ITEM 1A. RISK FACTORS.
Not applicable.
ITEM 1B. UNRESOLVED STAFF COMMENTS.
Not applicable.
ITEM 2. PROPERTIES.
The Company maintains its corporate offices at 9 East
Park Court, Old Bethpage, New York 11804, the home of its office manager/bookkeeper, and its main corporate telephone number is (516)
586-5643.
We are the sole owner of five United States patents.
Additionally, Bion has two United States patent applications pending and has three international patent applications currently pending.
(See Item 1, “Patents” above).
ITEM 3. LEGAL PROCEEDINGS.
The Company is currently involved in no litigation
matters except:
A: Website: Domain Sale/Resolved Litigation/Hacking/Theft
On March 23, 2022 the Company entered into an
agreement to sell domain name <biontech.com> and other related assets to BioNTech SE (“BNTX”) for the sum of $950,000
(before expenses related to the transaction) which sale was closed/completed on April 2, 2022 with a one-time gain of $902,490. The Company
has been using www.bionenviro.com as its primary website (and domain) since July 2021 due to the events described below. The
Company has not been using biontech.com as its primary website since July 2021 so domain name <biontech.com> no longer
represented a core asset of the Company.
As previously reported, on Saturday morning, July
17, 2021, our historical website domain – biontech.com – and email services were compromised and disabled. Research
indicated that an unknown party had ‘hijacked’ the domain in a theft attempt. On September 10, 2021, the Company filed a federal
lawsuit ‘in rem’ to recover the <biontech.com> domain and the unknown ‘John Doe’ who hacked and attempted
to steal the website. The litigation was filed in the United States District Court for the Eastern District of Virginia, Alexandria Division
under the heading ‘Bion Environmental Technologies, Inc., Plaintiff, vs John Doe and <biontech.com>, Defendants’ (Case
No. 1:21-cv-01034), seeking recovery of the domain name and other relief as set forth therein.
On November 19, 2021, the United States District Court
for the Eastern District of Virginia, Alexandria Division issued an order stating that “... ORDERED, ADJUDGED and Decreed that
plaintiff Bion Environmental Technologies, Inc. (‘plaintiff) Is the lawful owner of domain name <biontech.com> ....”
under the heading ‘Bion Environmental Technologies, Inc., Plaintiff, vs John Doe and <biontech.com>, Defendants’ (Case
No. 1:21-cv-01034). The Company has moved the domain name <biontech.com> to a new registrar and reactivated it for the Company’s
use (paired currently with its current bionenviro.com website).
No shareholder, sensitive or confidential information
was available to be breached which has limited damages from the hack/theft to date. However, the Company’s email operations were
subject disruption and expenses were incurred related to the matter including legal fees.
The Company created ‘work-arounds’
as a result. These issues have been resolved and the Company has moved our website (and email) to a new domain: bionenviro.com. Website
access is now www.bionenviro.com. To send emails to Bion personnel, one uses the same name identifier previously used, but in the
address, substitute ‘bionenviro.com’ for “biontech.com’: For example cscott@biontech.com (no longer functional)
is cscott@bionenviro.com and mas@biontech.com (no longer functional) is now mas@bionenviro.com.
B: Pennvest Loan and Dissolution of Bion PA1, LLC (“PA1”)
PA1, the Company’s wholly-owned subsidiary,
was dissolved on December 29, 2021 on which date it owed approximately $10,010,000 under the terms of the Pennvest Loan related to the
construction of the Kreider 1 System including accrued interest and late charges totaling $2,255,802 as of that date. Through the date
of the dissolution, PA1 was a wholly-owned subsidiary of the Company and its assets and liabilities were included on the Company’s
consolidated balance sheets. At September 30, 2021, PA1’s total assets were $297 and its total liabilities were $10,154,334 (including
the Pennvest Loan in the aggregate amount of $9,939,148, accounts payable of $214,235 and accrued liabilities of $950) which sums were
included in the Company’s consolidated balance sheets in its Form 10-Q for the quarter ended September 30, 2021. Subsequent to the
dissolution of PA1, its assets and liabilities are no longer consolidated and included in the Company’s balance sheets. As of December
29, 2021, PA1’s total assets were nil and its total liabilities were $10,234,501 (including the Pennvest Loan in the aggregate amount
of $10,009,802, accounts payable of $212,263 and accrued liabilities of $12,436. The net amount of $10,234,501 was recognized as a gain
on the legal dissolution of a subsidiary in other (income) expense.
As background, the terms of the Pennvest Loan provided
for funding of up to $7,754,000 which was to be repaid by interest-only payments for three years, followed by an additional ten-year amortization
of principal. The Pennvest Loan accrued interest at 2.547% per annum for years 1 through 5 and 3.184% per annum for years 6 through maturity.
The Pennvest Loan required minimum annual principal payments of approximately $5,886,000 in fiscal years 2013 through 2021, and $846,000
in fiscal year 2022, $873,000 in fiscal year 2023 and $149,000 in fiscal year 2024. The Pennvest Loan was collateralized by PA1’s
Kreider 1 System and by a pledge of all revenues generated from Kreider 1 including, but not limited to, revenues generated from nutrient
reduction credit sales and by-product sales. In addition, in consideration for the excess credit risk associated with the project, Pennvest
was entitled to participate in the profits from Kreider 1 calculated on a net cash flow basis, as defined. The Company has incurred
interest expense related to the Pennvest Loan of $123,444 and $246,887 for the years ended June 30, 2022 and 2021, respectively. Based
on the limited development of the depth and breadth of the Pennsylvania nutrient reduction credit market, PA1 commenced discussions and
negotiations with Pennvest related to forbearance and/or re-structuring the obligations under the Pennvest Loan during 2013. In the context
of such negotiations, PA1 elected not to make interest payments to Pennvest on the Pennvest Loan since January 2013. Additionally, the
PA1 did not make any principal payments, which were to begin in fiscal 2013, and, therefore, the Company classified the Pennvest Loan
as a current liability through the dissolution of PA1 on December 29, 2021.
During August 2012, the Company provided Pennvest
(and the PADEP) with data demonstrating that the Kreider 1 system met the ‘technology guaranty’ standards which were incorporated
in the Pennvest financing documents and, as a result, the Pennvest Loan has been solely an obligation of PA1 since that date. Note, however,
the Company’s consolidated balance sheets as of June 30, 2021 reflects the Pennvest Loan as a liability of $9,868,495 despite the
fact that the obligation (if any) was solely an obligation of PA1.
