UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
For the Fiscal Year Ended: June 30, 2025
OR
For the transition period from: __________ to __________
Commission File No. 000-19333
BION ENVIRONMENTAL TECHNOLOGIES, INC.
(Exact Name of Registrant as Specified in its Charter)
9 East Park Court
Old Bethpage, New York11804
(Address of Principal Executive Offices, Including
Zip Code)
Registrant’s Telephone Number, including
area code: (406) 839-0816
Securities Registered Pursuant to Section 12(b)
of the Act:
Title of Each Class Name of Exchange on Which Registered
None N/A
Securities Registered Pursuant to Section 12(g)
of the Act:
Common Stock, No Par Value
(Title of Class)
Indicate by check mark if the registrant is a
well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
☐ YES
☒No
Indicate by check mark if the registrant is not
required to file reports pursuant to Section 13 or Section 15(d) of the Act.
☐ YES
☒No
Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days.
☒Yes☐ NO
Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding
12 months (or for such shorter period that the registrant was required to submit).
☒Yes☐ NO
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. ☒
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large
accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company”
in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer ☐ Smaller reporting company ☒
Emerging growth company ☐
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of
its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public
accounting firm that prepared or issued its audit report. ☐
If
securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate
by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by
check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐No☒
The aggregate market value of the approximately
47,000,000 shares of voting stock held by non-affiliates of the Registrant as of June 30, 2025 approximated $8.8 million. As of
August 1, 2025, the Registrant had 57,386,476 shares of common stock issued and 56,682,167 shares of common stock
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
None
FORWARD-LOOKING STATEMENTS
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. These forward-looking statements
include, but are not limited to, predictions regarding:
· our business plan;
· expenses we will incur in operating our business;
· our liquidity and sufficiency of existing cash;
· the success of our financing plans; and
· the outcome of pending or threatened litigation.
We have based these forward-looking statements
on our current expectations and projections about future events. Although we believe that the expectations underlying our forward-looking
statements are reasonable, these expectations may prove to be incorrect, and all of these statements are subject to risks and uncertainties.
Therefore, you should not place undue reliance on our forward-looking statements. We have included important risks and uncertainties in
the cautionary statements included in this Annual Report; particularly, the section titled “Risk Factors” incorporated in
Item 1.A of this report. These risks and uncertainties could cause actual results or events to differ materially from the forward-looking
statements that we make. Should one or more of these risks and uncertainties materialize, or should underlying assumptions, projections
or expectations prove incorrect, actual results, performance or financial condition may vary materially and adversely from those anticipated,
estimated or expected.
Our forward-looking statements do not reflect the potential impact
of future acquisitions, mergers, dispositions, joint ventures or investments that we may make. We do not assume any obligation to update
any of the forward-looking statements contained herein, whether as a result of new information, future events or otherwise, except as
required by law.
i
PART I
ITEM 1. BUSINESS.
GENERAL
The Company has been under substantial financial
and management stress over the past eighteen (18) months. Covid-related delays during technology pilot development at Buflovak in New
York, followed by post-Covid supply chain disruptions during construction of our demonstration facility at Fair Oaks, have led to extreme
difficulties in raising needed funds. These delays prevented us from meeting our project development and related capital timelines, and
were further compounded by the death (following extended illness) of Dominic Bassani, who most recently served as our COO from May 2022
after serving as our CEO for the prior decade, the subsequent resignation of Bill O’Neill, Dominic’s replacement at the CEO
position, effective May 31, 2024, followed by the retirement of Mark A. Smith, the Company’s President, General Counsel
and Chief Financial Officer, effective July 31, 2024.
At the end of May 2024, a new core leadership
team was installed (see H and I, below) and a short-term funding strategy was implemented (see K, below) while longer term capital solutions
were pursued. These efforts are ongoing. Our new leadership team believes the difficulties Bion has faced are outweighed by our recent
successes that include the technology demonstration and optimization at our Fair Oaks facility and the initial responses from our fertilizer
outreach. This is coupled with strong recent interest in our ammonia control solution from the biogas operators and developers that will
be needed to ensure a supply of feedstock for our fertilizer products. These successes coincide with growing trends in sustainable agriculture
and clean fuels technology and policy that favor Bion’s business opportunities. Bion leadership believes this confluence of events
positions the Company, assuming it aligns with appropriate strategic partners and obtains sufficient financing, to exploit a unique opportunity
at the intersection of agriculture, renewable energy, the environment, and consumer demand.
PLEASE NOTE:
A: 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. Current liabilities
were approximately $7.1 million at June 30, 2025 which represents an increase of approximately $1,400,000 from June 30, 2024 (largely
due to new debt as well as increased deferred compensation). Similarly, the Company’s cash on hand decreased from approximately
$52,000 to approximately $4,400 over the same period. The Company has faced extreme difficulty obtaining needed funding during the entire
2024 fiscal year, which has continued throughout the first nine months of the current fiscal year to date.
B: Previous management believed that the
Initial Project had reached the point where it could be appropriately deemed ‘placed in service’ at January 1, 2024. However,
discussions with the key technical and engineering personnel involved at the Initial Project during the recently concluded prior fiscal
year convinced management that such a characterization was premature as some key modules had not yet been completed and/or fully tested
at that date. Additionally, due to some equipment break-downs, the Initial Project was in maintenance mode rather than conducting operations,
while the Company awaited required replacement parts and subsequent repairs. This process was slowed by the Company’s ongoing difficulties
in raising the funds needed for its activities. The Company’s Board of Directors re-evaluated the classification/status of the Initial
Project as part of the Company’s annual review process and determined that the Initial Project should have been ‘placed in
service’ at the June 30, 2024, fiscal year end.
