and assets, as well as current business plans and financial

expectations, may be treated as a PFIC for the taxable year in which the Transactions occurred or in future taxable years.

conclusion regarding PFIC status is a factual determination that must be made annually at the close of each taxable year and,

thus, is subject to change.

In addition, even if NioCorp concluded it did not qualify as a PFIC, it is possible that the U.S.

Internal Revenue Service (the “IRS”) could assert, and that a court could sustain, a determination that NioCorp is

Accordingly, there can be no assurance that NioCorp will not be treated as a PFIC for any taxable year.

Each holder of

Common Shares should consult its own tax advisors regarding the PFIC rules and the U.S.

federal income tax consequences of the

acquisition, ownership, and disposition of such securities.

See “Certain United States Federal Income Tax Considerations”

included in Exhibit 99.1 to the Company’s Current Report on Form 8-K to which this “Risks Related to Our Common Shares”

is filed as an exhibit for further details regarding this issue.

Transactions could result in NioCorp becoming subject to materially adverse U.S.

federal income tax consequences.

7874 and related sections of the U.S.

Internal Revenue Code of 1986, as amended (the “Code”), provide for certain

adverse tax consequences when the stock of a U.S.

corporation is acquired by a non-U.S.

corporation in certain transactions in

which former shareholders of the U.S.

corporation come to own 60% or more of the stock of the non-U.S.

corporation (by vote or

value, and applying certain specific counting and ownership rules).

These adverse tax consequences include (i) potential additional

required gain recognition by the U.S.

corporation, (ii) treatment of certain payments to the non-U.S.

corporation that reduce

gross income as “base erosion payments,” (iii) an excise tax on certain options and stock-based compensation of the

corporation, (iv) disallowance of “qualified dividend” treatment for distributions by the non-U.S.

and (v) if former shareholders of the U.S.

corporation come to own 80% or more of the stock of the non-U.S.

corporation, treatment

of the non-U.S.

corporation as a U.S.

corporation subject to U.S.

federal income tax on its worldwide income (in addition to any

tax imposed by non-U.S.

jurisdictions).

If the Transactions result in the application of any of these, or any other, adverse tax

consequences, NioCorp could incur significant additional tax costs.

While NioCorp currently does not believe the Transactions

will cause such adverse tax consequences as a result of Section 7874 and related sections of the Code, this determination is subject

to significant legal and factual uncertainty.

NioCorp has not sought and will not seek any rulings from the IRS as to the tax

treatment of any of the Transactions.

Further, there can be no assurance that your tax advisor, the IRS, or a court, will agree

with the position that NioCorp is not subject to these adverse tax consequences.

The Company recently identified additional

material weaknesses in its internal control over financial reporting.

If not remediated, the Company’s failure to establish

and maintain effective disclosure controls and procedures and internal control over financial reporting could result in material

misstatements in its financial statements and a failure to meet its reporting and financial obligations, each of which could have

a material adverse effect on the Company’s financial condition and the trading price of the Common Shares.

Our management has identified additional

material weaknesses in its internal control over financial reporting relating to its control over the design and maintenance of

an effective control environment and risk assessment process, and its monitoring controls over the timely remediation of identified

internal control weaknesses..

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial

reporting, such that there is a reasonable possibility that a material misstatement of a company’s annual or interim financial

statements will not be prevented or detected on a timely basis.

As discussed in Item Part I, Item 4, “Controls and Procedures,” of this Quarterly Report on

Form 10-Q, the Company’s management has assessed the effectiveness of its disclosure controls and procedures and concluded

that they were not effective as of March 31, 2023.

The Company is committed to remediating

its material weaknesses as promptly as possible.

Management is in the process of implementing its remediation plan.

However, there

can be no assurance as to when the material weaknesses will be remediated or that additional material weaknesses will not arise

in the future.

If the Company is unable to maintain effective internal control over financial reporting, its ability to record,

process and report financial information timely and accurately could be adversely affected, which could subject the Company to

litigation or investigations, require management resources, increase costs, negatively affect investor confidence and adversely

impact the trading price of the Common Shares.

We may face litigation and other risks as a result of

the material weaknesses in our internal control over financial reporting.

We identified material weaknesses in our

internal control over financial reporting that exist as of March 31, 2023.

As a result of such material weaknesses, the restatement

of our 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 other matters raised or that

may in the future be raised by the SEC or the Canadian securities regulators, we face potential for litigation or other disputes,

which may include, among others, claims invoking the federal and state securities laws, contractual claims or other claims arising

from the material weaknesses in our internal control over financial reporting and the preparation of our financial statements.

As of the date of this Quarterly Report on Form 10-Q, we have no knowledge of any such litigation or dispute.

However, we can provide

no assurance that such litigation or dispute will not arise in the future.

Any such litigation or dispute, whether successful or

not, could adversely affect our business, financial condition and results of operations.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1A. Risk Factors