NioDevelopments .(NB) - 2022 Q2 - Quarterly Report

PART I — FINANCIAL INFORMATION This part covers the unaudited condensed consolidated financial statements and management's discussion and analysis for NioCorp Developments Ltd ITEM 1. FINANCIAL STATEMENTS This section presents NioCorp Developments Ltd.'s unaudited condensed consolidated financial statements, including balance sheets, statements of operations, cash flows, and shareholders' equity, with detailed notes on business, accounting policies, and financial instruments Condensed Consolidated Balance Sheets Presents the unaudited condensed consolidated balance sheets as of December 31, 2021, and June 30, 2021 Condensed Consolidated Balance Sheets (in thousands of U.S. dollars) | Metric (in thousands of U.S. dollars) | Dec 31, 2021 | Jun 30, 2021 | Change | | :------------------------------------ | :----------- | :----------- | :----- | | Cash | $4,866 | $7,317 | -$2,451 | | Total current assets | $5,145 | $7,341 | -$2,196 | | Total assets | $22,254 | $24,470 | -$2,216 | | Total current liabilities | $2,534 | $3,918 | -$1,384 | | Total liabilities | $6,862 | $10,807 | -$3,945 | | Total shareholders' equity | $15,392 | $13,663 | +$1,729 | | Common shares outstanding | 264,026,990 | 256,379,931 | +7,647,059 | Condensed Consolidated Statements of Operations and Comprehensive Loss Details the unaudited condensed consolidated statements of operations and comprehensive loss for the three and six months ended December 31, 2021 and 2020 Condensed Consolidated Statements of Operations and Comprehensive Loss (in thousands of U.S. dollars) | Metric (in thousands of U.S. dollars) | 3 Months Ended Dec 31, 2021 | 3 Months Ended Dec 31, 2020 | 6 Months Ended Dec 31, 2021 | 6 Months Ended Dec 31, 2020 | | :------------------------------------ | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Total operating expenses | $3,028 | $1,213 | $4,284 | $2,276 | | Net loss | $3,458 | $1,081 | $5,418 | $2,134 | | Total comprehensive loss | $3,443 | $1,338 | $5,512 | $2,521 | | Loss per common share, basic and diluted | $0.01 | $0.00 | $0.02 | $0.01 | Condensed Consolidated Statements of Cash Flows Outlines the unaudited condensed consolidated statements of cash flows for the six months ended December 31, 2021 and 2020 Condensed Consolidated Statements of Cash Flows (in thousands of U.S. dollars) | Metric (in thousands of U.S. dollars) | 6 Months Ended Dec 31, 2021 | 6 Months Ended Dec 31, 2020 | | :------------------------------------ | :-------------------------- | :-------------------------- | | Net cash used in operating activities | $(2,958) | $(1,759) | | Net cash used in investing activities | $(16) | $0 | | Net cash provided by financing activities | $645 | $1,569 | | Change in cash and cash equivalents | $(2,451) | $(174) | | Cash and cash equivalents, end of period | $4,866 | $133 | Condensed Consolidated Statements of Shareholders' Equity Presents the unaudited condensed consolidated statements of shareholders' equity for the three and six months ended December 31, 2021 and 2020 Condensed Consolidated Statements of Shareholders' Equity (in thousands of U.S. dollars) | Metric (in thousands of U.S. dollars) | Dec 31, 2021 (6 months) | Dec 31, 2020 (6 months) | | :------------------------------------ | :---------------------- | :---------------------- | | Common Shares | $120,935 | $100,683 | | Accumulated deficit | $(104,494) | $(96,820) | | Total shareholders' equity | $15,392 | $3,121 | | Debt conversions | $4,522 | $506 | | Share-based compensation | $1,568 | $797 | Notes to Condensed Consolidated Financial Statements Provides detailed notes to the unaudited condensed consolidated financial statements, explaining accounting policies, business operations, and specific financial instrument details Note 1. Description of Business NioCorp Developments Ltd. is an exploration-stage company developing the Elk Creek Niobium/Scandium/Titanium property in Nebraska, currently generating no revenue and requiring significant capital - The Company operates in one reportable segment: exploration and development of mineral deposits in North America, specifically the Elk Creek Project in Nebraska[17] - The Company currently earns no operating revenues and requires additional capital to advance the Elk Creek Project to construction and commercial operation[19] - The Company's ability to continue as a