What changed in this filing

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Item 4. Controls and Procedures

2024-11-13 compared with 2024-05-02 · 91 added, 109 removed, 2 unchanged (99% of the section changed)

CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

At the end of the period covered by this

Quarterly Report on Form 10-Q for the quarter ended March 31, 2024, an evaluation was carried out under the supervision of and

with the participation of our management, including the Chief Executive Officer (“CEO”) and the Chief Financial Officer

(“CFO”), of the effectiveness of the design and operations of our disclosure controls and procedures (as defined in

Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act).

Controls and Procedures

management of NioCorp Developments Ltd.

has evaluated, under the supervision of and with the participation of our management,

including the CEO and the Chief Financial Officer (“CFO”), the effectiveness

of the design and operations of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the

Exchange Act) as of September 30, 2024.

Based on that evaluation, the CEO and the CFO have concluded that, as of September 30,

2024, our disclosure controls and procedures were not effective due to the material weaknesses in internal control over financial

reporting described below.

Notwithstanding

the material weaknesses in our internal control over financial reporting, our CEO and CFO have concluded that the interim condensed

consolidated financial statements included in this Quarterly Report on Form 10-Q fairly present, in all material respects, our

financial position, results of operations and cash flows for the periods presented in conformity with U.S.

Weaknesses in Internal Control over Financial Reporting Existing as of September 30, 2024

management of NioCorp Developments Ltd.

is responsible for establishing and maintaining adequate internal control over financial

reporting as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act for the Company.

Management assessed the effectiveness

of our internal control over financial reporting as of September 30, 2024.

In making this assessment, our management used the

criteria set forth in the Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of

the Treadway Commission (the “COSO Framework”).

Based on that evaluation, the CEO and the CFO have concluded that,

as of the end of the period covered by this Quarterly Report on Form 10-Q, our disclosure controls and procedures were not effective

due to the material weaknesses in internal control over financial reporting described below.

The Company’s disclosure controls

and procedures have been designed to ensure that:

(i) information required to be disclosed by us in reports that we file or submit

to the SEC under the Exchange Act is recorded, processed,

summarized, and reported within the time periods specified in applicable

rules and forms and (ii) material information required to be disclosed in our reports filed under the Exchange Act is accumulated

and communicated to management, including the CEO and the CFO, as appropriate, to allow for accurate and timely decisions regarding

required disclosure.

Management does not expect that our disclosure

controls and procedures will prevent all error and all fraud.

The effectiveness of our or any system of disclosure controls and

procedures, however well designed and operated, can provide only reasonable assurance that the objectives of the system will be

met and is subject to certain limitations, including the exercise of judgment in designing, implementing, and evaluating controls

and procedures and the assumptions used in identifying the likelihood of future events.

Material Weaknesses in Internal Control

over Financing Reporting Existing as of March 31, 2024

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 our annual or interim consolidated financial statements will not be prevented or detected on a timely

Management concluded that the material

weaknesses disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2023 continued to exist

as of March 31, 2024.

Specifically, management concluded that the following material weaknesses exist as of March 31, 2024:

● Control Environment:

Management did not design and maintain an effective control environment based

on the criteria established by the Committee of Sponsoring Organizations Integrated Framework (2013) (“COSO Framework”).

Specifically, the Company does not have sufficient personnel with the appropriate levels of knowledge, experience, and training

in accounting and internal control over financial reporting commensurate with the complexity of the Company’s business.

material weakness contributed to additional material weaknesses related to the Company’s control activities as further described

● Risk Assessment:

Management did not design and maintain effective controls over the risk assessment

Specifically, management does not have a formal process to identify, update, and assess risks due to changes in the Company’s

business practices, including entering into increasingly complex transactions that could significantly impact the design and operation

of the Company’s control activities.

● Control Activities:

Management did not design and maintain effective controls, including management

review controls, related to non-routine transactions.

Specifically, management did not maintain effective controls over monitoring

and assessing the work of third-party specialists, including the evaluation of the appropriateness of accounting conclusions that

has resulted in misstatements.

In addition, the Company did not design and maintain effective controls related to the evaluation

of certain inputs and assumptions used to estimate the fair value of instruments and features associated with complex debt and

equity transactions.

Finally, management did not have policies and procedures for the reconsideration of existing agreements when

infrequent transactions occur.

● Monitoring Activities:

Management did not design and maintain effective monitoring controls to

support timely evaluation of remediation of identified internal control deficiencies.

As previously disclosed, these material

weaknesses were initially identified at various points during the fiscal year ended June 30, 2023, in connection with the Company’s

normal quarterly close and review procedures, and certain of these material weaknesses resulted in errors that required the restatement

of Company’s consolidated financial statements as of and for the fiscal years ended June 30, 2022 and 2021, as well as the

restatement of the Company’s condensed consolidated financial statements as of and for the interim periods ended September

30, 2021, December 31, 2021, March 31, 2022, September 30, 2022 and December 31, 2022.

Additionally, these material weaknesses

could result in a misstatement of the account balances or disclosures that would result in a material misstatement to the annual

or interim consolidated financial statements that would not be prevented or timely detected.

Remediation Plan for the Material Weaknesses

To address our material weaknesses existing

as of March 31, 2024, we have implemented a detailed plan to address each individual material weakness identified, as well as the

overall monitoring process, including the following:

● In order to remediate the material weaknesses relating to the Company’s control environment

and risk assessment process, the following control procedures are in the process of being implemented:

○ In consultation with our third-party advisors, we have developed and are in the process of implementing

a technical accounting policy that provides for separation of the analysis and review of identified accounting issues from the

detailed review steps to be performed by the Corporate Controller, which is being tested and evaluated for effectiveness.

this policy includes transactions related to warrants, convertible debt, debt modifications, and earnout share liabilities.

policy will be maintained to ensure that additional non-routine transactions identified in our normal course of business (as discussed

below), are included in the review process.

