ITEM 1A. RISK FACTORS.
Our future results of operations, financial condition
and liquidity and the market price for our securities are subject to numerous risks, many of which are driven by factors that we cannot
control. The following cautionary risks, uncertainties and assumptions relevant to our business include factors we believe could cause
our actual results to differ materially from expected and historical results. Other factors beyond those listed below, including factors
unknown to us and factors known to us which we have not currently determined to be material, could also adversely affect our business,
results of operations, financial condition, prospects and cash flows. Also see “Forward-looking Statements” above.
· delays in anticipated permit approval and/or start-up dates;
· delays in market awareness of Bion and our Systems;
· seasonal and climatic conditions;
· the strength and financial resources of the Company's potential competitors;
· general economic and capital market conditions;
· industry risks, including environmental related problems;
Risks Relating to our Common Stock
· The market price of our stock is subject to volatility;
· Our stockholders face further potential dilution in any new financing
ITEM 1B. UNRESOLVED STAFF COMMENTS.
Not applicable.
ITEM 1C. CYBERSECURITY.
We
face cybersecurity risks as a result of the variety of networks and systems we must defend against cybersecurity attacks; and the
level of harm that could occur if we suffer impacts of a material cybersecurity incident.We
are committed to robust oversight of these risks and implementing mechanisms, controls, technologies, and processes designed to help
us assess, identify, and manage these risks. In the year ended June 30, 2025, we did not experience a
material “cybersecurity incident” as such term is defined in Item 106(a) of Regulation S-K. However, we have experienced
two such material breaches in the past (see Form 10-K for the year ended 2023) and there can be no guarantee that we will not
experience such incidents in the future. Such incidents could result in us incurring significant costs related to implementing
threat protection measures, and the possibility of such incidents could result in additional costs in defending against litigation,
responding to regulatory inquiries or actions, paying damages, or taking other remedial steps with respect to third parties, as well
as incurring significant reputational harm. Further, cybersecurity threats are constantly evolving, increasing the difficulty of
successfully defending against them or implementing adequate preventative measures. While we seek to detect and investigate
unauthorized attempts and attacks against our network and to prevent their occurrence where practicable, we remain potentially
vulnerable to known or unknown threats. In some instances, we may be unaware of a threat or incident or its magnitude and effects
for some time. Further, there is increasing regulation regarding responses to cybersecurity incidents, including reporting to
regulators, which could subject us to additional liability and reputational harm. See “Item 1A. Risk Factors” of
this Annual Report for more information on our cybersecurity risks and product vulnerability risks.
We incorporate
industry best practices throughout our cybersecurity program to the extent practicable for a company of our size and resources. New leadership
is committed to improving our cybersecurity strategy, with the goal of enhancing controls, technologies, and other processes to assess,
identify, and manage material cybersecurity risks. Our cybersecurity program will be aligned with applicable industry standards and maintained
by a third-party technology firm.The third-party firm has processes in place to assess, identify, manage, and address material cybersecurity
threats and incidents.These include, among other things, annual and ongoing security awareness advice for employees; mechanisms to detect
and monitor unusual network activity; and containment and incident response tools.
Our third-party
IT/ cybersecurity firm reports to our Chief Executive Officer (“CEO”).The third-party firm is informed about and monitors
prevention, detection, mitigation, and remediation efforts through regular communication and reporting from professionals within its team
and through the use of technological tools and software.Our CEO reports directly to the Board of Directors on our cybersecurity program
and efforts to prevent, detect, mitigate, and remediate issues. Cybersecurity reviews by the Board of Directors will occur at least annually,
or more frequently as determined to be necessary or advisable.
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
(406) 839-0816.
We are the sole owner of six 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 (Litigation (and related matters).
The Company is currently involved in no litigation
matters except:
1) Convertible Bridge Loan/Default
On September 28, 2023, in
order to partially mitigate the problems discussed above, 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”).
The Bridge Loan Agreements require 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”). 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 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 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 to recover a total of $1,494,513 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.
2) Creditor Matters
As is described in the Company’s
Financial Statements included herein and discussed in the Notes to the Financial Statements, the Company has had on-going difficulties
raising needed funds for its operations/activities over the past 3 years which has rendered the Company unable to meet its current creditor
obligations on a timely basis. This situation includes a substantial increase in the Company’s ‘Current Liabilities’
including ‘accounts payable’ over recent periods. 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 $1,494,513 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). The Company could also face litigation from the Lessor of the land on which the Initial Project is located as it is
in default on lease rental payments.