going concern is uncertain and dependent on obtaining sufficient financing, generating profits from mineral properties, and maintaining shareholder and creditor support[19] Note 2. Basis of Preparation Unaudited interim condensed consolidated financial statements are prepared under US GAAP and SEC rules, consolidating the Company and its subsidiaries, with no material impact from ASU 2019-12 and ongoing evaluation of ASU 2020-06 - Financial statements are prepared in accordance with US GAAP and SEC rules, consolidating the Company and its wholly-owned subsidiaries[20] - The Company adopted ASU 2019-12 on July 1, 2021, with no material effect on its financial position, results of operations, or disclosures[23] - The Company is currently evaluating the potential impact of ASU 2020-06, which simplifies accounting for convertible instruments, effective for fiscal years beginning after December 15, 2021[24] Note 3. Going Concern Issues Significant net loss, accumulated deficit, and insufficient cash raise substantial doubt about the Company's ability to continue as a going concern without additional financing, exacerbated by COVID-19 Going Concern Metrics (in thousands of U.S. dollars) | Metric (in thousands of U.S. dollars) | Dec 31, 2021 | | :------------------------------------ | :----------- | | Net loss (6 months) | $5,418 | | Accumulated deficit | $104,494 | | Cash | $4,866 | - The Company's ability to continue operations is dependent on securing additional financing, which management is actively pursuing, but there is no assurance of future success[28] - The COVID-19 pandemic creates uncertainty and could adversely impact the Company's ability to obtain financing, development plans, results of operations, financial position, and cash flows[29] Note 4. Accounts Payable and Accrued Liabilities Accounts payable and accrued liabilities increased to $458 thousand as of December 31, 2021, from $408 thousand at June 30, 2021, driven by trade payables and related party interest Accounts Payable and Accrued Liabilities (in thousands of U.S. dollars) | Metric (in thousands of U.S. dollars) | Dec 31, 2021 | Jun 30, 2021 | | :------------------------------------ | :----------- | :----------- | | Accounts payable, trade | $186 | $163 | | Interest payable to related party | $104 | $40 | | Other accruals | $168 | $205 | | Total accounts payable and accrued liabilities | $458 | $408 | Note 5. Convertible Debt Convertible debt significantly decreased, with the Nordmin Note fully converted and the Lind III Convertible Security reduced to $4,262 thousand by December 31, 2021, through conversions and accretion Convertible Debt Balances (in thousands of U.S. dollars) | Metric (in thousands of U.S. dollars) | Dec 31, 2021 | Jun 30, 2021 | | :------------------------------------ | :----------- | :----------- | | Current Portion - Nordmin Note | $0 | $1,123 | | Non-Current Portion - Lind III Convertible Security | $4,262 | $6,784 | Changes in Convertible Security (in thousands of U.S. dollars) | Changes in Convertible Security (in thousands of U.S. dollars) | Lind III Convertible Security | Nordmin Note | | :----------------------------------------------------------- | :---------------------------- | :----------- | | Balance, June 30, 2021 | $6,784 | $1,123 | | Accretion expense | $828 | $49 | | Conversions | $(3,350) | $(1,172) |\ | Balance, December 31, 2021 | $4,262 | $0 | Note 6. Common Shares Details changes in stock options and warrants, with 18,315,000 options (C$0.80 W.A.E.P.) and 13,470,118 warrants (C$1.18 W.A.E.P.) outstanding as of December 31, 2021 Stock Options Activity (in C$) | Metric | Number of Options | Weighted Average Exercise Price (C$) | | :---------------------- | :---------------- | :----------------------------------- | | Balance, June 30, 2021 | 15,965,000 | 0.65 | | Granted | 3,975,000 | 1.36 | | Exercised | (1,019,616) | 0.72 | | Cancelled/expired | (605,384) | 0.84 | | Balance, Dec 31, 2021 | 18,315,000 | 0.80 | Warrants Activity (in C$) | Metric | Number of Warrants | Weighted Average Exercise Price (C$) | | :---------------------- | :----------------- | :----------------------------------- | | Balance, June 30, 2021 | 14,341,868 | 1.16 | | Exercised | (871,750) | 0.78 | | Balance, Dec 31, 2021 | 13,470,118 | 1.18 | Note 7. Related Party Transactions and Balances The Smith Credit Facility with CEO Mark Smith has $2,000 