Further, after extensive discussion between previous
management and the Board, it was determined that the ‘carrying value’ of the Initial Project, as of that date, be reduced
to $0 on the Company balance sheet, in order to conform with accepted accounting practices. Bion’s technology demonstration system
was always planned as a small scale integrated Gen3Tech beef project. Due to covid-related delays and increased capital constraints, it
was decided to move quickly to initially construct Phase 1, which was the standalone ARS at Fair Oaks, in order to demonstrate and optimize
the technology. As matters progressed, including cost overruns, management and financial crises, etc., Bion was unable to proceed beyond
demonstration at Fair Oaks. It was anticipated that the ARS would ultimately be relocated to another site (potential locations included
Ribbonwire Ranch or University of Nebraska-Lincoln) after providing the final design data, where it would be integrated with a small scale
Gen3Tech beef facility as originally planned. We recently learned it would not be economically feasible to decommission and disassemble
the ARS, then transport, reassemble, and recommission it at another location. Therefore, since the Initial Project is now: i) largely
a research & development facility and ii) is located on land subject to a short-term lease, it no longer has commercial value and
was written down to $0. As a result, a large ‘one time/non-recurring’ ‘non-cash’ charge of $9,460,425 was taken
by the Company, at that date, which charge reduced the Company shareholders’ equity to ($5,808,501) and resulted in a loss of $11,691,115
for the 2024 fiscal year.
C: On September 28,
2023, the Company entered into an agreement for a $1,500,000 bridge loan and executed documents including a convertible promissory note
(“Note”) and a binding subscription agreement (“Subscription”) (collectively the Note and the Subscription are
the “Bridge Loan Agreements”) with SEB LLC, a non-affiliated party (“Lender”). SEB and the note represented a
strategic investment that would ‘anchor’ a larger capital raise. In addition to SEB, it was to include an offering to Bion
shareholders, alongside new retail and institutional investors introduced by Titan Partners, the NY investment banking firm Bion engaged
to underwrite the offering. The Bridge Loan Agreements required the Lender to loan the Company $1,500,000 in six monthly tranches of $250,000
commencing October 2023. All sums advanced under the Bridge Loan Agreements (and accrued interest thereon) would be due and payable (with
interest accrued at 9% per annum) on October 1, 2024 if not previously converted into securities of the Company. The Note is convertible
at $1.00 per unit, at the sole election of the Lender, into units consisting of one share of the Company’s common stock and a warrant
to purchase one half share. The initial $250,000 tranche was received by the Company on October 5, 2023. However, no further funds were
received by the Company from the Lender.
During early November 2023
the Lender informed the Company verbally that it did not intend to fulfill its obligations pursuant to the Bridge Loan Agreements and
since such time the Lender has been in default (“Default”). Titan Partners informed the Company that it would be unable to
complete an offering to their customers (or their syndicate member’s customers) without a strategic investor anchor. Further, the
Company had limited success raising money with its own shareholders for the same reason. The Default (which is continuing) has created
substantial problems for and materially damaged the Company and rendered the Company unable to meet its current creditor obligations on
a timely basis. The Company is currently evaluating its rights regarding the Default by the Lender. This situation has contributed to
the substantial increase in the Company’s ‘Current Liabilities’, including ‘accounts payable’, over recent
periods. See Condensed Consolidated Financial Statements and ‘Management’s Discussion and Analysis’. The Company has
engaged in discussion/negotiation with its larger creditors (including its largest creditor--- the primary contractor on the Initial Project)
but has been unable to reach agreements regarding payments due to the uncertainty as to if, when and how much funding the Company will
be able to raise in future periods. As a result, the Company’s two largest creditors have filed separate lawsuits (see O, below)
to recover a total of $1,494,512.72 in unpaid invoices related to the construction of Bion’s Ammonia Recovery System at Fair Oaks,
Indiana (and other creditors are threatening to commence litigation and/or repossess/remove leased equipment). Further, as of October
1, 2024, the Company is in default of the terms of the note.
On May 10, 2024 the Company
received $150,000 from affiliates of the Bridge Loan Lender on terms not yet finalized and included in an agreement. These funds were
received in the context of negotiations/discussions regarding a potential larger investment by affiliates and/or associates of the Lender
but no further funds were received and the larger transaction was never completed. The funds were used primarily to re-initiate operations
at the Initial Project. The Company is currently involved in discussions with representatives of SEB in an effort to achieve a mutually
satisfactory resolution.
D: At the end of December
2023, Bion achieved key objectives in the optimization of the Ammonia Recovery System at our commercial-scale demonstration facility in
Fair Oaks, Indiana. Though delayed by supply chain issues, the demonstration at Fair Oaks confirmed the system's state-of-the-art capabilities
and economics. In managements’ opinion, the wide applicability of the ARS and its environmental benefits cannot be overstated, as
livestock-related and other nutrient issues continue to grow, both in the U.S. and globally.
E: On January 2, 2024,
Bion received a new (continuation) patent that broadened the claims related to its Ammonia Recovery System (ARS) to include industrial
and municipal wastewater sources, in addition to animal waste streams that were previously covered. Since that time, Bion has a directed
part of its limited resources to understanding and evaluating opportunities to apply its ARS as a ‘standalone’ or ‘bolt-on’
ammonia control solution in these sectors. In such cases, the ARS would be deployed as a standalone ammonia control solution (vs integrated
into a Bion Gen3Tech platform) for facilities (both new and existing) that produce biogas from organic waste streams, such as food, food
processing, and livestock packing/slaughter. These facilities are subject to EPA-mandated discharge limits that require ammonia control
or face other limitations on ammonia/nitrogen in the effluent from biogas production. We believed then, and at this time, that there is
a robust opportunity to provide bolt-on ammonia control solutions to others in the industrial and animal waste sectors. During fiscal
2025, we devoted increasing resources to pursuing the bolt-on opportunity in both of these sectors.
F: Effective April
1, 2024, the Company entered into two material definitive agreements regarding voluntary surrender for cancellation of securities of the
Company (and related matters) by: a) members of the family of Dominic Bassani, recently deceased former Chief Executive Officer and (with
his family) the Company’s largest shareholder (collectively “Bassani Family”), and b) Mark A. Smith, recently retired
President of the Company and a director (“MAS”). The Bassani Family and MAS entered into these agreements with the intention
of mitigating dilution to shareholders as new, successor management is added to the Company’s management team. The Bassani Family
agreed to surrender not less than approximately 20% of its Company holdings (as of December 2023) which surrender would be increased to
approximately 30% based on certain financing performances (see Form 8-K dated April 3, 2024, Exhibit 10.1). The Bassani Family Agreement
also set forth requirements regarding conversion of convertible notes held by members of the Bassani Family after the security surrender.