On September 25, 2014, the Pennsylvania Infrastructure
Investment Authority (“Pennvest”) exercised its right to declare the PA1’s Pennvest Loan in default, accelerated the
Pennvest Loan and demanded that PA1 pay $8,137,117 (principal, interest plus late charges) on or before October 24, 2014. PA1 did not
make the payment and did/does not have the resources to make the payments demanded by Pennvest. PA1 commenced discussions and negotiations
with Pennvest concerning this matter but Pennvest rejected PA1’s proposal made during the fall of 2014. PA1 made a final proposal
to Pennvest during September 2021 which proposal was also rejected by Pennvest. PA1 provided Pennvest with its financial statements (which
include a description of system status) annually. During the 2021 fiscal year, Pennvest’s auditors requested a ‘corrective
action plan’ and PA1 informed Pennvest that “... there is no viable corrective action plan for the Pennvest Loan (‘Loan’).
The facility funded by the Loan has been shut down for many years (which has been disclosed in the annual financial reports to Pennvest
and in public filings by the parent of Bion PA 1, LLC) and the technology utilized in the facility is now obsolete. The facility has not
been commercially operated for approximately six years and has generated zero income. We recommend that Pennvest take appropriate steps
to remove and sell the equipment.” Pennvest responded favorably to the approach of selling the equipment.
On December 29, 2021, the Company approved and executed
a ‘Consent of the Sole Member of Bion PA 1’ (the “Consent to Dissolution”) that authorized the complete liquidation
and dissolution of PA1. A Statement of Dissolution was filed by PA1 with the Colorado Secretary of State on December 29, 2021. The Company
is of the understanding that the liquidation value of Bion PA 1’s property is substantially below the current amount outstanding
under the Funding Agreement dated October 27, 2010 by and between PA1 and Pennvest, the only known secured creditor of PA1. Post-dissolution,
PA1’s activities will be limited entirely to activities required to properly distribute its net assets to creditors and wind down
its business.
PA1 and Pennvest agreed to have the equipment sold
by a third party auctioneer who arranged for the sale of its property and delivery of all proceeds (net of commissions and customary
costs of sale) to Pennvest. The auction took place during the period between May 13-18, 2022. The Company’s personnel assisted PA1
with this process as needed at no cost to PA1. The net sum of $104,725 was realized from the asset sale, which sum was delivered
to Pennvest on June 15, 2022. The remaining unsold assets will be transferred to Kreider Farms during the next quarter in order to complete
the winding up of the Kreider 1 project.
Upon the complete distribution of all assets of PA1,
whether by transfer or sale and distribution of net proceeds as provided above, PA1 will use commercially reasonable efforts to cause
the cessation of all activities. No distributions of PA1’s assets will be made to the Company or its affiliates. The Consent to
Dissolution authorized Mark A. Smith, the Company’s President and the sole manager of PA1, to cause to be delivered for filing the
Statement of Dissolution, to give notice of the dissolution, and to take any other act necessary to wind up and liquidate the business.
PA1 has made no payments to vendors or other creditors
in connection with the dissolution. No distributions or payments of any kind have ever been made to the Company, the sole member of PA1
since inception and no payment will be made to the Company or any affiliate in connection with the dissolution.
For more information regarding the history and background
of the Pennvest Loan and PA1, please review our Form’s 10-K for the years from 2008 through 2021 including the Notes to the Financial
Statements included therein.
The Company currently is not involved in any other material litigation
or similar events.
ITEM 4. MINE SAFETY DISCLOSURES.
None.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY,
RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
(a) Market Information
Our common stock is quoted on the Over-The-Counter
Electronic Bulletin Board under the symbol "BNET." The following quotations reflect inter dealer prices, without
retail mark up, markdown or commissions and may not represent actual transactions.
Fiscal Year Ended June 30, High Low High Low
(b) Holders
The number of holders of record of our common stock
at September 1, 2023 was approximately 1,300. Many of our shares of common stock are held by brokers and other institutions on behalf
of stockholders, so we are unable to estimate the number of stockholders represented by these record holders.
The transfer agent for our common stock is Equiniti,
3200 Cherry Creek Drive South, Suite 430, Denver, Colorado 80209.
(c) Dividends
We have never paid any cash dividends on our common
stock. Our board of directors does not intend to declare any cash dividends in the foreseeable future, but instead intends to retain earnings,
if any, for use in our business operations. The payment of dividends, if any, in the future is within the discretion of the board of directors
and will depend on our future earnings, if any, our capital requirements and financial condition, and other relevant factors.
No preferred shares are outstanding at this time.
During fiscal year 2023 the Company paid an aggregate dividend of $0 cash, respectively, on shares of Series B Preferred Stock and Series
C Preferred Stock which were outstanding during the year. A dividend of $1,000 was accrued on Series B Preferred Stock during the 2022
fiscal year. From July 1, 2014, the Company had 200 shares of Series B redeemable convertible Preferred stock outstanding with a par value
of $0.01 per share, convertible at the option of the holder at $2.00 per share, with dividends accrued and payable at 2.5% per quarter.
The Series B Preferred stock was mandatorily redeemable at $100 per share by the Company three years after issuance and accordingly was
classified as a liability. The 200 shares have reached their maturity date and the Company approved the redemption of the Series B preferred
stock during the quarter ended December 31, 2021 and the final 200 shares of Series B redeemable convertible Preferred stock were redeemed
for $41,000, which included the $21,000 in accrued dividend payable.
(d) Securities Authorized for Issuance Under
Equity Compensation Plans
In June 2006 the Company adopted its 2006 Consolidated
Incentive Plan, as amended ("Plan"), which terminated all prior plans and merged them into the Plan. The Plan was ratified
by the Company's shareholders in October 2006 (and has been amended multiple times since initial ratification). Under the Plan,
Directors may grant Shares, Options, Stand Alone Stock Appreciation Rights ("SAR's"), shares of Restricted Stock, shares of
Phantom Stock and Stock Bonuses and other items with respect to a number of Common Shares that in the aggregate does not exceed 36,000,000
shares. The maximum number of Common Shares for which Incentive Awards, including Incentive Stock Options, may be granted to any one Participant
shall not exceed 2,000,000 shares in any one calendar year; and the total of all cash payments to any one participant pursuant to the
Plan in any calendar year shall not exceed $1,500,000. As of June 30, 2023 12,006,600 options have been granted and outstanding under
the Plan (as amended), including all options granted under prior merged plans, and were merged into the 2021 Equity Incentive Plan. As
of June 30, 2023, the Company had no outstanding contingent Stock Bonuses.