○ We have developed and are in the process of implementing a non-routine transactions policy to ensure

the timely identification, analysis, and monitoring of the potential non-routine transactions, which is being tested and evaluated

for effectiveness.

Further, the policy provides for third-party assistance, as needed, in the review of U.S.

GAAP issues related

to the proposed transaction.

● In order to remediate the material weakness relating to the Company’s controls activities,

we have tested and are in the process of implementing the technical accounting policy discussed above to ensure the completeness

and accuracy of identifying and adequately assessing the assumptions utilized in the valuation analysis of complex financial instruments,

which is being tested and evaluated for effectiveness.

In addition, we have engaged third-party consultants with the relevant background

and expertise to perform the appropriate complex valuation analyses under the control and oversight of Company personnel.

● In order to remediate the material weakness relating to the Company’s controls over monitoring

activities, we have developed and are in the process of implementing enhanced controls over our financial statement close and reporting

process, which are being tested and evaluated for effectiveness, and designing and implementing additional closing steps to review,

manage, and monitor our progress towards the remediation of internal control deficiencies and material weaknesses, including periodic

reporting of progress to the Audit Committee.

The process of designing and maintaining

effective internal control over financial reporting is a continuous effort that requires management to anticipate and react to

changes in our business, economic and regulatory environments and to expend significant resources.

As we continue to evaluate our

internal control over financial reporting, we may take additional actions to remediate the material weaknesses or modify the remediation

actions described above.

While we continue to devote significant

time and attention to these remediation efforts, the material weaknesses will not be considered remediated until management completes

the design and implementation of the actions described above and the controls operate for a sufficient period of time, and management

has concluded, through testing, that these controls are effective.

Changes in Internal Control over Financial Reporting

Other than as discussed above, there have

been no changes in the Company’s internal control over financial reporting during the three months ended March 31, 2024,

that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial

PART II — OTHER INFORMATION

as of September 30, 2024, our internal control over financial reporting was not effective due to the material weaknesses in internal

control over financial reporting described below.

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 our annual or interim consolidated financial statements will not be

prevented or detected on a timely basis.

concluded that the material weaknesses disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended June

30, 2024, continued to exist as of September 30, 2024.

Specifically, management identified deficiencies in the principles associated

with the control environment, risk assessment, control activities, and monitoring components of internal control, based on the

criteria established by the COSO Framework, that constitute material weaknesses, either individually or in the aggregate.

Environment :

The Company does not have sufficient personnel with the appropriate

levels of knowledge, experience, and training in accounting and internal control over

financial reporting commensurate with the complexity of the Company’s financing

transactions and associated reporting requirements.

This material weakness contributed

to additional material weaknesses further described below.

The Company does not have a formal process to identify, update, and assess

financial reporting risks due to changes in the Company’s business practices, including

entering into increasingly complex transactions that could significantly impact the design

and operation of the Company’s control activities.

Management did not maintain effective controls over:

and assessing the work of third-party specialists, including the evaluation of the appropriateness

of accounting conclusions, and

evaluation of certain inputs and assumptions used to estimate the fair value of instruments

and features associated with complex debt and equity transactions.

Management did not appropriately:

develop, and perform ongoing evaluation to ascertain whether the components of internal

controls are present and functioning, and

and communicate internal control deficiencies in a timely manner to those parties responsible

for taking corrective action.

previously disclosed, these material weaknesses resulted in errors that required the restatement of Company’s consolidated

financial statements as of and for the fiscal years ended June 30, 2022 and 2021, as well as the restatement of the Company’s

condensed consolidated financial statements as of and for the interim periods ended September 30, 2021, December 31, 2021, March

31, 2022, September 30, 2022 and December 31, 2022.

Additionally, these material weaknesses could result in a misstatement of

the account balances or disclosures that would result in a material misstatement to the annual or interim consolidated financial

statements that would not be prevented or timely detected.

Plan for the Material Weaknesses

address our material weaknesses existing as of September 30, 2024, we have implemented a detailed plan to address each individual

material weakness identified, including the following:

have, and will continue, to engage outside accounting and internal control consultants

with subject matter expertise to supplement our level of knowledge, experience, and training

in accounting and internal control over financial reporting.

plan to develop a formal risk assessment process to ensure that it is robust and frequent

enough for the Company’s business, including the identification of risks, the level

of detail in our risk assessment, and the clarity of the linkage between risks and internal

controls associated with the material weaknesses.

The results of this effort are expected

to enable us to effectively identify, develop, evolve and implement controls and procedures

to address risks.

plan to develop and provide incremental training to the accounting and financial reporting

team regarding accounting for and valuation of complex financial instruments.

will develop a monitoring program to periodically evaluate and assess whether those responsible

for controls are conducting their activities in accordance with their design, such that

there is contemporaneous evidence that the controls are present and functioning and will

communicate internal control deficiencies in a timely manner to those parties responsible

for taking corrective action.

process of designing and maintaining effective internal control over financial reporting is a continuous effort that requires

management to anticipate and react to changes in our business, economic and regulatory environments and to expend significant

As we continue to evaluate our internal control over financial reporting, we may take additional actions to remediate

the material weaknesses or modify the remediation actions described above.

we continue to devote significant time and attention to these remediation efforts, the material weaknesses will not be considered

remediated until management completes the design and implementation of the actions described above and the controls operate for

a sufficient period of time, and management has concluded, through testing, that these controls are effective.

in Internal Control over Financial Reporting

than as discussed above, there has been no change in our internal control over financial reporting during the quarter ended September

30, 2024, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

— OTHER INFORMATION

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 4. Controls and Procedures