See Exhibit 10.1 for the material terms of the contemplated transactions. MAS agreed to surrender approximately 30% of his Company holdings
(as of December 2023). Immediately upon the effectiveness of the MAS Agreement, he cancelled all Company options held by him (2,425,000,
in aggregate) and waived $56,250 of accrued deferred compensation (convertible into 75,000 shares of the Company’s common stock).
The MAS Agreement also set forth requirements regarding conversion of convertible notes held by MAS after the security surrender and references
the planned retirement of MAS on or before May 15, 2024. See Exhibit 10.2 for the material terms of the contemplated transactions. Subsequently,
and effective June 27, 2024, the Board of Directors of the Company agreed to amend the terms of the agreements dated April 1, 2024. The
amendments solely extend any dates of certain required conversions and/or exercises (and related promissory note maturity dates and warrant
expiration dates), if any, that were earlier than January 15, 2025, to said date. No changes were made regarding any ‘givebacks’
of securities of the Company. On June 30, 2024, the Bassani Family surrendered approximately 20% of its Company holdings (as of December
2023) (See Exhibit 10.1). As previously reported, MAS had previously completed 100% of his ‘give backs’.
On January 18, 2025, under
the Bassani Family Agreement described above, Bion cancelled 1,237,500 warrants owned by the Bassani Family. Under the terms of the Agreement,
the Bassani Family was required to surrender an additional 5% of their holdings after Bion successfully raised $500,000 in funding. Following
the date of the agreement. The warrants had a net exercise cost of $0.1875.
Effective September 15, 2025, pending formal documentation
and execution, two affiliates of the Company (Danielle Lominy and Christopher Parlow, family members of the late Dominic Bassani, Bion’s
former CEO), and three non-affiliates of the Company (Dominic Bassani’s spouse, Mark A. Smith, previously a Director and President,
and Edward Schafer, previously a Director) (referred to hereinafter collectively as ‘Holders’) have each individually agreed
to a settlement (“Settlement Agreements”) that will simplify Bion’s capital structure and substantially reduce the number
of Fully Diluted Shares. In consideration of the cancellation of various obligations and security instruments held by the Holders, including
without limitation deferred compensation, convertible notes, warrants, and options, the Holders (as a whole) will receive, in aggregate,
8,101,746 shares of common stock. If all the instruments they forfeited had been converted or exercised, it could have increased the Company’s
shares outstanding by 22,498,405. The transactions represent a net reduction in fully diluted shares of 14,369,659 and an increase in
outstanding shares of 8,101,746 (approximately). The shares will be issued by January 15, 2026, or earlier upon the election of the individual
Holders. When the formal agreements are executed and ratified by the Board, they will be attached as an exhibit to a Form 8-K.
G: On May 13, 2024,
the Board of Directors commenced a Board-led review of potential strategic alternatives to ensure the Company’s survival and to
enhance Bion’s potential growth and maximize shareholder value. The review included assessing approaches to optimize the Company’s
multiple business opportunities through alternative capital return strategies, potential strategic or financial transactions, and developing
strategic initiatives best applicable to each opportunity created by our technology in order to consider all possible paths towards maximizing
value creation. No timetable was established for the conclusion of this review and no decisions related to any further actions or potential
strategic alternatives have been made at this time. There can be no assurance that the review will result in any transaction or other
strategic change or outcome.
H: Effective May 31,
2024, Bion accepted the resignation of Bill O’Neill, both as CEO and Director. Mr. O’Neill had previously informed the Board
that he believed he was not being adequately compensated or incentivized, and the job was too difficult. On May 21, 2024, Bion received
a letter from Mr. O’Neill that expressed his dissatisfaction with the Board’s refusal to address his demands and stated he
was resigning to pursue other opportunities, despite the fact he had not yet completed the last year of a three-year agreement. Bion chose
to accept his resignation in the belief the Company needed a change in leadership and approach.
I: On June 1, 2024,
Craig Scott joined the Company's Board of Directors. Mr. Scott has served Bion in several senior positions, dating back to 1996. Mr. Scott
also agreed to assume a broader management role for Bion and subsequently accepted the role of interim Chief Executive Officer. Also in
June, Greg Schoener assumed the role of Chief Operating Officer on an interim basis. He also joined Bion's Board of Directors. Mr. Schoener
is a successful business owner and operator, serving the construction industry in Houston, Texas. He brings broad business management
experience, with an emphasis on mission-focused execution and accountability. He has been a Bion shareholder since late-2020. Bob Weerts,
another Bion shareholder and a successful serial entrepreneur from Winnebago, Minnesota, also accepted a position on Bion’s Board
of Directors.
J: On June 18, 2024,
Bion formed a strategic relationship with Turk Stovall and Stovall Ranching Companies with the goal of developing a 16,000-head sustainable
beef project at Stovall’s Yellowstone Cattle Feeders (YCF) location in Shepherd, Montana. The YCF feedyard is a traditional outdoor
dirt feedlot that today is permitted to feed up to 25,000 head. Mr. Stovall also agreed to join Bion's Board of Directors and lead a joint
venture between Stovall Ranching Companies and Bion to develop the project. The facility was envisioned to produce premium quality Montana
beef that we believed would be the 'cleanest', most eco-friendly finished beef in the marketplace. (Note update in P, below)
K: To help
alleviate short-term cash needs for continued operations, in August, three affiliates of the Company (Greg Schoener, Interim COO &
Director; Turk Stovall, Director (at that time); Bob Weerts, Director) and two shareholders (one of whom is the brother of Greg Schoener)
began advancing money to Bion to cover critical payables. They subsequently formed a loan group, BION BLG, LLC (“BLG”), and
have continued to provide short-term funding for Bion in a secured promissory note of up to $500,000. Schoener, Weerts, and the two non-affiliate
members were also large Bion shareholders, prior to the formation of BLG. As a group, Schoener, Stovall, and Weerts own 60% of BLG, which
has a security interest in the Company’s Intellectual Property. The BLG note will bear interest at a rate of 7.5% per annum and
the maturity date is April 15, 2025. As of the filing date, BLG has advanced $407,734. The BLG note will convert into Units (shares and/or
warrants) in the Company at the terms of a later capital raise, in which Bion crosses the threshold of $3 (three) million in aggregate
capital raised (or other source of funding, and other terms as defined in the note). If the Company is unable to complete such funding
within six (6) months, it will be in default of the BLG note, which is secured by the Company’s Intellectual Property (“IP”
“Collateral”). BLG will share the Collateral on a pro rata basis with investors in a Note with similar terms being offered
to previous Bion investors. The BLG note and security agreements contain other terms set forth therein and are included as exhibits to
this filing.