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, 2025 was approximately 1,471. 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
Trust Company, 1110 Centre Pointe Curve, Ste # 101, Mendota Heights, MN 55120.
(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 as of June
30, 2025 and 2024. 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, 2025 4,891,600 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, 2025, 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, 2024 nil options
have been granted and outstanding under the 2021 Equity Plan. As of June 30, 2025, 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, 2025:
2006 Equity Compensation Plan table
Equity compensation plans not approved by security holders — — —
ITEM 6. SELECTED FINANCIAL DATA.
N/A
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Statements made in this Form 10-K that are not historical or current
facts, which represent the Company's expectations or beliefs including, but not limited to, statements concerning the Company's operations,
performance, financial condition, business strategies, and other information, involve substantial risks and uncertainties. The Company's
actual results of operations, most of which are beyond the Company's control, could differ materially. These statements often can be identified
by the use of terms such as "may," "will," "expect," "believe," anticipate," "estimate,"
or "continue" or the negative thereof. 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 potential
conflicts of interest related to the BLG loan group, its control by two of Bion’s Directors and key management, and its security
position in the Company’s IP (see below, Item K), adverse economic conditions, entry of new and stronger competitors, inadequate
capital and limited ability to obtain financing, needed personnel 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 and failure to obtain 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 eco-friendly/sustainable beef, organic and low-carbon fertilizer products, and clean fuels will be
slow to develop (or not develop at all), ii) the possibility that competitors will develop more comprehensive and/or less expensive environmental
solutions, viii) delays in market awareness of Bion and our Systems, iv) uncertainties and
costs increases related to research and development efforts to update and improve Bion’s technologies and applications thereof,
and/or v) delays and/or costs exceeding expectations relating to Bion's development of the Initial Project, JVs and/or Projects and vi)
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.
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
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, above) and a short-term funding strategy was implemented (see K, above) 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.
See Part 1, Item 1 – General for detailed
business overview
THERE IS NO ASSURANCE THAT THE COMPANY WILL
REACH OR APPROACH THE GOALS/TARGETS SET FORTH ABOVE. REACHING SUCH GOALS/TARGETS WILL REQUIRE RESOLUTION OF THE COMPANY’S EXISTING
FINANCIAL DIFFICULTIES AND ACCESS TO VERY LARGE AMOUNTS OF CAPITAL (EQUITY AND DEBT) AS EACH BOLT-ON PROJECT IS PROJECTED TO COST BETWEEN
$10 AND $40 MILLION, AND EACH BEEF PROJECT MODULE IS PROJECTED TO COST IN EXCESS OF $50 MILLION (DEBT/EQUITY/GRANTS) TO CONSTRUCT AND
WILL REQUIRE MOBILIZATION OF SUBSTANTIAL PERSONNEL, TECHNICAL RESOURCES AND MANAGEMENT SKILLS. THE COMPANY DOES NOT POSSESS EITHER THE
FINANCIAL OR PERSONNEL RESOURCES INTERNALLY AND WILL NEED TO SOURCE SUCH RESOURCES FROM OUTSIDE ITSELF.
For expanded information regarding our ‘HISTORY,
BACKGROUND AND CURRENT ACTIVITIES’, see discussion within the Notes (particularly Notes 1, 4, 5, and 8) included in this report,
in Forms 8-K and Forms 10-Q filed earlier this year and Item 1 (and other sections) in our Annual Reports on Form 10-K filed in previous
years.
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 June 30, 2025 and 2024, 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, 2025 COMPARED TO THE YEAR ENDED JUNE 30, 2024
Revenue
Total revenues were nil for both the years ended
June 30, 2025 and 2024.
General and Administrative
Total general and administrative expenses were
$2,145,000 and $2,046,000 for the years ended June 30, 2025 and 2024, respectively.
Salaries and related payroll tax expenses were
$368,000 and $600,000 for the years ended June 30, 2025 and 2024, respectively. Consulting costs were $198,000 and $488,000 for the years
ended June 30, 2025 and 2024, respectively. The $232,000 decrease in salary costs is due to Bill O’Neill resigning, Mark Smith retirement
and Dominic Bassani passing away and the Company not replacing the position. The $290,000 decrease in consulting costs is due to Bill
O’Neill resigning and the reduction of contracts related to capital raise efforts. Investor relations expenses were $136,000 and
$328,000 for the years ended June 30, 2025 and 2024, respectively, and the $192,000 decrease was due to less investor related activity
during the fiscal year in order to conserve cash. Legal costs were $1,000 and $34,000 for the years ended June 30, 2025 and 2024, respectively.