In December 2021 the Company adopted its 2021 Equity
Incentive Plan, as amended ("2021 Equity Plan"). The 2021 Equity Plan was ratified by the Company's shareholders in April
2022. Under the 2021 Equity Plan, Directors may grant Shares, Options, Stand Alone Stock Appreciation Rights ("SAR's"),
shares of Restricted Stock, shares of Phantom Stock and Stock Bonuses and other items with respect to a number of Common Shares that in
the aggregate does not exceed 30,000,000 shares. The maximum number of Common Shares for which Incentive Awards, including Incentive Stock
Options, may be granted to any one Participant shall not exceed 2,500,000 shares in any one calendar year. As of June 30, 2022 nil options
have been granted and outstanding under the 2021 Equity Plan. As of June 30, 2023, the Company had no outstanding contingent Stock
Bonuses.
Equity Compensation Plan Information
The following table summarizes share and exercise
price information about the Company’s 2006 equity compensation plans as of June 30, 2023:
2006 Equity Compensation Plan table
Equity compensation plans not approved by security holders — — —
(e) Recent Sales of Unregister Securities
During the year
ended June 30, 2023 the Company entered into subscription agreements to sell units for $1.00 per unit, with each unit consisting of one
share of the Company’s restricted common stock and one warrant to purchase on share of the Company’s restricted common stock
for $1.25 per share with an expiry date of 12/31/2023, and pursuant thereto, the Company issued 346,230 units for total proceeds of $346,230.
During the year
ended June 30, 2023 the Company entered into subscription agreements to sell shares for $1.00 per share and pursuant thereto, the Company
issued 2,000,000 of the Company’s restricted common stock for total proceeds of $2,000,000.
During the year
ended June 30, 2023 the Company entered into subscription agreements to sell units for $1.60 per unit, with each unit consisting of one
share of the Company’s restricted common stock and one-half warrant to purchase shares of the Company’s restricted common
stock for $2.40 per share with an expiry date of 6/30/2024 and pursuant thereto, the Company issued 975,000 units for total proceeds of
$1,560,000, net proceeds of $1,473,600 after commissions of $86,400.
During the year
ended June 30, 2023, 175,114 warrants wee exercised to purchase 175,114 shares of the Company’s common stock at $0.75 per share
for total proceeds of $131,335.
During the year
ended June 30, 2023 Mark Smith elected to convert $50,000 of his 2020 Convertible Obligation into 100,000 units at $0.50 per unit (pursuant
to the 2006 Consolidated Incentive Plan) with each unit consisting of one share of common stock and one warrant to purchase one share
of the Company’s stock for $0.75 per share until 12/31/2024.
During the year ended June 30, 2023 Mark Smith elected to convert $99,889 of his Adjusted 2020 Convertible Obligation into 1,055,906 units
at $0.0946 per unit (pursuant to the 2006 Consolidated Incentive Plan) with each unit consisting of one share of common stock and one
warrant to purchase one share of the Company’s stock for $0.75 per share until March 2026.
During the year ended June 30, 2023 Mark Smith elected to convert $36,573 of his Adjusted 2020 Convertible Obligation into 386,608
units at $0.0946 per unit (pursuant to the 2006 Consolidated Incentive Plan) with each unit consisting of one share of common stock and
one warrant to purchase one share of the Company’s stock for $0.75 per share until March 2026.
During
the year ended June 30, 2023 the Company issued 82,259 shares for services of $130,000.
During the year ended June
30, 2022, 2,315,550 warrants were exercised to purchase 2,315,550 shares of the Company’s common stock at $0.75 per share for total
proceeds of $1,736,662, net proceeds of $1,718,061 after commissions of $18,601.
During the year
ended June 30, 2022, Smith elected to convert accounts payable of $17,711 into an aggregate of 35,424 units at $0.50 per unit (pursuant
to the 2006 Consolidated Incentive Plan) with each unit consisting of one share of the common stock and one warrant to purchase one share
of the Company’s stock for $0.75 per share until December 31, 2024.
During the year
ended June 30, 2022, the Company issued 25,000 units at $1.10 per until for services of $27,500.
During the year ended June 30, 2021, the Company entered
into subscription agreements, under three different offerings, to sell units for $0.50 per unit, with each unit consisting of one share
of the Company’s restricted common stock and one warrant to purchase one share of the Company’s restricted common stock for
$0.75 per share with an expiry date of December 31, 2021 and pursuant thereto, the Company issued 3,720,000 units for total proceeds of
$1,860,000, net proceeds of $1,699,000 after commissions of $161,000.
During the year ended June 30, 2021 300,000 shares
of the Company’s restricted company stock were sold to an investor for $300,000.
During the year ended June 30, 2021, 129,364 shares
of its unregistered common stock were issued as commissions.
During the year ended June 30, 2021, the company issued
1,186,824 units to various employees/consultants upon the conversion of debt pursuant to the 2006 Consolidated Incentive Plan with
each unit consisting of one share of the common stock and one warrant to purchase one share of the Company’s stock for $0.75 per
share until June 30, 2023.
During the year ended June 30, 2021, Mark Smith elected
to convert deferred compensation, accrued interest and accounts payable of $124,698, $3,342 and $52,360 respectively into an aggregate
of 360,805 units at $0.50 per unit, pursuant to the 2006 Consolidated Incentive Plan with each unit consisting of one share of the common
stock and one warrant to purchase one share of the Company’s stock for $0.75 per share until December 31, 2024.
During the year ended June 30, 2021, the Company issued
144,000 units to Mr. Smith for salary of $72,000, pursuant to the 2006 Consolidated Incentive Plan with each unit consisting of one share
of the common stock and one warrant to purchase one share of the Company’s stock for $0.75 per share until December 31, 2024.
During the year ended June 30, 2021, 4,065,988 warrants
were exercised to purchase 4,065,988 shares of the Company’s common stock at $0.75 per share for total proceeds of $3,049,491.
TEM 6. SELECTED FINANCIAL DATA.
N/A
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
This Annual Report on Form 10-K (and the documents
incorporated herein by reference) contain forward-looking statements, within the meaning of Section 27A of the Securities Act and Section
21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), that involve substantial risks and uncertainties.