Effective May 29, 2025, the Company entered into
a Forbearance Agreement with Bion BLG, LLC, extending the maturity date of the BLG Note to July 15, 2025 (See Bion’s Form 8-K, dated
April 17, May 30 and July 24, 2025). Under the terms of the Forbearance Agreement, the amounts outstanding under the Note began to bear
interest at a rate of 9% per annum.
On July 24, 2025, the Company
entered into a Forbearance Agreement with Bion BLG, LLC, (effective July 15, 2025) extending the maturity date of the BLG Note to January
15, 2026 (attached as exhibit). The agreement was ratified by Bion’s Board on July 24, 2025. Under the terms of the Forbearance
Agreement, the amounts outstanding under the Note will continue to bear interest at a rate of 9% per annum. Bion agreed to a new formula
to determine BLG’s obligation for up to $100,000 in legal costs related to litigation over delinquent payment for construction costs
incurred at Bion’s demonstration facility near Fair Oaks, IN (see Bion’s Forms 8-K, dated April 7 and 17, 2025). Bion BLG,
LLC, also extended their agreement to share their collateral with investors in the three prior Shareholder Note offerings, with investors
participating in a new offering, dated July 25, 2025. Included in the Bassani family agreement was a provision to cancel their remaining 5% obligation under the previous
giveback agreement.
L: In
November, the Company launched a secured promissory note offering to previous investors/shareholders (and certain others)
(Shareholder Notes) with similar terms to the BLG note. Based on feedback from shareholders and registered representatives with
which the Company has long standing relationships, management believed at that time that sufficient capital could be raised with
this group to 1) continue to cover critical payables to maintain operations that will allow the Company to finish the engineering
report and technology demonstration at Fair Oaks, 2) move forward with pre-development work on the Stovall project, 3) continue
discussions with potential strategic partners, and 4) position ourselves for the larger offering/ funding that will be required. As
of filing date, Bion has raised $611,000in
the Shareholder Note offerings. Further, Bion has changed its focus from pre-development work on the Stovall project, to an initial
bolt-on project at an existing facility.
M: In mid-December,
Bion completed the ARS data acquisition at Fair Oaks needed to support an engineering report to be prepared in conjunction with Buflovac/
Hebeler Process Solutions, Bion’s R&D engineering firm. Further, during the week ended January 4, 2025, Bion successfully produced
samples of its OMRI Listed 10-0-0 liquid nitrogen fertilizer. These samples were quality tested and subsequently sent to several major
U.S. fertilizer manufacturers/ distributors that Bion has been in discussions with and that had requested them in order to conduct in-house
analysis. A 7-0-0 solution was also produced that was sent to a large West Coast fertilizer distributor that Bion is in discussions with.
N: On April 16, 2025, the Company was served
a summons by Hamstra Builders, Inc. (“Hamstra”) along with three other defendants: Bion Technologies, Inc. (“Biontech”),
Bion 3G-1, LLC (“3G-1”), both entities of Bion Environmental Technologies, Inc., and North Prairie Holdings, LLC (‘NPHLLC”)
the property lessor. The Hamstra suit is related to the Notice of Intent to file a Mechanic’s Lien, that was filed April 16, 2024,
and has been disclosed in our public filings since that date. Bion has retained counsel in Indiana to represent the company in these actions.
Hamstra is seeking to recover $1,494,513 in unpaid invoices related to the construction of Bion’s Ammonia Recovery System at Fair
Oaks, Indiana. This sum includes $653,915 owed to Dilling Group, Inc., a subcontractor of Hamstra. Dilling filed suit to recover that
amount on March 31, 2025, which was disclosed in Bion’s 8-k, dated April 7, 2025.
O: In May 2025, Bion
secured its first non-binding offtake commitments for its AB10 nitrogen fertilizer. The agreements were with Perfect Blend and Yield RNG,
large West Coast organic fertilizer distributors. The agreements are attached as exhibits to Bion’s 8-k, dated May 30, 2025). Bion
subsequently executed a similar offtake with a large integrated U.S. agribusiness concern that requested confidentiality. These three
initial offtakes represent 250,000 gallons of Bion’s liquid AB10.
P: On May 30, 2025,
Bion named Stephen J Posner to its Board of Directors and accepted the resignation of Turk Stovall as a director. Mr. Poser is a long-term
Bion shareholder who spent a 50-year career in financial services and capital markets. Mr. Stovall, through his various roles and activities
in the cattle business, was exposed to a wide range of potential conflicts of interest. It was mutually agreed that both Bion and Mr.
Stovall’s interests would be better served by his focus on Stovall Ranching Companies and Yellowstone Cattle Feeders, while Bion
focused on its opportunities independently. At this time, Bion turned its attention solely to its bolt-on opportunity and securing offtake
agreements and identifying projects to supply them.
Q: In June, Bion completed
and released its Technology-Optimization Report, that details the development and 18-month optimization of the ARS at our demonstration
facility in Fair Oaks, Indiana. The optimized ARS demonstrated it is stable and can maintain continuous steady-state operations, reliable,
and scalable. The ARS also showed it can achieve its ammonia reduction targets by evaporating one-third less water than was anticipated
and modeled. That translates to significantly better economics, including lower fertilizer production costs. The platform is now ready
for the final design process of a full-scale commercial system, which is subject to project-specific details, location, and feedstock
characteristics.
Summary and Overview
Bion Environmental Technologies, Inc.'s ("Bion,"
"Company," "We," "Us," or "Our") was incorporated in 1987 in the State of Colorado. Bion’s
long term mission has been to make livestock production more sustainable, profitable and transparent. Bion developed its Gen3Tech platform
and business model (discussed below) to clean up Concentrated Animal Feeding Operations (CAFOs), or build new state-of-the-art facilities
with minimal environmental impacts, that produce premium-branded sustainable meat and dairy products and recover renewable energy, high
value organic fertilizers, and clean water. The Gen3Tech is anchored by Bion’s patented Ammonia Recovery System (ARS), which captures
and upcycles the problematic ammonia released when biogas/Renewable Natural Gas is produced from manure or other organic waste.