thousand principal outstanding as of December 31, 2021, with maturity extended to June 30, 2022, and $104 thousand accrued interest - The Smith Credit Facility with CEO Mark Smith has a principal amount outstanding of $2,000 thousand as of December 31, 2021[36] - The maturity date for the Smith Credit Facility was extended from December 15, 2021, to June 30, 2022[36] - Accrued interest of $104 thousand payable under the Smith Credit Facility was included in accounts payable and accrued liabilities as of December 31, 2021[37] Note 8. Exploration Expenditures Exploration expenditures significantly increased to $1,112 thousand for the six months ended December 31, 2021, from $414 thousand in the prior year, driven by metallurgical development, field management, and technical studies Exploration Expenditures (in thousands of U.S. dollars) | Category | 3 Months Ended Dec 31, 2021 | 3 Months Ended Dec 31, 2020 | 6 Months Ended Dec 31, 2021 | 6 Months Ended Dec 31, 2020 | | :---------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Technical studies and engineering | $84 | $0 | $134 | $0 | | Field management and other | $157 | $148 | $281 | $330 | | Metallurgical development | $150 | $41 | $586 | $84 | | Geologists and field staff | $100 | $0 | $111 | $0 | | Total | $491 | $189 | $1,112 | $414 | Note 9. Leases Net lease costs for the six months ended December 31, 2021, were $42 thousand, a decrease from $56 thousand in the prior year, with total lease payments due of $161 thousand Net Lease Cost (in thousands of U.S. dollars) | Metric | 3 Months Ended Dec 31, 2021 | 3 Months Ended Dec 31, 2020 | 6 Months Ended Dec 31, 2021 | 6 Months Ended Dec 31, 2020 | | :-------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net lease cost | $17 | $28 | $42 | $56 | Lease Maturities (in thousands of U.S. dollars) | Fiscal Year | Lease Maturities (in thousands of U.S. dollars) | | :---------------- | :--------------- | | 2021 | $46 | | 2022 | $92 | | 2023 and thereafter | $23 | | Total lease payments | $161 | | Present value of lease payments | $142 | Note 10. Fair Value Measurements Financial assets and liabilities are measured at fair value, with cash and equity securities as Level 1 inputs, and the Lind III Convertible Security's fair value approximates carrying value using Level 3 inputs Fair Value Measurements (in thousands of U.S. dollars) | Asset | Dec 31, 2021 Total | Dec 31, 2021 Level 1 | Jun 30, 2021 Total | Jun 30, 2021 Level 1 | | :------------------------ | :----------------- | :------------------- | :----------------- | :------------------- | | Cash and cash equivalents | $4,866 | $4,866 | $7,317 | $7,317 | | Equity securities | $11 | $11 | $16 | $16 | | Total | $4,877 | $4,877 | $7,333 | $7,333 | - The Lind III Convertible Security was initially recorded at fair value using a Level 3 input, and its estimated fair value approximates carrying value as of December 31, 2021[45] ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Management discusses the Company's financial condition, results of operations, and future outlook, focusing on the Elk Creek Project, financing challenges, and COVID-19 impact Note Regarding Forward Looking Statements The report contains forward-looking statements about future operations, financial resources, and exploration, subject to risks including going concern, capital requirements, and commodity price volatility - The report contains forward-looking statements regarding anticipated results, planned exploration, financial resources, and future events, identified by words like "expects," "anticipates," "believes," and "intends"[49] - Forward-looking statements are subject to risks and uncertainties, including the ability to operate as a going concern, the need for significant additional capital, limited operating history, and cost increases for projects[50] - The Company does not assume any obligation to update forward-looking statements unless required by law, and investors should not place undue reliance on them[52] Company Overview NioCorp is developing the Elk Creek Project in Nebraska, an advanced Niobium/Scandium/Titanium and Rare Earths exploration project, aiming for commercial production through additional funding for development and operation - NioCorp is developing the Elk Creek Project in southeast Nebraska, an advanced Niobium/Scandium/Titanium and Rare Earths exploration