Stock-based compensation for the years ended June
30, 2025 and 2024 were $844,000 and ($16,000) respectively. The $860,000 variance is due to warrants exercise dates extended in 2025.
Depreciation
Total depreciation expense was $695 and $1,582
for the years ended June 30, 2025 and 2024, respectively.
Research and Development
Total research and development expenses were $22,000
and $23,000 for the years ended June 30, 2025 and 2024, respectively.
Salaries and related payroll tax expenses were
$6,000 and $6,000 for the years ended June 30, 2025 and 2024, respectively. Consulting costs were nil and $4,000 for the years ended June
30, 2025 and 2024, respectively. Legal expenses were $15,000 and $11,000 for the years ended June 30, 2025 and 2024, respectively.
Loss from Operations
As a result of the factors described above, the
loss from operations was $2,168,000 and $2,071,000 for the years ended June 30, 2025 and 2024 respectively.
Other (Income)/Expense
Other expense was $212,000 and $9,620,000 for
the years ended June 30, 2025 and 2024, respectively. The increase in 2024 was due to the impairment of fixed assets taken on the Fair
Oaks project.
Interest expense related to deferred compensation,
loan payable and convertible notes prior to capitalization was $311,000 and $222,000 for the years ended June 30, 2025 and 2024, respectively.
Net Loss Attributable to the Noncontrolling
Interest
The net loss attributable to the noncontrolling
interest was nil and nil for the years ended June 30, 2025 and 2024, respectively.
Net Loss Attributable to Bion’s Common
Stockholders
As a result of the factors described above, the
net loss attributable to Bion’s stockholders was $2,380,000 and $11,691,000 for the years ended June 30, 2025 and 2024, respectively,
and the net loss per basic common share was $.04 and $.22 for the years ended June 30, 2025 and 2024, respectively.
LIQUIDITY AND CAPITAL RESOURCES
The Company's consolidated financial statements
for the year ended June 30, 2025 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, 2025 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, 2025, the Company had cash of approximately
$4,400. During the year ended June 30, 2025, net cash used in operating activities was $868,000, 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 in part by proceeds from
financing activities, primarily in debt funding.
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. As stated in multiple places in this report, over the last fiscal year
the Company has had only very limited success in raising needed funds which lack of success has had material negative effects on the Company
and its business. 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, 2025, the Company
invested nil in the purchase of property and equipment or other investing activities.
Financing Activities
During the year ended June 30, 2025, the Company
received net cash proceeds of $400,000 from a note payable and $426,00 in convertible loans less commissions of $5,300.
During the year ended June 30, 2024, the Company
received net cash proceeds of $590,000 from the sale of units for $611,000 less commissions of $20,000.
As of June 30, 2025, the Company has debt obligations
consisting of: a) deferred compensation of $1,173,000, b) convertible notes payable – affiliates of $1,742,000, c) current note
payable including accrued interest of $423,000 and d) convertible bridge note payable of $1,023,000. As of June 30, 2024, the Company
had debt obligations of a) deferred compensation of $890,000, b) convertible notes payable – affiliates of $1,709,000, c) current
note payable including accrued interest of $419,000 and d) note payable including accrued interest of $125,600.
Plan of Operations and Outlook
As of June 30, 2025, the Company had cash of approximately
$4,400.
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
2024 and 2023 (as a whole), 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 2025 fiscal year (and the first quarter of 2026 through the date of this report). The Company raised very
limited equity funds during such periods to meet some of its immediate needs, and therefore, the Company needs to raise substantial additional
funds in the upcoming periods. The Company has faced substantial demand for capital and operating expenditures for the fiscal year 2025
that we anticipate will continue (or increase) during the 2026 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 begun to be alleviated during 2024 and 2023. 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 and members of the Company's senior management
have from time-to-time made loans to the Company in the past and may do so in future periods.