For the last several years, Bion was focused on
building new large integrated beef projects that utilize our Gen3Tech, because we believed the beef industry is faced with the most challenges
of all the livestock sectors and can benefit the most from the application of Bion’s technology and business strategy. Livestock
production and its waste, particularly from CAFOs, is a primary source of excess nutrients, that have been identified as the greatest
water quality problem in the U.S. today; CAFOs are also under increasing scrutiny for their impacts on air pollution and soil health.
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, including renewable energy and nutrients. These ‘assets’
have traditionally been wasted or underutilized and are the same ‘pollutants’ that today fuel harmful algae blooms, contaminate
groundwater, and exacerbate climate change. Bion’s technology captures and upcycles these polluting waste emissions and discharges
to produce renewable energy, organic fertilizers, and/or low carbon fertilizers for corn used in the production of clean fuels.
Many associated with the livestock industry, Bion’s
leadership included, believe that within a few years, reducing CAFO impacts – especially ammonia/nutrient control – will be
required or incentivized/ subsidized in the U.S., as it is now in the EU. Implementing a new regulatory framework in the livestock industry
would create a very large business opportunity for Bion and others to provide ‘retrofit’ solutions to CAFOs to mitigate their
environmental impacts. While it has been slow to develop, it was this expectation of regulation (or an incentive-driven, industry-wide
transition to cleaner practices) that originally sparked Bion’s commitment to provide technology solutions to the problem. With
the recent and growing attention to the environmental impacts from CAFOs, especially impacts related to human health, such as PM2.5 formation
and groundwater nitrates, we believe that the demand for change in how CAFOs are regulated (or cleanup is otherwise incentivized) is accelerating
and will provide us with a robust retrofit opportunity in the not-too-distant future.
The ARS can recover and upcycle ammonia from any
organic waste stream. In 2024 our patents were expanded to include organic waste streams from the industrial and municipal wastewater
sectors, as described below. For the last year, we have been evaluating those capabilities and economics and the business opportunities
they present. During the second half of calendar 2023, the Company completed construction of our Ammonia Recovery System at our commercial
scale demonstration facility located near Fair Oaks, Indiana. Through the end of 2023, 2024, and 2025 to date, Bion executed a series
of testing protocols designed to optimize the ARS’s performance, prepare for final design of a full-scale commercial system, and
support the economic models for sustainable beef production. The ARS has exceeded expectations for performance related to both ammonia
recovery and efficiencies.
Based on the expanded capabilities of the ARS,
and resulting from our January 2024 patent, the Company’s focus has shifted away from large integrated beef or other livestock projects
to standalone ‘bolt-on’ ammonia control solutions for CAFOs and industrial facilities that use anaerobic digestion (“AD”)
to produce biogas. Unlike CAFOs that are regulated under a ‘nutrient management plan’, industrial and municipal facilities
are ‘point sources’ under the Clean Air and Water Acts. Their emissions and discharges are strictly regulated by US EPA, and
they are required to control nutrients in their waste stream discharge. With the January 2024 patent that extended our IP to include these
sources, we believe additional (and potentially very robust) opportunities exist (in addition to animal waste) for our ARS as a standalone
‘bolt-on’ ammonia control solution for those facilities that produce biogas from organic waste streams. We also believe that
the standalone opportunity, especially if a retrofit of an existing biogas facility, could represent a much shorter project development
timeline and path to revenues, compared to a new beef facility We intend to pursue this opportunity with strategic partners with specific
expertise and an operating footprint in the biogas/ renewable natural gas (RNG). We are evaluating several such potential partners at
this time.
Bion believes these opportunities can create extraordinary
value for our shareholders and employees (all of whom own securities in the Company) and both agriculture and clean fuels partners who
join us in our ventures and/or utilize our technology. We anticipate pursuing the opportunities created by our patented Ammonia Recovery
System (ARS) and the third-generation technology (“Gen3Tech”) it supports, utilizing a joint venture/strategic partner model
and/or through sales/licensing transactions. We believe our technology and our strategic partner model will enhance the businesses of
those enterprises utilizing our technology, create value for our shareholders, and improve the planet.
Changes in Approach
Through the end of calendar
2022, Bion’s strategy to exploit the beef opportunity was focused on developing an initial sustainable beef project as ‘proof
of concept’. At the beginning of 2023, under the guidance of Bill O’Neill, our last CEO, Bion’s strategy shifted to
executing multiple letters of intent and agreements for sustainable beef JV projects and moving forward with development of those projects
in quick succession. During our 2023 fiscal year, Bion entered into three (3) letters of intent (“LOIs”): a) July 2022 letter
of intent to develop a large-scale commercial project - a 15,000-head sustainable beef cattle feeding operation together with the Ribbonwire
Ranch (“Ribbonwire LOI”), in Dalhart, Texas (with a provision to expand to 60,000 head) (“Dalhart Project”), b)
January 2023 letter of intent to develop a large-scale commercial project - a 15,000-head sustainable beef cattle feeding operation together
with the Olson Feeders and TD Angus (“Olson LOI”), near North Platte, Nebraska (with a provision to expand to 45,000 head
or more) (“Olson Project”), c) April 2023 letter of intent to develop a large-scale commercial project - a 15,000-head sustainable
beef cattle feeding operation together with Dakota Valley Growers (“DVG LOI”) near Bathgate, North Dakota (“DVG Project”).
Management at that time believed it would not be difficult to secure participation in our Projects from additional feeders/cattlemen,
especially once project financing and offtake agreements for both protein and co-products, were in place. As described above, Mr. O’Neill
decided he was unable to accomplish this strategy and departed Bion in May 2024.