project[55] - Niobium, Scandium, Titanium, and Rare Earths are critical for various high-performance applications, including aerospace, HSLA steel, fuel cells, and permanent magnets[55] - The primary business strategy is to advance the Elk Creek Project to commercial production by obtaining additional funds for mine development, construction, commissioning, and operation[56] Emerging Growth Company Status The Company qualifies as an "emerging growth company" but will lose this status on June 30, 2022, opting out of extended accounting transition periods and becoming subject to Section 14A(a) and (b) of the Exchange Act - NioCorp qualifies as an "emerging growth company" but will lose this status on June 30, 2022[57] - The Company has elected to opt out of the extended transition period for complying with new or revised financial accounting standards[58] - Upon losing emerging growth company status, the Company will become subject to Section 14A(a) and (b) of the Exchange Act (shareholder advisory votes on executive compensation) but will remain exempt from Section 404(b) of Sarbanes-Oxley (auditor attestation on internal controls) as long as it is not a large or accelerated filer[58] COVID-19 Impact The COVID-19 pandemic creates significant uncertainty, impacting project funding timelines and increasing the risk of insufficient capital, with unpredictable effects on business plans and liquidity - The COVID-19 pandemic continues to create uncertainty regarding project funding timelines and has heightened the risk of being unable to secure sufficient additional capital[60] - The full extent of the pandemic's impact on the business is highly uncertain and unpredictable, depending on factors like duration, severity, containment actions, vaccine effectiveness, and economic recovery[59] - The Company believes the pandemic could adversely impact its ability to obtain financing, development plans, results of operations, financial position, and cash flows during the current fiscal year[59] Recent Corporate Events Key corporate events include executive changes and the filing of a US $200 million shelf registration statement on Form S-3 for future securities offerings - John F. Ashburn, Jr. retired as VP, General Counsel, and Corporate Secretary, with Neal S. Shah appointed as Corporate Secretary[61] - The Company filed and had declared effective a US $200 million shelf registration statement on Form S-3, allowing flexibility to offer and sell securities in the U.S.[62] Elk Creek Project Update NioCorp is advancing the Elk Creek Project through metallurgical testing for Rare Earth recovery, updating Mineral Resources with REE grades, securing a construction air permit extension, and engaging consultants for mine cost estimation and ESG program development - Metallurgical testing by L3 Process Development demonstrated process alternatives to HCl leach and the ability to selectively reject non-pay metals, facilitating efficient extraction of all pay metals, including REEs[64] - L3 demonstrated that Scandium can be effectively extracted and separated from REEs using a phosphate-based extractant, and REEs (including magnetic REEs) can be selectively extracted using an amide-based extractant[73] - The Company is analyzing historic drill core samples to compile data for an updated Mineral Resource that includes individual REE grades and tonnage, with assay results completed on 1,094 samples[66][68][71] - The Nebraska Department of Environment and Energy granted an extension until April 4, 2022, for initiating construction under the current air permit[70] - NioCorp engaged Cementation US, Inc. for detailed cost estimates and optimization studies for the underground mine design, and Olsson to assist with an Equator Principles program for ESG practices[72][73] Other Activities Long-term financing efforts continue, with future activities contingent on funding, including securing permits, evaluating Rare Earth production, negotiating EPC agreements, and constructing infrastructure - Long-term financing efforts are ongoing, but the COVID-19 pandemic continues to impact funding timelines[74] - Planned future activities, contingent on funding, include securing federal, state, and local permits, evaluating Rare Earth production, negotiating engineering, procurement, and construction agreements, and completing detailed engineering for the Elk Creek Project[76] - Other planned