The Company continues to explore sources of additional
financing (including potential agreements with strategic partners – both financial, renewable energy- and ag-industry) to satisfy
its current and future operating and capital expenditure requirements as it is not currently generating any significant revenues. Bion’s
leadership team’s new approach, focusing on the bolt-on opportunity and developing a single proof-of-concept project vs multiple
projects developed simultaneously, will substantially reduce the company’s need to raise capital. Further, leadership believes this
approach represents a more achievable goal that will reinspire confidence in our own shareholders, as well as assure potential new strategic
and institutional investors, and make it easier to raise funds.
Going Concern and Management’s Plans:
The Company’s consolidated financial statements have
been prepared assuming the Company will continue as a going concern.
The Company is not currently
generating any significant revenues. Further, the Company’s anticipated revenues, if any, from existing JVs and proposed projects
will not be sufficient to offset operating and capital costs (for Projects) for a minimum of two to five years. Further, there are no
assurances that the Company will ultimately be successful in its efforts to develop and construct its Projects and market its Systems;
but 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. The aggregate effect of these factors raises substantial doubt about the Company’s ability to continue as a going concern.
During the fiscal year ended
June 30, 2025, the Company had a loss of $2,380,000 including $844,000 non-cash compensation expenses related to extension of warrants
and options.
During the year ended June
30, 2024, a one-time, non-recurring, non-cash charge of $9,460,425 was incurred by the Company in connection with a write-down of the
capitalized carrying value of the Initial Project (at Fair Oaks, Indiana) because the Initial Project was recently reclassified as largely
a research & development facility and is located on land subject to a short term lease (as described below in Item 2, Management’s
Discussion and Analysis). This charge reduced the Company shareholders’ equity to ($5,808,501) and resulted in a loss of $11,691,115
for the 2024 fiscal year.
The constraints on available
resources have had, and continue to have, negative effects on the pace and scope of the Company’s efforts to operate and 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, and to develop Projects. The Company anticipates that it will seek to raise
from $3,000,000 to $10,000,000 or more debt and/or equity through sale of its equity securities (common, preferred and/or hybrid) and/or
debt (including convertible) securities, and/or through use of ‘rights’ and/or warrants (new and/or existing) and/or license
payments and/or through other means during the next twelve months. Further, Bion will be required to raise $15 million (or more) to fund
its initial project, in a combination of debt financing and equity investment. However, as discussed above, there is no assurance, especially
in light of the difficulties the Company has experienced in many recent years and the extremely unsettled capital markets that presently
exist for small pre-revenue companies like us, that the Company will be able to obtain the funds that it needs to stay in business, complete
its technology development or to successfully develop its business and Projects. Ultimately, in the event the Company cannot secure additional
financial resources, or complete a strategic transaction in the longer term, the Company may need to curtail or suspend its operational
plans or current initiatives, or potentially liquidate its business interests, and investors may lose all or part of their investment.
The accompanying consolidated
financial statements do not include any adjustments relating to the recoverability or classification of assets or the amounts and classification
of liabilities that may result should the Company be unable to continue as a going concern. The following paragraphs describe management’s
plans with regard to these conditions.
Management’s Plan
The Company continues to explore sources of financing
to satisfy its current operating requirements and future growth needs. The Company has faced substantial demand for capital and operating
expenditures for the fiscal year 2025 that we anticipate will increase during the 2026 fiscal year and periods thereafter as we move toward
commercial implementation of our 3G Tech and development of JVs (including costs associated with additions of personnel to carry out the
business activities of the Company). As a result, the Company has faced, and continues to face, significant cash flow 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 and members of the Company's senior management have from time-to-time made loans to the Company in the past
and may do so in future periods.
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.
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 the 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.
To date, the Company has primarily
raised funds through private placements with accredited investors, often conducted through FINRA-registered broker/dealers. However, the
Company anticipates moving forward, it will need to raise capital using a combination of financial instruments and sources, that could
also include strategic and/or institutional investors, including family offices and private equity, brokered equity or debt offerings
with both public and private investors, and banks and other ag lending institutions, among others, although there can be no assurance
it will be successful. Many of these financing options may involve dilution, potentially substantial, for current shareholders. Management
intends to augment its access to capital by adding one or more staff members (or consultants) with experience in the capital markets,
as well as utilizing its current contacts and relationships in the capital markets.
Bion is 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.
CONTRACTUAL OBLIGATIONS
We have the following material contractual
obligations (in addition to employment and consulting agreements with management and employees):
The Company entered into an agreement on September
23, 2021, to lease approximately four acres of land near Fair Oaks, Indiana, for the development site of its Initial Project. The lease
ended December 31, 2024 and there is an agreement to extend month to month at the same rate.