Bion’s new leadership
team returned the company to its earlier approach, focusing on building an initial ‘flagship’ project to prove the ARS technology
and the Gen3Tech platform it supports at full commercial scale. Leadership made this decision after determining that a) a large addressable
market for sustainable beef does exist and consumers have demonstrated a ‘willingness to pay’ a premium for sustainable food
products; however, since such products cannot be supplied today at scale, it is not a ‘ready’ market and will take time to
develop, b) an entrenched industry is never eager for change and it will only occur through enlightened/ proven self-interest, and c)
investment capital of the magnitude needed for large scale conversion to sustainable production will first require proof of concept.
New leadership continued to
focus on beef, for several reasons, and believed the best opportunity for the Company to prove its sustainable beef concept was with the
Stovall Ranch JV in Montana. In June 2024, Bion formed a strategic relationship with Turk Stovall and Stovall Ranching Companies. Turk
Stovall is a fifth-generation Montana cattleman, with an extensive graduate-level education in cattle husbandry and an MBA in agribusiness,
and he is the largest custom cattle feeder in Montana. He also has broad experience and relationships with both the U.S. and Montana’s
beef industry and important state leaders, resources, and agencies. Bion and Stovall agreed to establish a JV, that was to be led by Mr.
Stovall, with the goal of developing a 16,000-head sustainable beef project at Stovall’s Yellowstone Cattle Feeders (‘YCF’)
location in Shepherd, Montana.
Over the following months,
it became apparent to Bion’s leadership that a) Bion did not have the requisite partners or resources needed to develop these large
integrated projects, b) that project development timelines would be much longer than anticipated, and c) it was unlikely Bion would be
able to raise sufficient capital to execute such a plan. Bion correspondingly pivoted to devote almost all of its resources to the bolt-on
business opportunity: using the ARS as a standalone ammonia control solution for others’ biogas production facilities. We are currently
focused on existing large-scale livestock facilities with digesters in place, since they have waste streams for which the ARS has been
optimized. Further, we have and will continue to add resources to pursue opportunities in the industrial wastewater sector, where regulatory
drivers already exist, and we believe the ARS and its byproducts may give us a competitive advantage over existing solutions. We have
no intention of abandoning our opportunities to develop integrated sustainable livestock projects, which we believe our technology and
business model is best suited for. However, we believe the bolt-on business opportunity has the advantage of requiring substantially less
capital and could represent a much shorter path to fertilizer production and revenues.
The Company’s on-going
difficulties raising needed funds over the past two years have rendered the Company unable to meet its current creditor obligations on
a timely basis. The Company has engaged in discussion/negotiation with its larger creditors (including its largest creditor--- the primary
contractor on the Initial Project) but has been unable to reach agreements regarding payments due to the uncertainty as to if, when, and
how much funding the Company will be able to raise in future periods. As a result, the primary contractor has filed a mechanics in Indiana
and is pursuing action in federal court, and other creditors are threatening to commence or have commenced litigation and/or repossess/remove
leased equipment. The Company is behind on its lease payments related to the site of the Initial Project. On September 5, 2024, three
members of the BLG met with representatives of two of the largest creditors: the primary contractor and the property lessor. We have resumed
payments to certain creditors, whose services the Company requires to continue operations at Fair Oaks, including partial lease payments
to the property lessor (and ongoing supplier of digestate). Discussions and ultimate resolution are ongoing and subject to court proceedings
(see N, above) and Bion’s ability to raise capital in a timely manner. We have implemented extreme cost savings measures: maintaining
only mission-critical operations and funding. These measures will continue until we can execute a larger financing or obtain other sources
of capital, such as a potential strategic investor/partner or license agreement.
Bion is currently in discussions
with several potential strategic partners in engineering, renewable energy (biogas/RNG) and clean fuels, organic fertilizer distribution,
and others involved in reducing the environmental footprint of biogas, agriculture, and livestock production. Bion is now evaluating a
number of these as potential development and finance partners for project opportunities. Further, with the recent OMRI Listing for its
commercial fertilizer, the Company has initiated discussions with several large U.S. fertilizer manufacturers and distributors that have
demonstrated interest in the product. Bion believes that these industry relationships could entail a direct investment in Bion, licensing
fee, or some other ‘up front’ financial benefit to Bion, although there is no assurance that they will. The Company recently
completed an engineering/ technology optimization report that is critical to demonstrating the technology performance and economics of
its ammonia recovery technology to potential strategic partners.
Bion’s new leadership
team is strongly committed to Bion’s continuation, its future success, and its shareholders. We have refocused the Company’s
efforts to the bolt-on opportunity, to prove the technology at full scale and reach revenues more quickly. We believe this puts us on
a more achievable path. Further, this strategy will substantially reduce our need for capital, and we believe that a more reasonable and
credible objective will make it easier to raise that capital. We also believe that the recent changes in leadership will lend validation
and credibility to Bion and its business plan, making it easier to execute needed strategic alliances and raise capital from potential
strategic, institutional, and retail investors.
Renewable Energy/ Clean Fuels Strategic Partner
Bion is currently (and has been) in discussions
with several companies related to strategic partnerships in renewable energy – RNG – and fertilizer production. With today’s
U.S, and global emphasis on decarbonizing energy and the food supply chain, as well as a growing focus on water, the sectors have become
closely intertwined, They are evolving quickly, and integrated solutions have become increasingly complex. While Bion has over 30 years
of experience in capturing and recycling nutrients, the Company needs to build on its own abilities by affiliating with strategic partners
to fully understand the overlapping opportunities in the two spaces, and how to exploit them to their fullest potential. Bion is now evaluating
both European and U.S. renewable energy developers, operators, and investors to determine the best fit for moving forward with AD/RNG
development, both here and in the EU, as well as development partners in industrial opportunities. After its IP was extended to industrial
and municipal waste streams in January 2024, Bion announced its intention to establish strategic partnerships and to market the ARS as
a standalone ’bolt-on’ ammonia control solution for anaerobic digestion (“AD”) of both animal manure waste (non-Bion
livestock waste treatment facilities), as well as industrial wastewater, both in the U.S. and in Europe (See Standalone Opportunity below).