activities include constructing natural gas and electrical infrastructure, completing water supply agreements, initiating revised mine groundwater investigation, procuring long-lead equipment, and operating a small-scale demonstration plant[76] Financial and Operating Results The Company reported no mining revenues and a net loss of $5,418 thousand for the six months ended December 31, 2021, primarily due to higher operating expenses and increased interest expense Financial and Operating Results (in thousands of U.S. dollars) | Metric | 6 Months Ended Dec 31, 2021 | 6 Months Ended Dec 31, 2020 | | :-------------------------- | :-------------------------- | :-------------------------- | | Total operating expenses | $4,284 | $2,276 | | Net Loss | $5,418 | $2,134 | | Employee-related costs | $1,551 | $1,005 | | Professional fees | $514 | $193 | | Exploration expenditures | $1,112 | $414 | | Other operating expenses | $1,107 | $664 | | Interest expense | $980 | $258 | Six months ended December 31, 2021 compared to six months ended December 31, 2020 Operating expenses significantly increased due to higher share-based compensation, increased legal services for SEC filings, and higher costs for comminution testing, process optimization, and REE resource updates, alongside rising interest expense - Employee-related costs increased due to higher share-based compensation costs, reflecting increased Common Share values in the Black Scholes model[76] - Professional fees increased primarily due to legal services related to SEC filings, including the Form S-3 shelf registration statement[77] - Exploration expenditures increased due to costs for high-pressure grinding rolls comminution testing, process optimization, demonstration plant EPC efforts, Equator Principles program development, and efforts to update the mineral resource with REEs[78] - Interest expense increased due to the accretion of the Nordmin Note (issued Dec 2020) and the Lind III Convertible Security (issued Feb 2021)[82] Three months ended December 31, 2021 compared to three months ended December 31, 2020 The increase in net loss for the three months ended December 31, 2021, mirrored the factors driving the six-month changes, primarily higher operating expenses and interest costs - The increase in net loss for the three months ended December 31, 2021, was primarily due to the same factors affecting the six-month changes, including increased operating expenses and interest expense[83] Liquidity and Capital Resources The Company, with no revenue-generating operations, relies on equity sales and debt for funding, holding $4.9 million cash and a $2.6 million working capital surplus as of December 31, 2021, but requires $1.0 million to $2.0 million additional funds, raising substantial doubt about its going concern ability - The Company has no revenue-generating operations and relies on equity sales, convertible securities, and related party loans for funding[84] Liquidity and Capital Resources (in millions of U.S. dollars) | Metric | Dec 31, 2021 | Jun 30, 2021 | | :---------------------- | :----------- | :----------- | | Cash | $4.9 | $7.3 | | Working capital surplus | $2.6 | $3.4 | - Current planned operational needs are approximately $6.5 million until June 30, 2022, with an anticipated need for an additional $1.0 million to $2.0 million to advance the project[86][87] - Substantial doubt exists about the Company's ability to continue as a going concern due to insufficient cash, ongoing losses, and the uncertainty of securing additional financing, exacerbated by the COVID-19 pandemic[90] Operating Activities (Cash Flow) Cash used in operating activities increased to $3.0 million for the six months ended December 31, 2021, from $1.8 million in the prior year, primarily due to higher losses and increased Elk Creek Project spending Operating Activities Cash Flow (in millions of U.S. dollars) | Metric | 6 Months Ended Dec 31, 2021 | 6 Months Ended Dec 31, 2020 | | :------------------------------------ | :-------------------------- | :-------------------------- | | Net cash used in operating activities | $3.0 | $1.8 | | Net loss for the period | $5.4 | $2.1 | - The increase in cash used in operating activities was due to higher losses and increased spending at the Elk Creek Project, along with a prepayment for process optimization testing[93] Financing Activities (Cash Flow) Financing