The Company has not made consistent lease payments
since October 16, 2023 and has made no payments since February 24, 2025. The Company owes $106,250 in lease payments at June 30, 2025.
OFF-BALANCE SHEET ARRANGEMENTS
The Company does not have any off-balance sheet
arrangements (as that term is defined in Item 303 of Regulation S-K) that are reasonably likely to have a current or future material effect
on our financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
Not applicable.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA
The consolidated financial statements are set forth on pages F-1 through
F-25 hereto.
Item 9A. Controls and Procedures.
Disclosure Controls and Procedures
As of June 30, 2025, under the supervision and
with the participation of the Company’s President and Principal Financial Officer (the same person), management has evaluated the
effectiveness of the design and operations of the Company’s disclosure controls and procedures. Based on that evaluation, the President
and Principal Financial Office concluded that the Company’s disclosure controls and procedures were not effective as of June 30,
2025 as a result of the material weakness in internal control over financial reporting discussed below.
Changes in Internal Control over Financial Reporting
There were no changes in internal control over
financial reporting that occurred during the last fiscal quarter covered by this report that have materially affected, or are reasonably
likely to materially affect, the Company’s internal control over financial reporting.
Management’s Report on Internal Control over Financial
Reporting
Our management is responsible for establishing
and maintaining adequate internal control over financial reporting, as such term is defined in the Securities Exchange Act of 1934 Rule
13a-15(f). Our Chief Executive Officer and Principal Financial Officer (the same person) conducted an evaluation of the effectiveness
of our internal control over financial reporting based on the framework in Internal Control – Integrated Framework, issued by the
Committee of Sponsoring Organizations of the Treadway Commission (“COSO Framework”) and the related guidance provided in Internal
Control Over Financial Reporting – Guidance for Smaller Public Companies, also issued by the Committee of Sponsoring Organizations.
Based on this evaluation, management has concluded
that our internal control over financial reporting was not effective as of June 30, 2025. Our President and Principal Financial Officer
concluded we have a material weakness due to our control environment, and one condition caused by this is an inadequate of segregation
of duties as well as a lack of timely review and approval of related party transactions and a second condition is the a lack of timely
review and approval of capitalized internal costs and interest. Our size has prevented us from being able to employ sufficient resources
to enable us to have an adequate level of supervision and segregation of duties within our internal control system. There is one person
involved in the processing of the Company's accounting and banking transactions and a single person with overall supervision and review
of the cash disbursements and receipts and the overall accounting process. Therefore, while there are some compensating controls in place,
it is difficult to ensure effective segregation of accounting duties. While we strive to segregate duties as much as practicable, there
is an insufficient volume of transactions to justify additional full time staff. As a result of this material weakness, we have implemented
remediation procedures whereby in May 2006 we engaged an outside accounting and consulting firm with SEC and US GAAP experience to assist
us with the preparation of our financial statements, evaluation of complex accounting issues and the implementation of systems to improve
controls and review procedures over all financial statement and account balances. In December of 2021, there was a change made to a new
outside accounting and consulting firm. We believe that this outside consultant's review improved our disclosure controls and procedures.
If this review is effective throughout a period of time, we believe it will help remediate the segregation of duties material weakness.
However, we may not be able to fully remediate the material weakness unless we hire more staff. We will continue to monitor and assess
the costs and benefits of additional staffing.
This annual report does not include an attestation
report of the Company’s independent registered public accounting firm regarding internal control over financial reporting. Management’s
report was not subject to attestation by the Company’s independent registered public accounting firm pursuant to rules of the SEC
that permit the Company to provide only management’s report on internal control in this annual report.
ITEM 9B. OTHER INFORMATION
Insider Trading Arrangements and Policies
During the quarter ended June 30, 2025, no director
or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement”
as each term is defined in Item 408(a) of Regulation S-K.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
Our directors, executive officers and significant
employees/consultants, along with their respective ages and positions are as follows:
Name Age Position
Directors and Officers:
Craig Scott 65 Chief Executive Officer and Director
Jon Northrop 82 Director
Stephen Posner 81 Director
Greg Schoener 57 Chief Operating Officer and Director
Salvatore Zizza 79 Director
Robert Weerts 73 Director
Stephen Craig (Craig) Scott (65)
has been associated with Bion since 1993. Since that time he has been responsible for business and industry intelligence and analysis.