Forward-looking statements generally can be identified by the use of forward-looking terminology such as "may," "will,"
"expect," "intend," "estimate," "anticipate," "project," "predict," "plan,"
"believe," or "continue," or the negative thereof or variations thereon and/or references to “goals”,
“targets”, “projections” or similar terminology. The expectations reflected in forward-looking statements may
prove to be incorrect. The Company's actual results of operations, most of which are beyond the Company's control, could differ materially.
We wish to caution readers not to place undue reliance on any such forward looking statements, which speak only as of the date made. Any
forward-looking statements represent management's best judgment as to what may occur in the future. However, forward looking statements
are subject to risks, uncertainties and important factors beyond our control that could cause actual results and events to differ materially
from historical results of operations and events and those presently anticipated or projected.
These factors include adverse economic conditions,
entry of new and stronger competitors, inadequate capital and limited ability to obtain financing, needed personnel (including entire
team related to project development and project operations in coming years) and equipment, unexpected costs, failure (or delay) to gain
product certifications and/or regulatory approvals in the United States (or particular states) or foreign countries, loss (permanently
or for any extended period of time) of the services of members of the Company’s small core management team (many of whom are age
70 or older) and failure to capitalize upon access to new markets. Additional risks and uncertainties that may affect forward looking
statements about Bion's business and prospects include: i) the possibility that markets for nutrient reduction credits (discussed below)
and/or other ways to monetize nutrient reductions and other environmental benefits will be slow to develop (or not develop at all), ii)
PA1’s dissolution and its effect on how the Company is viewed, (if any), iii) the possibility that competitors will develop more
comprehensive and/or less expensive environmental solutions, iv) delays in market awareness of Bion and our Systems, v) uncertainties
and costs increases related to research and development efforts to update and improve Bion’s technologies and applications thereof,
and/or vi) delays and/or costs exceeding expectations relating to Bion's development of the Initial Project, JVs and/or Projects and vii)
failure of marketing strategies, each of which could have both immediate and long term material adverse effects by placing us behind our
competitors and requiring expenditures of our limited resources.
THESE RISKS, UNCERTAINTIES AND FACTORS BEYOND OUR
CONTROL ARE MAGNIFIED DURING THE CURRENT UNCERTAIN PERIOD RELATED TO THE COVID-19 PANDEMIC AND THE UNIQUE ECONOMIC, FINANCIAL, GOVERNMENTAL
AND HEALTH-RELATED CONDITIONS IN WHICH THE COMPANY, THE ENTIRE COUNTRY AND THE ENTIRE WORLD NOW RESIDE. TO DATE THE COMPANY HAS
EXPERIENCED DIRECT IMPACTS IN VARIOUS AREAS INCLUDING WITHOUT LIMITATION: I) GOVERNMENT-ORDERED SHUTDOWNS WHICH HAVE SLOWED
THE COMPANY’S RESEARCH AND DEVELOPMENT PROJECTS AND OTHER INITIATIVES, II) SHIFTED FOCUS OF STATE AND FEDERAL GOVERNMENT WHICH IS
LIKELY TO NEGATIVELY IMPACT THE COMPANY’S LEGISLATIVE INITIATIVES IN PENNSYLVANIA AND WASHINGTON DC, III) STRAINS AND UNCERTAINTIES
IN BOTH THE EQUITY AND DEBT MARKETS HAVE MADE DISCUSSION AND PLANNING OF FUNDING OF THE COMPANY AND ITS INITIATIVES AND PROJECTS WITH
INVESTMENT BANKERS, BANKS AND POTENTIAL STRATEGIC PARTNERS MORE TENUOUS, IV) STRAINS AND UNCERTAINTIES IN THE AGRICULTURAL SECTOR AND
MARKETS HAVE MADE DISCUSSION AND PLANNING OF FUNDING OF THE COMPANY AND ITS INITIATIVES AND PROJECTS MORE DIFFICULT AS FUTURE INDUSTRY
CONDITIONS ARE NOW MORE DIFFICULT TO ASSESS/PREDICT, V) CONSTRAINTS DUE TO PROBLEMS EXPERIENCED IN THE GLOBAL INDUSTRIAL SUPPLY CHAIN
WHICH HAVE INCREASED ANTICIPATED PROJECT DEVELOPMENT COSTS, VI) DUE TO THE AGE AND HEALTH OF OUR CORE MANAGEMENT TEAM, MOST OF WHOM ARE
AGE 70 OR OLDER AND HAVE HAD ONE OR MORE EXISTING HEALTH ISSUES, THE COVID-19 PANDEMIC PLACES THE COMPANY AT GREATER RISK THAN WAS PREVIOUSLY
THE CASE (TO A HIGHER DEGREE THAN WOULD BE THE CASE IF THE COMPANY HAD A LARGER, DEEPER AND/OR YOUNGER CORE MANAGEMENT TEAM), AND VII)
THERE ALMOST CERTAINLY WILL BE OTHER UNANTICIPATED CONSEQUENCES FOR THE COMPANY AS A RESULT OF THE CURRENT PANDEMIC EMERGENCY AND ITS
AFTERMATH.
Bion disclaims any obligation subsequently to revise
any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated
or unanticipated events.
The following discussion and analysis should be read
in conjunction with the Consolidated Financial Statements and Notes to Consolidated Financial Statements filed with this Report.
BUSINESS OVERVIEW AND PLAN
Bion Environmental Technologies, Inc.'s ("Bion," "Company,"
"We," "Us," or "Our") was incorporated in 1987 in the State of Colorado. Bion’s mission is to make
livestock production more sustainable, profitable and transparent. We intend to accomplish this by deploying our Gen3Tech platform/business
model (discussed below) in ventures focused on the ‘feeder’ space of the livestock production/value chain to provide the consumer
with verifiably sustainable premium meat products (together with environmentally friendly, sustainable and/or organic co-products from
the production process). Bion believes this approach can create extraordinary value for our shareholders and employees (all of whom
own securities in the Company) and for livestock/agriculture industry ‘partners’ who join us in our ventures. We anticipate
pursuing the opportunity created by our third generation technology (“Gen3Tech”) and business/technology platform in conjunction
with other industry practices (“Gen3Tech Platform” or “Platform”).
Our patented and proprietary technology provides advanced
waste treatment and resource recovery for large-scale livestock production facilities (also known as “Concentrated Animal Feeding
Operations” or “CAFOs"). Livestock production and its waste, particularly from CAFOs, has been identified as one of the
greatest soil, air, and water quality problems in the U.S. today. Application of our Gen3Tech can largely mitigate these environmental
problems, while simultaneously improving operational/ resource efficiencies by recovering high-value co-products from the CAFOs’
waste stream. These waste ‘assets’ – nutrients and methane – have traditionally been wasted or underutilized and
are the same ‘pollutants’ that today fuel harmful algae blooms, contaminate surface groundwater, and exacerbate climate change.