inflows decreased to $0.6 million for the six months ended December 31, 2021, from $1.6 million in the prior year, mainly due to timing of warrant/option exercises and related party debt repayments Financing Activities Cash Flow (in millions of U.S. dollars) | Metric | 6 Months Ended Dec 31, 2021 | 6 Months Ended Dec 31, 2020 | | :------------------------------------ | :-------------------------- | :-------------------------- | | Net cash provided by financing activities | $0.6 | $1.6 | - The decrease in financing inflows was primarily due to the timing of warrant and option exercises and related party debt repayments[94] Cash Flow Considerations The Company relies on debt and equity financings, but COVID-19 creates funding uncertainty, requiring substantial additional capital for the Elk Creek Project's development and construction, with no assurance of acceptable financing terms - The Company historically relies on debt and equity financings, but the COVID-19 pandemic creates uncertainty for future funding[95] - Development and construction of the Elk Creek Project will require substantial additional capital resources, including near-term and ultimate funding for construction and other costs[98] - There is no assurance that additional financing will be available on acceptable terms, and a lack of funding would require the Company to reduce its planned activities[95][88] Contractual Obligations No material changes to contractual obligations were reported since June 30, 2021, except for reductions in convertible debt and extension of the related party credit facility - No material changes to contractual obligations were reported, other than reductions in convertible debt balances (Note 5) and the extension of the related party credit facility (Note 7)[99] Off-Balance Sheet Arrangements The Company has no off-balance sheet arrangements - The Company has no off-balance sheet arrangements[100] Critical Accounting Policies No material changes in critical accounting policies were reported since June 30, 2021 - No material changes in critical accounting policies were reported since June 30, 2021[101] Certain U.S. Federal Income Tax Considerations The Company expects to continue as a "passive foreign investment company" (PFIC) for U.S. federal income tax purposes, advising U.S. shareholders to consult their tax advisors - The Company has been and expects to continue to be a "passive foreign investment company" (PFIC) for U.S. federal income tax purposes[102] - Current and prospective U.S. shareholders should consult their tax advisors regarding the tax consequences of PFIC classification[102] Other (Fully Diluted Shares) As of February 4, 2022, the Company had 264,903,954 common shares outstanding on a fully-diluted basis, including stock options, warrants, and convertible debt Fully Diluted Shares | Instrument | Number of Shares | | :---------------- | :--------------- | | Common Shares | 264,903,954 | | Stock options | 18,315,000 | | Warrants | 13,470,118 | | Convertible Debt | 9,044,100 | ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company is exposed to market risks including interest rate risk on cash, foreign currency exchange risk from U.S. and Canadian dollar expenditures, and commodity price risk related to Elk Creek Project elements, holding no commodity derivatives Interest rate risk The Company's interest rate risk primarily relates to earned interest income on cash deposits and short-term investments, balancing liquidity with returns - The Company's exposure to interest rate risk relates primarily to earned interest income on cash deposits and short-term investments[105] Foreign currency exchange risk The Company incurs expenditures in both U.S. and Canadian dollars, leading to foreign currency exchange risk, mitigated by maintaining sufficient Canadian dollar cash balances for near-term needs - The Company incurs expenditures in both U.S. and Canadian dollars, leading to foreign currency exchange fluctuations impacting operating costs[106] - To reduce foreign currency risk, the Company maintains sufficient cash balances in Canadian dollars to fund expected near-term expenditures[106] Commodity price risk The Company is exposed to commodity price risk related to Elk Creek Project elements (Niobium, Scandium, Titanium, Rare Earths), where decreased global demand could materially affect the business, with no