Bion is now focused primarily on: i) operation
and production of fertilizer samples at the Initial Project, our commercial-scale ARS installation at Fair Oaks, IN, ii) identifying biogas/
clean fuels partners for both livestock and industrial projects, iii) developing applications and markets for its low carbon and organic
fertilizer products (including life-cycle analysis (LCA) to determine Carbon Intensity (CI) Score for both liquid and solid products,
and organic listings/certifications for multiple liquid products), iv) exploring opportunities related to stand-alone ARS markets, (v),
discussions regarding initiation and development of agreements and joint ventures (“JVs” as discussed herein), and vi) ongoing
R&D activities. Each of the initiatives/activities mentioned above are subject to resolution of the financial constraints facing the
Company that are described in multiple places in this document.
Technology Platform and Development
Bion has invested decades of work and substantial
capital in the development of our technology and technology platform since 1989. The predecessors to Bion’s Gen3Tech platform, our
patented first- and second-generation technologies (“1G and 2G Tech”), were proven at commercial scale. Over 30 of these systems
were deployed at New York dairies, Florida food processing facilities and dairies, North Carolina hog farms, a Texas dairy and a Pennsylvania
dairy. The 2G Tech was reviewed and qualified for federal loan guarantees under USDA’s Technical Assessment program. Bion’s
2G Tech dairy project (“Kreider 1” or “KF1”), located at Kreider Farms in Pennsylvania (“PA”) received
the first verified /measurable nutrient reduction credits from a non-point source livestock facility in the U.S. and its nutrient reductions
were verified by the Pennsylvania Department of Environmental Protection (“DEP”) during 2012. For more information on Bion’s
2G Tech, please see Bion’s Form 10-K, for the year ended June 30, 2023. (and prior years).
A key attribute of Bion’s 2G Tech, now our
Gen3Tech, was that nutrient and other pollution reductions could be measured, providing a level of verification on par with a municipal
wastewater treatment plant, which created the opportunity for the nutrient reductions to be used as “qualified offsets” to
EPA-mandated requirements. However, while it was an engineering success, the 2G Tech failed financially because the platform was dependent
on either regulation or revenues from an anticipated incentive program under the Chesapeake Bay Strategy, that did not materialize. By
the mid-2010’s, it became apparent that neither of these options were imminent or even assured, so the Company initiated the steps
to reimagine and redesign its technology. The Gen3Tech platform was developed to maximize value from resource recovery and co-products,
by using AD to produce biogas and our ARS to produce fertilizer products. By verifying these processes to the consumer, we would achieve
premium pricing from USDA PVP-certified ‘environmentally sustainable’ retail branding of the animal protein products it supports.
Further, the third-generation platform provides enhanced nutrient control, compared to prior versions, and will also generate verified
water quality trading credits (or some other form of payment for ecosystem services that we believe is inevitable for nutrient impaired
watersheds).
The core technology that supports the Gen3Tech
platform is Bion’s patented and proprietary Ammonia Recovery System (ARS), which utilizes existing commercial evaporation and distillation
process equipment (with decades of reliability and service history) that is customized for Bion’s specific applications. The first
patent on the ARS was filed in 2015, for an ammonia recovery process that produces ammonium bicarbonate (a commercial fertilizer) without
external chemical additives, thereby providing the basis for organic certification. A Notice of Allowance from the US Patent and Trademark
Office (“USPTO”) was received during August 2018 related to this patent application and the patent was subsequently issued.
Since July 2017 Bion has filed for continuations of this patent to provide broadened protections and to cover improvements to the process
developed in the interim. During August 2020 the Company received a ‘Notice of Allowance’ for our third patent related to
our Gen3Tech and additional related applications are pending and/or planned (See “Patents”). In January 2024, the ARS claims
were extended to industrial and municipal wastewater streams, in addition to the animal manure waste streams, previously covered.
In June 2025, Bion completed and released its
Technology-Optimization Report, that details the development and 18-month optimization of the ARS at our demonstration facility in Fair
Oaks, Indiana. The optimized ARS demonstrated it is stable and can maintain continuous steady-state operations, reliable, and scalable.
The ARS also showed it can achieve its ammonia reduction targets by evaporating one-third less water than was anticipated and modeled.
That translates to significantly better economics, including lower fertilizer production costs. The platform is now ready for the final
design process of a full-scale commercial system, which is subject to project-specific details, location, and feedstock characteristics.
Ammonia Recovery System
The patented ARS is the core of Bion’s Gen3Tech
platform. It recovers and upcycles more than 90 percent of the volatile ammonia that is available in the livestock manure (or other organic)
waste stream effluent after biogas/methane is produced through anaerobic digestion (AD). The technology has applications in various industrial
organic waste streams, including food processing, slaughter/packing plants, and municipal facilities that utilize AD to produce biogas.
The ARS utilizes the CO2 that is also in the organic waste stream to stabilize the ammonia, forming ammonium carbonate/bicarbonate in
either a liquid or solid form. Ammonium bicarbonate has a long history of use as a water-soluble nitrogen fertilizer, that was commonly
used before the advent of low-cost synthetic fertilizers, such as urea.
Ammonia nitrogen enters the environment through
volatilization (evaporation) from the AD effluent, before and after it is applied to croplands as fertilizer, or it enters the water supply
directly in runoff from fields where it has been spread. Approximately 80 percent of the ammonia in livestock manure is lost in this manner.
Once the ammonia has escaped to the environment, it is highly mobile, water soluble, and difficult to recapture and treat (it is the primary
cost-driver in municipal wastewater treatment). Airborne ammonia can contribute to the formation of PM2.5, small inhalable particulate
matter that causes respiratory distress and is regulated under the Clean Air Act. In runoff, ammonia in the form of nitrate contaminates
groundwater and fuels algae blooms in coastal waters that are becoming increasingly toxic. Ammonia nitrogen is the primary driver of nutrient
runoff that US EPA calls the most expensive and difficult to treat water quality problem in the U.S. today. Capturing and stabilizing
the ammonia both minimizes its environmental impacts and allows us to produce our low-carbon and/or organic ‘pure’ nitrogen
fertilizer products that can be transported to where they are needed and applied when they are needed.
Operating results at the Initial Project demonstrate
ARS performance exceeds initial expectations for ammonia recovery and related economics. The Company has achieved multiple key technical
objectives in the optimization of the ARS, which will support the final design process for full-scale systems. The ARS has achieved and
maintained controlled operations under a variety of conditions, producing both liquid and crystal ammonium carbonate/bicarbonate, Bion’s
commercial nitrogen fertilizer products. Bion has optimized the ARS’s operating parameters and has demonstrated that it meets and/or
exceeds the results needed for Bion’s economic models for large-scale commercial projects.