We anticipate this will result in substantial long-term
value for Bion. In the context of such JVs, we believe that the verifiable sustainable branding opportunities (conventional and organic)
in meat will represent one of the largest enhanced revenue contributors provided by Bion to the JVs (and Bion licensees). The Company
believes that the largest portion of its business with be conducted through such JVs, but a material portion may involve licensing and
or other approaches.
Bion’s Gen3Tech was designed to capture and
stabilize these assets and produce renewable energy, fertilizer products, and clean water as part of the process of raising verifiably
sustainable livestock. All steps and stages in the animal raising and waste treatment process will be third-party verified, providing
the basis for additional revenues, including carbon and/or renewable energy-related credits and, eventually, payment for a range of ecosystem
services, including nutrient credits as described below. The same verified data will be used to substantiate the claims of a USDA-certified
sustainable brand that will support premium pricing for the meat/ animal protein products that are produced in Bion facilities.
During the first half of 2022 Bion
began pre-marketing our sustainable beef to retailers, food service distributors and the meat industry in the U.S. In general, the
response has been favorable. During July 2022, Bion announced a letter of intent (“Ribbonwire LOI”) to develop a large-scale
commercial project - a 15,000-head sustainable beef cattle feeding operation together with the Ribbonwire Ranch, in Dalhart, Texas (with
a provision to expand to 60,000 head) (“Dalhart Project”). During January 2023 Bion announced a letter of intent (“Olson
LOI”) to develop a large-scale commercial project - a 15,000-head sustainable beef cattle feeding operation together with the Olson
Feeders and TD Angus, near North Platte, Nebraska (with a provision to expand to 45,000 head or more) (“Olson Project”). During
April 2023 Bion announced a letter of intent (“DVG LOI”) to develop a large-scale commercial project - a 15,000-head sustainable
beef cattle feeding operation together with Dakota Valley Growers near Bathgate, North Dakota (“DVG Project”). Based on our
experience to date, we believe we will not have difficulty in securing participation in our Projects from additional feeders/cattlemen.
The Olson, Dalhart and DVG Projects (and subsequent Projects) will be developed to produce blockchain-verified, sustainable beef in customized
covered barns (resulting in reduced stress on cattle caused by extreme weather and temperatures and resulting higher feed/weight gain
efficiency) with ongoing manure transfer (through slatted floors) to anaerobic digesters (AD) to capture nitrogen from the manure stream
before loss to the atmosphere and generate renewable natural gas (RNG) for sale while remediating the environmental/carbon impacts usually
associated with cattle feedlots and CAFOs. Bion’s patented Gen3Tech platform will refine the waste stream into valuable coproducts
that include clean water, RNG, photovoltaic solar electricity and fertilizer (‘climate smart’ and/or organic) products. We
anticipate converting these LOIs into definitive JV agreements and creating related distribution agreements with key retailers and food
service distributors during the current fiscal year.
Bion’s business model and technology platform can create
the opportunity for joint ventures (in various contractual forms)(“JVs”) between the Company and large livestock/food/fertilizer
industry participants based upon the supplemental cash flow generated by implementation of our Gen3Tech business model, which cash flows
will support the costs of technology implementation (including servicing related debt). We anticipate this will result in substantial
long-term value for Bion.. To accomplish Bion’s goals, we anticipate the we will ‘partner’ with other technology companies
who provide solutions for different links of the beef (and other livestock) value chain and with strategic partners up and down the supply
chain.In the context of such JVs, we believe that the verifiable sustainable branding opportunities (conventional and organic) in meat
will represent one of the single largest enhanced revenue contributor provided by Bion to the JVs (and, in some cases, Bion licensees).
The Company believes that the largest portion of its business with be conducted through such JVs, but a material portion may involve licensing
and or other approaches.
During the next three to six months, the Company intends
to fully complete construction of the Initial Project’s phase 1 (including the crystalizer module) and continue the optimization
operations. Bion expects the Initial Project data will document the effectiveness of our Gen3Tech in a commercial-scale setting during
the current fiscal year and support development of the LOI Projects (and/or other Gen3Tech beef JV projects) commencing later this fiscal
year. We do not presently know the order in which these JV Projects will be developed as that decision will be made based on many
factors not yet in place. We believe the Initial Project data will also provide additional potential stakeholders (cattle producers, cattle
feeders, packers, food distributors and retailers and financial institutions) with the information they need to proceed with confidence
in collaborating with Bion on multiple new projects (see below).
Bion is now focused primarily on: i) completion of
development/construction and operation of the Initial Project, our initial commercial-scale Gen3Tech installation, and optimization of
its operational parameters, ii) pre-development planning of the LOI Projects (and/or other Gen3Tech beef JV projects) including steps
toward distribution agreements, iii) developing applications and markets for its low carbon ‘ClimateSmart’ and organic fertilizer
products (including listings/certifications of multiple liquid and solid products) and its sustainable (conventional and organic) animal
protein products, and iv) discussions regarding initiation and development of agreements and joint ventures (“JVs” as discussed
herein) (and related Projects) based on the augmented capabilities of our Gen3Tech business platform (in the sustainable beef and other
livestock segments), while (v) continuing to pursue business opportunities related to large retrofit projects (such as the Kreider poultry
project JV described below) and vi) ongoing R&D activities.