commodity derivatives currently held - The Company is exposed to commodity price risk related to the elements associated with the Elk Creek Project (Niobium, Scandium, Titanium, Rare Earths)[107] - A significant decrease in global demand for these elements may have a material adverse effect on the business[107] - The Elk Creek Project is not in production, and the Company does not currently hold any commodity derivative positions[107] ITEM 4. CONTROLS AND PROCEDURES Management, including the CEO and CFO, concluded the Company's disclosure controls and procedures were effective as of December 31, 2021, ensuring timely and accurate reporting, with no material changes in internal control Disclosure Controls and Procedures The CEO and CFO concluded that the Company's disclosure controls and procedures were effective as of December 31, 2021, ensuring accurate and timely reporting of information required for SEC filings - The CEO and CFO concluded that the Company's disclosure controls and procedures were effective as of December 31, 2021[108] - These controls ensure information for SEC reports is recorded, processed, summarized, and reported within specified time periods, and material information is communicated to management for timely disclosure decisions[108] Changes in Internal Control over Financial Reporting No material changes in the Company's internal control over financial reporting occurred during the three months ended December 31, 2021 - No material changes in the Company's internal control over financial reporting occurred during the three months ended December 31, 2021[110] PART II — OTHER INFORMATION This part provides additional information including legal proceedings, risk factors, equity sales, mine safety, and exhibits ITEM 1. LEGAL PROCEEDINGS The Company is not aware of any material active or pending legal proceedings against it, nor is it involved as a plaintiff in material litigation, with no adverse interests from directors or officers - The Company is not aware of any material, active, or pending legal proceedings against it[112] - No directors, officers, affiliates, or shareholders have a material interest adverse to the Company in any proceedings[112] ITEM 1A. RISK FACTORS No changes to the risk factors previously disclosed in the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2021, were reported - No changes to the risk factors were reported since the Annual Report on Form 10-K for the fiscal year ended June 30, 2021[113] ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS The Company issued 343,101 common shares for $298,664 in October and December 2021 through voluntary conversion of a portion of the Nordmin Note Unregistered Sales of Equity Securities | Date | Conversion Amount (U.S. dollars) | Shares Issued | Conversion Price/Share (C$) | | :--------------- | :---------------- | :------------ | :-------------------------- | | October 21, 2021 | $127,043 | 171,252 | 0.9146 | | December 21, 2021 | $171,621 | 171,849 | 1.2925 | - Common Shares were issued pursuant to Section 3(a)(9) of the Securities Act, in connection with the voluntary conversion of a portion of the Nordmin Note[114] ITEM 3. DEFAULTS UPON SENIOR SECURITIES No defaults upon senior securities were reported - No defaults upon senior securities were reported[116] ITEM 4. MINE SAFETY DISCLOSURES The Company and its subsidiaries were not subject to MSHA regulation under the Mine Act during the three months ended December 31, 2021, thus no mine safety disclosure is required - The Company and its subsidiaries were not subject to MSHA regulation under the Mine Act during the three months ended December 31, 2021[117] - No mine safety disclosure is required under Section 1503(a) of the Dodd-Frank Act[117] ITEM 5. OTHER INFORMATION No other information was reported in this section - No other information was reported[118] ITEM 6. EXHIBITS This section lists the exhibits filed with the Form 10-Q, including various agreements, certifications, and XBRL financial data - Exhibits include the Amending Agreement to Smith Credit Agreement, Amendment 1 to Convertible Security Funding Agreement, CEO and CFO certifications, and Inline XBRL financial data[120][121] SIGNATURES This section contains the official signatures for the report - The report was signed by Mark A. Smith (President, CEO, Executive Chairman) and Neal Shah (CFO) on February 4, 2022[124]