Bion received an OMRI (Organic Materials Review
Institute) Listing on its first commercial nitrogen fertilizer product, a 10-0-0 ammonium bicarbonate solution, in August 2024, which
provides assurance to organic growers and their certifiers that the fertilizer can be used in organic production. Fertilizers that can
be used in organic production command substantially higher prices than synthetic (chemically-produced) commercial fertilizers, such as
urea. Bion will initially focus on several markets for its OMRI Listed fertilizers, including production of high-value specialty crop
fruits & vegetables, organic row crops, such as corn, and hydroponic, aeroponic, and greenhouse applications. Bion also expects demand
in regions where nitrogen inputs are required to maximize the benefits of cover crops and is also evaluating opportunities in regenerative
practices. Bion is also evaluating non-agriculture markets, including retail home lawn and garden, golf courses, city parks, schools,
and youth sports fields, which are all experiencing trends to natural and safe products. At this time, Bion intends to continue producing
fertilizer products at the Initial Project to support testing and life-cycle analysis, product trials, and ongoing organic and low-carbon
fertilizer initiatives. Bion has produced and will continue to produce a solid/granular nitrogen fertilizer product at the Initial Project
which we believe will be both ‘Climate-Smart’ and ‘Water-Smart’ – a pure nitrogen fertilizer with a low
carbon footprint, that is water soluble and readily available to plants.
Final economic and energy efficiency models will
be validated during the final design process. The Company has prepared an evaluation and technology optimization report on the ARS and
its economics, under guidance from Buflovak. We believe this data will also provide potential stakeholders, including a) livestock producers,
b) biogas and clean fuels developers and producers, c) operators of industrial and/or municipal facilities utilizing ADs and d) financial
institutions with the information they need to proceed with confidence in collaborating with Bion on projects. Each of the initiatives/activities
referenced above are subject to resolution of the financial constraints facing the Company that are described in multiple places in this
document.
Gen3Tech Platform
Our Gen3Tech platform provides comprehensive waste
treatment and resource recovery that is unmatched in the industry today. The platform consists of manure handling and conditioning, anaerobic
digestion (AD) and biogas upgrading, coupled with our Ammonia Recovery System (ARS) and fertilizer processing, handling and storage. The
Gen3Tech platform is the basis for a JV business model with four primary distinct revenue streams: 1) pipeline quality renewable natural
gas and related carbon and other environmental credits, 2) premium fertilizer product and related credits s: organic and ‘low-carbon’,
3) premium pricing/revenues for USDA PVP-certified (or otherwise verified) ‘Environmentally Sustainable’ or ‘Eco-friendly’
branded meat at the retail level, and potentially 4) nutrient reduction credits in certain watersheds. Carbon and nutrient credit revenues
will be supported by third-party verification of the waste treatment processes with relatively limited incremental cost to Bion. The same
verified data will also provide the backbone for the USDA PVP-certified sustainable brand, with limited incremental cost.
1) Renewable energy and renewable energy- and carbon-related credits:
Bion’s Gen3Tech platform utilizes
anaerobic digestion (“AD”), customized to maximize both recovery of biogas (methane) and ammonia nitrogen from the waste stream.
At sufficient scale, methane produced from AD can be cost-effectively conditioned/cleaned, compressed and injected into a pipeline or
used onsite, depending on project needs and economics. The US Renewable Fuel Standard (“RFS”) program and state programs,
like the LCFS in California and elsewhere, provide ongoing renewable energy credits for the production of biogas and its subsequent use
as a renewable fuel. The CO2 recovered in the gas cleaning process will be recycled for use in the production of organic fertilizer products
along with the ammonia-rich digestate, instead of venting it to atmosphere. Gen3Tech facilities can also generate photovoltaic (solar)
electricity from modules placed on the roofs of the barns (approximately 12 acres of rooftop per 15,000 head of cattle module) to supply
onsite needs and/or export to the grid, depending on project requirements. Additional renewable energy-related credit programs are being
developed that Bion believes will impact these revenues, including a Carbon Intensity (CI) score that measures the amount of carbon produced
per unit of energy produced.
In
addition to liquid ammonium nitrogen fertilizer, Bion’s ARS is capable of recovering nitrogen in the form of solid ammonium bicarbonate
products containing up to 18%-22% (or higher) nitrogen in a crystalline form that is easily transported (while producing liquids with
various percentages of ammonium bicarbonate nitrogen during interim stages of the process). This solid product is water soluble and provides
a readily available nitrogen source for crops. It will contain virtually none of the other salt, iron and mineral constituents of the
livestock waste stream that often accompany other organic fertilizers. This product is being developed to fertilizer industry standards
so that it can be precision-applied to crops using existing equipment.
Applications
for our first solid form of concentrated ammonia, soluble nitrogen fertilizer product line were filed with OMRI (filed during May 2021)
and CDFA (filed during May 2022) without success, to date. After an extended review processes (which was largely opaque), the OMRI application
proceeded through multiple stages without receiving a positive result. The Company’s solid product line is novel (in the context
of organic certification) in part due to the fact that no formal listing category currently in the organic space for a solid form of
concentrated ammonia, soluble nitrogen fertilizers and there is no clear guidance at present from internal policy manuals on how to categorize
this product and the process that produces it. There is also no clear guidance at present from either the NOP or the National Organic
Standards Board (“NOSB”) (which is currently involved in a related review and recommendations process regarding ‘high
nitrogen liquid fertilizers’ derived from ammonia from manure). The Company and its representatives, along with a number of other
organic fertilizer stakeholders, are involved in discussions regarding resolution of these matters at all three levels. The Company intends
to continue efforts to obtain listing/certification for its solid nitrogen fertilizer line over the course of this fiscal year. The overarching
standard of organic production, per NOP guidelines, is that a “product shall have been produced and handled without the use of
synthetic chemicals...” That is rule Number One. At NOP, the term "synthetic" means “a substance that is formulated
or manufactured by a chemical process or by a process that chemically changes a substance extracted from naturally occurring plant, animal,