At present, there is essentially no traceable and
verifiable ‘sustainable beef’ available to the US market except for niche products. In response to consumer demand for transparency
and sustainability, Bion expects the meat industry in general, and beef specifically, to evolve towards using new technologies to deliver
these attributes in their products. While we anticipate a faster adoption of tracking, verification and sustainability technologies in
other perishable food categories like produce and dairy due to their shorter product cycles (and related harvest and production techniques),
meat industry leaders have also announced their willingness to move forward with initiatives in this area. Many companies have announced
‘sustainability’ initiatives but most appear to consist largely of ‘greenwashing’ marketing commitments rather
than substantive undertakings at this date. Note, however, that Tyson’s Brazen beef initiative (which was announced during March
2023) may develop into a substantive competitive factor in the sustainable beef marketplace. Bion predicts that within approximately five
years, consumers will be able to track and verify claims including sustainability on 25% (or more) of the products merchandised in the
meat department. Bion believes that the retail market share of verifiably sustainable beef in the US will approach 7-10 % within three
(3) years (end of 2026) and 25% in five (5) years (end of 2028) (approximately 6-7,000,000 cattle annually) (and more thereafter). If Bion
can successfully execute on its sustainable beef business plan (which is subject to many contingencies), we believe that JV facilities
utilizing Bion’s Gen3Tech platform will supply one-third (1/3) or more of that of the premium market segment (and a higher portion
of meat that is actually traceable and verifiably sustainable). Our goal is to have multiple sustainable beef projects under development
(within 3-5 distinct JVs) by the end of our 2025 fiscal year. Our first commercial project is likely to be one of our current LOI Projects
but we anticipate commencing development of additional sustainable beef projects during the current fiscal year as well. Our current target
is to have at least three (3) facility modules (15,000 head per module)(“Modules”) in development and/or under construction
during 2024 in three (3) different JVs with the initial barns being populated with livestock during 2025. Further expansion in the number
of distinct JVs is projected through 2026-7 aiming at 5-10 JVs in process --- each of which JVs will be pursuing development of multiple
Modules with targets of 12-15 populated Modules by the end of 2026 (approximately 2%-3% of the US beef market) and 30-45 Modules constructed
and being populated by 2029 (approximately 6%-8% of the US beef market) with further expansion thereafter. Bion’s current goal is
that its Gen3Tech platform will be utilized to produce 33% of the verifiable “sustainable beef” category at the end of the
period (which will equal approximately 2 million cattle annually)(45 Modules).
During this five (5) year period, the Company also
anticipates having additional Gen3Tech projects underway in the pork/dairy/egg sectors of the US animal protein market.
There is no assurance that the Company will reach
or approach the goals/targets set forth above. Reaching such goals/targets will require access to very large amounts of capital (equity
and debt) as each module is projected to cost in excess of $50 million (debt/equity/grants) to construct and require mobilization of substantial
personnel, technical resources and management skills. The Company does not possess either the financial or personnel resources required
internally and will need to source such resources from outside itself.
For additional information regarding our ‘HISTORY,
BACKGROUND AND CURRENT ACTIVITIES’,see discussion in Part I, Item 1 above and Notes to the Financial Statements (particularly
Notes 1, 3, 5 and 9) included in this report .
COVID-19 PANDEMIC RELATED MATTERS:
The Company faces risks and uncertainties and factors
beyond our control that are magnified during the current Covid-19 pandemic and the unique economic, financial, governmental and health-related
conditions in which the Company, the country and the entire world now reside. To date the Company has experienced direct impacts in various
areas including but without limitation: i) government ordered shutdowns which have slowed the Company’s research and development
projects and other initiatives, ii) shifted focus of state and federal governments which is likely to negatively impact the Company’s
legislative initiatives in Pennsylvania and Washington D. C., iii) strains and uncertainties in both the equity and debt markets which
have made discussion and planning of funding of the Company and its initiatives and projects with investment bankers, banks and potential
strategic partners more tenuous, iv) strains and uncertainties in the agricultural sector and markets have made discussion and planning
more difficult as future industry conditions are now more difficult to assess and predict, v) constraints due to problems experienced
in the global industrial supply chain since the onset of the Covid-19 pandemic, which have delayed certain research and development testing
and have delayed and/or increased the cost of construction of the Company’s initial 3G Tech installation as equipment/services remain
difficult to acquire in a timely manner, vi) due to the age and health of our core management team, many of whom are age 70 or older and
have had one or more existing health issues (including brief periods of Covid-19 infection), the Covid-19 pandemic places the Company
at greater risk than was previously the case (to a higher degree than would be the case if the Company had a larger, deeper and/or younger
core management team), and vii) there almost certainly will be other unanticipated consequences for the Company as a result of the current
pandemic emergency and its aftermath.
CRITICAL ACCOUNTING POLICIES
Revenue Recognition
The Company currently does not generate revenue
and if and when the Company begins to generate revenue the Company will comply with the provisions of Accounting Standards Codification
(“ASC”) 606 “Revenue from Contracts with Customers”.
Stock-based compensation
The Company follows the provisions of ASC 718,
which generally requires that share-based compensation transactions be accounted and recognized in the statement of income based upon
their grant date fair values.
Pursuant to ASC Topic 815 “Derivatives and Hedging”
(“Topic 815”), the Company reviews all financial instruments for the existence of features which may require fair value accounting
and a related mark-to-market adjustment at each reporting period end. Once determined, the Company assesses these instruments as derivative
liabilities. The fair value of these instruments is adjusted to reflect the fair value at each reporting period end, with any increase
or decrease in the fair value being recorded in results of operations as an adjustment to fair value of derivatives. As of March 31, 2023
and 2022, there are no derivative financial instruments.
Options:
The Company has issued options to employees and consultants
under its 2006 Plan to purchase common shares of the Company. Options are valued on the grant date using the Black-Scholes option-pricing
model. The expected volatility is based on the historical price volatility of the Company’s common stock. The dividend yield represents
the Company’s anticipated cash dividend on common stock over the expected term of the stock options. The U.S. Treasury bill rate
for the expected term of the stock options was utilized to determine the risk-free interest rate. The expected term of stock options represents
the period of time the stock options granted are expected to be outstanding based upon management’s estimates.
Warrants:
The Company has issued warrants to purchase common
shares of the Company. Warrants are valued using a fair value based method, whereby the fair value of the warrant is determined at the
warrant issue date using a market-based option valuation model based on factors including an evaluation of the Company’s value as
of the date of the issuance, consideration of the Company’s limited liquid resources and business prospects, the market price of
the Company’s stock in its mostly inactive public market and the historical valuations and purchases of the Company’s warrants.
When warrants are issued in combination with debt or equity securities, the warrants are valued and accounted for based on the relative
fair value of the warrants in relation to the total value assigned to the debt or equity securities and warrants combined.
Lease Accounting:
The Company accounts for leases under ASC 842, Leases (“ASC
842”). Accordingly, the Company will determine whether an arrangement contains a lease at the inception of the arrangement. If a
lease is determined to exist, the term of such lease is assessed based on the date on which the underlying asset is made available for
the Company’s use by the lessor. The Company’s assessment of the lease term reflects the non-cancelable term of the lease,
inclusive of any rent-free periods and/or periods covered by early-termination options which the Company is reasonably certain of not
exercising, as well as periods covered by renewal options which the Company is reasonably certain of exercising. The Company also determines
lease classification as either operating or finance at lease commencement, which governs the pattern of expense recognition and the presentation
reflected in the consolidated statements of operations over the lease term.
For leases with a term exceeding 12 months,
a lease liability is recorded on the Company’s consolidated balance sheet at lease commencement reflecting the present value of
its fixed minimum payment obligations over the lease term. A corresponding right-of-use (“ROU”) asset equal to the initial
lease liability is also recorded, adjusted for any prepaid rent and/or initial direct costs incurred in connection with execution of
the lease and reduced by any lease incentives received. For purposes of measuring the present value of its fixed payment obligations
for a given lease, the Company uses its incremental borrowing rate, determined based on information available at lease commencement,
as rates implicit in its leasing arrangements are typically not readily determinable. The Company's incremental borrowing rate reflects
the rate it would pay to borrow on a secured basis and incorporates the term and economic environment of the associated lease.
YEAR ENDED JUNE 30, 2023 COMPARED TO THE
YEAR ENDED JUNE 30, 2022
Revenue
Total revenues were nil for both the years ended June 30, 2023 and 2022.
General and Administrative
Total general and administrative expenses
were $3,072,000 and $2,348,000 for the year ended June 30, 2023 and 2022, respectively.
Salaries and related payroll tax expenses were
$730,000 and $340,000 for the years ended June 30, 2023 and 2022, respectively, representing a $390,000 increase. The increase is largely
due to the addition of Bill O’Neill (and administrative initiatives he has commenced), pay increases, and lower percentage of total
salaries capitalized to the Initial Project. Consulting costs were $485,000 and $561,000 for the years ended June 30, 2023 and 2022, respectively.
The $76,000 decrease in consulting costs is due to the capitalization of a larger portion of Brightcap’s consulting expense to the
Initial Project in fiscal year 2023. Investor relations expenses were $697,000 and $395,000 for the years ended June 30, 2023 and 2022,
respectively, and the $302,000 increase is due to a new contract with an investor relations firm and increased activity during the year
ended June 30, 2023 due to the resumption of investor conferences and other matters. Legal costs were $83,000 and $291,000 for the years
ended June 30, 2023 and 2022, respectively, and the $208,000 decrease is due to less outside legal activities in the year 2023 compared
to the year 2022 in which legal fees surrounding the hack and theft of the Company’s domain name and the dissolution of PA-1 were
incurred.
Stock-based compensation for the years ended June
30, 2023 and 2022 were $442,000 and $269,000, respectively.
Depreciation
Total depreciation expense was $1,645 and $1,161
for the year ended June 30, 2023 and 2022, respectively.
Research and Development
Total research and development expenses were $83,000
and $201,000 for the years ended June 30, 2023 and 2022, respectively, representing a $118,000 decrease due to less legal and salary expense
allocated to research and development and greater allocation to the Initial Project.
Salaries and related payroll tax expenses were
$9,000 and $32,000 for the years ended June 30, 2023 and 2022, respectively, as more salary expense was allocated to administrative expense
than research and development expense for the year ended June 30, 2023. Consulting costs were $43,000 and $80,000 for the years ended
June 30, 2023 and 2022, respectively. The Company also incurred $14,000 and $55,000 for the years ended June 30, 2023 and 2022, respectively
in legal costs related to patent applications and renewals.
Stock-based compensation allocated to research
and development for the years ended June 30, 2023 and 2022 were $4,000 and $22,000, respectively.
Loss from Operations
As a result of the factors described above, the
loss from operations was $3,157,000 and $2,550,000 for the years ended June 30, 2023 and 2022 respectively.
Other Income/(Expense)
Other income/(expense) was $(33,000) and $10,841,000
for the years ended June 30, 2023 and 2022, respectively. The difference was due to the gains recognized in 2022 consisting of $10,200,000
on the dissolution of PA1 and $902,000 from the sale of a domain name.
Interest expense related to deferred compensation,
loan payable and convertible notes for the year ended June 30, 2023 was $218,000 prior to capitalization of $180,000. Interest expense
related to deferred compensation, loan payable and convertible notes for the year ended June 30, 2022 was $334,000 prior to capitalization
of $32,000. The decrease is due to more interest being capitalized to the 3G1 project.
Net Loss Attributable to the Noncontrolling
Interest
The net loss attributable to the noncontrolling
interest was nil and $1,500 for the years ended June 30, 2023 and 2022, respectively.
Net Income/(Loss) Attributable to Bion’s
Common Stockholders
As a result of the factors described above, the
net income/loss attributable to Bion’s stockholders was $(3,189,000) and $8,292,000 for the years ended June 30, 2023 and 2022, respectively,
and the net income/(loss) per basic common share was $(.07) and $.20 for the years ended June 30, 2023 and 2022, respectively.
LIQUIDITY AND CAPITAL RESOURCES
The Company's consolidated financial statements for
the year ended June 30, 2023 have been prepared on a going concern basis, which contemplates the realization of assets and the settlement
of liabilities and commitments in the normal course of business. The Report of our Independent Registered Public Accounting Firm on the
Company's consolidated financial statements as of and for the year ended June 30, 2023 includes a "going concern" explanatory
paragraph which means that the auditors stated that conditions exist that raise substantial doubt about the Company's ability to continue
as a going concern.
Operating Activities
As of June 30, 2023, the Company had cash of approximately
$626,000. During the year ended June 30, 2023, net cash used in operating activities was $2,929,000, primarily consisting of cash operating
expenses related to salaries and benefits, and other general and administrative costs such as insurance, legal, accounting, consulting
and investor relations expenses as well as the purchase of property and equipment. Cash expenditures were offset by proceeds from financing
activities, primarily the exercise of warrants and sale of common shares. As previously noted, the Company is currently not generating
significant revenue and accordingly has not generated cash flows from operations. The Company does not anticipate generating sufficient
revenues to offset operating and capital costs for a minimum of two to five years. While there are no assurances that the Company will
be successful in its efforts to develop and construct its Projects and market its Systems, it is certain that the Company will require
substantial funding from external sources. Given the unsettled state of the current credit and capital markets for companies such as Bion,
there is no assurance the Company will be able to raise the funds it needs on reasonable terms.
Investing Activities
During the year ended June 30, 2023, the Company
invested $3,557,000 in the purchase of property and equipment, primarily related to the Initial Project construction in process.
Financing Activities
During the year ended June 30, 2023, the Company
received gross cash proceeds of $131,335 from the exercise of 175,114 warrants into shares of the Company’s common stock.
During the year ended June 30, 2023, the Company entered into subscription
agreements to sell units for $1.00 per unit, with each unit consisting of one share of the Company’s restricted common stock and
one warrant to purchase one share of the Company’s restricted common stock for $0.75 per share with an expiry date of December 31,
2024, and pursuant thereto, the Company issued 346,230 units for total proceeds of $346,230.
During the year ended June 30, 2023, the Company entered
into a subscription agreement to sell 2,000,000 shares of restricted common stock of which 1,800,000 shares were purchased
on January 10, 2023 (the other 200,000 shares were purchased on December 31, 2022) for total proceeds during year ending June 30, 2023
of $2,000,000.
During the year ended June 30, 2023, the Company entered
into subscription agreements to sell 575,000 units at a price of $1.60, with each unit consisting of one share of the Company’s
restricted common stock and one half warrant to purchase one share of the Company’s restricted common stock for $2.40 per share
with an expiry date of June 30, 2024, and, pursuant thereto, the Company issued 575,000 units for total proceeds of $920,000, in aggregate.
The Company paid commissions of $86,000 on the sale of units.
As of June 30, 2023, the Company has debt obligations
consisting of: a) deferred compensation of $865,000 and b) convertible notes payable – affiliates of $1,716,000.
Plan of Operations and Outlook
As of June 30, 2023, the Company had cash of approximately
$626,000.
The Company continues to explore sources of additional financing
to satisfy its current operating requirements as it is not currently generating any significant revenues.
During fiscal years 2023 and 2022, the Company faced less difficulty
in raising equity funding (but was subject to substantial equity dilution from the larger amounts of equity financing during the periods)
than was experienced in the prior 3 years. However, this positive trend did not continue during the last quarter of the 2023 fiscal
year and first quarter of the current fiscal year (to date). The Company raised only raised very limited equity funds during such periods
to meet its some of its immediate needs, therefore, the Company needs to raise additional funds in the upcoming periods. The Company currently
faces substantial increases in demand for capital and operating expenditures for the fiscal year 2024 to date (and we anticipate such
increased demands will continue during the remainder of the 2024 fiscal year and periods thereafter) as it moves toward commercial implementation
of its 3G Tech and development of JVs (including costs associated with additions of personnel to carry out the business activities of
the Company) and, therefore, is likely to continue to face, significant cash flow management issues due to limited capital resources and
working capital constraints which had only recently begun to be alleviated. As a result, the Company has faced, and continues to face,
significant cash flow management challenges due to material working capital constraints. To partially mitigate these working capital
constraints, the Company's core senior management and some key employees and consultants have been deferring most of their cash compensation
and/or are accepting compensation in the form of securities of the Company (Notes 5 and 7 to Financial Statements) and members of the
Company's senior management have from time to time made loans to the Company and may need to do so in future periods. Note that, to deal
with earlier capital constraints, during the year ended June 30, 2018, senior management and certain core employees and consultants agreed
to a one-time extinguishment of liabilities owed by the Company which in aggregate totaled $2,404,000. Additionally, the Company made
reductions in its personnel during the years ended June 30, 2014 and 2015 and again during the year ended June 30, 2018. As set forth
in detail elsewhere herein, during the year ended June 30, 2023 senior management (and family members) who held convertible obligations
of the Company adjusted the terms of their outstanding notes and agreed to debt modifications that reduced of the Company’s debt
by $3,522,000 and increased shareholders equity by the same amount. The constraints on available resources have had, and continue to
have, negative effects on the pace and scope of the Company’s efforts to develop its business. The Company has had to delay payment
of trade obligations and has had to economize in many ways that have potentially negative consequences. If the Company is able to raise
needed funds during the remainder of the current fiscal year (and subsequent periods), of which there is no assurance, management will
not need to consider deeper cuts (including additional personnel cuts) and/or curtailment of ongoing activities including research and
development activities.
The Company will need to obtain additional capital
to fund its operations and technology development, to satisfy existing creditors, to develop the Initial Project, JVs, Projects and CAFO
Retrofit waste remediation systems (potentially including the Kreider 2 facility. The Company anticipates that it will seek to raise from
$20,000,000 to $80,000,000 or more (debt and equity) during the next twelve months. However, as discussed above, there is no guarantee
that we will be able to raise sufficient funds or further capital for the operations planned in the near future.
The Company is not currently generating any significant
revenues. Further, the Company’s anticipated revenues, if any, from existing projects, JVs and proposed projects will not be sufficient
to meet the Company’s anticipated operational and capital expenditure needs for many years. During the year ended June 30, 2023
the Company raised gross proceeds of approximately $4,038,000 through the sale of its securities and paid commissions of approximately
$86,000. During the year ended June 30, 2022 the Company raised gross proceeds for approximately $1,737,000 and paid commissions of approximately
$19,000. The Company anticipates raising additional funds from such sales and transactions in the coming periods. However, there is
no guarantee that we will be able to raise sufficient funds or further capital for the operations planned in the near future.
Because the Company is not currently generating
significant revenues, the Company will need to obtain additional capital to fund its operations and technology development, to satisfy
existing creditors, to develop the Initial Project and subsequent Projects.
As indicated above, the Company anticipates that it
will seek to raise from $20,000,000 to $80,000,000 or more (from debt, equity, joint venture, strategic partnering, etc.) during the next
twelve months, some of which may be in the context of joint ventures for the development of one or more large scale projects. We reiterate
that there is no assurance, especially in the extremely unsettled capital markets that presently exist for companies such as Bion, that
the Company will be able to obtain the funds that it needs to stay in business, finance its Projects and other activities, continue its
technology development and/or to successfully develop its business.
See Item 2 below and Note 5 (“Pennvest Loan and Bion PA1 LLC (“PA1”)
Dissolution”) to the Financial Statements included in this report and the Company’s Forms 10-K for the year ended June
30, 2022 (and the years 2009-2021) for discussion and more details related to the dissolution of PA1, the Pennvest Loan and the
Kreider 1 project.
There is extremely limited likelihood that funds
required during the next twelve months or in the periods immediately thereafter will be generated from operations and there is no assurance
that those funds will be available from external sources such as debt or equity financings or other potential sources. The lack of additional
capital resulting from the inability to generate cash flow from operations and/or to raise capital from external sources would force the
Company to substantially curtail or cease operations and would, therefore, have a material adverse effect on its business. Further, there
can be no assurance that any such required funds, if available, will be available on attractive terms or that they will not have a significantly