He was with Bion full-time from 1996 to 2000, then periodically as a consultant through 2005. Craig rejoined Bion in 2006 and has held
several senior positions, including Director of Communications, SVP – Capital Markets, and Head of Business Development. As of June
2024, he joined Bion’s Board of Directors and was subsequently named Interim Chief Executive Officer. Craig studied business and
communications at Montana State and Denver-Metro Universities.
Jon Northrop (82) has served as
our Secretary and a Director since March of 2003. Since September 2001 he has been self employed as a consultant with a practice focused
on business buyer advocacy. Mr. Northrop is one of our founders and served as our Chief Executive Officer and a Director from our inception
in September 1989 until August 2001. Before founding Bion Technologies, Inc., he served in a wide variety of managerial and executive
positions. He was the Executive Director of Davis, Graham & Stubbs, one of Denver’s largest law firms, from 1981 to 1989. Prior
to his law firm experience, Mr. Northrop worked at Samsonite Corporation’s Luggage Division in Denver, Colorado, for over 12 years.
His experience was in all aspects of manufacturing, systems design and implementation, and planning and finance, ending with three years
as the Division’s Vice President, Finance. Mr. Northrop has a bachelor’s degree in physics from Amherst College, Amherst,
Massachusetts (1965), an MBA in Finance from the University of Chicago, Chicago, Illinois (1969), and spent several years conducting post
graduate research in low energy particle physics at Case Institute of Technology, Cleveland.
Stephen Posner (81) is a financial
markets professional with a 50 year career raising capital, increasing public awareness, and advising on corporate strategy and M&A
for companies. He is experienced in facilitating the growth of both large and small companies, private and public. He is currently a Director
of a family of ETF’s. He is a proud husband, father, and grandpa and has been involved with Bion and a substantial shareholder in
the company for 25 years. He received a BA from Hofstra University, in New York.
Gregory (Greg) Schoener (57) currently
serves as the Chief Operating Officer and as a director of the company since June 1, 2024.He is a successful business owner and
operator, serving the construction industry in Houston, Texas. Mr. Schoener has broad management experience in the medical field
as well as the construction industry. Mr. Schoener is a Bion Shareholder since 2020.
Salvatore J. Zizza (79) Salvatore
Zizza has served as a director of Bion since February 15, 2023. He is presently President of Zizza & Associates Corp. a private holding
company which invests in various industries and retired Chairman of BAM (Bethlehem Advanced Materials), which designs and manufactures
high-temperature furnaces for sale and for its own use in the processing of specialty carbon, graphite and ceramic materials for semiconductor
and aerospace applications, and Chairman of Bergen Cove Realty Inc., with substantial holdings in residential real estate. Mr. Zizza serves
as Director & Chairman of Trans-Lux Corporation, a full-service provider of integrated multimedia systems for today’s communications
environments (since 2018) and served on board since 2009. Mr. Zizza bought NICO Construction Company, Inc., in 1978 and was President
and CFO until 1985 when NICO merged with The LVI Group Inc., a (NYSE), listed company. Prior to joining The LVI Group Inc., Mr. Zizza
was an independent financial consultant and had been a lending officer of Chemical Bank. Mr. Zizza is also an investor in numerous private
companies and real estate holdings. Mr. Zizza currently holds directorship positions at nineteen (19) Gabelli/GAMCO funds and trusts.
He has been associated with this family of investment funds for over thirty (30) years. He received a Baccalaureate/Political Science,
St. John’s University (1967) and a Master of Business Administration, St. John’s University (1972). In 2007 Mr. Zizza received
a Doctor of Commercial Sciences (Honorary) from St. John’s University.
Robert (Bob) Weerts (73) Bob Weerts
has been a member of The Company’s Board of Directors since July currently serves Director of the company since June 27, 2024.He
is a successful entrepreneur from Winnebago, Minnesota where he serves on the City Council. He founded and operates Erosion Control
Plus, that serves county, state and federal highway projects; Blue Valley Sod, serving the upper Midwest since 1987; Green Energy &
Development, active in recycling and composting and Bedrock Ready Mix. He is actively involved with Umpqua Energy and was a founding
member/Chairman of the Corn Plus Ethanol Plant.
Family Relationships
There are currently no family relationships among
our Directors and Executive Officers.
Compliance with Section 16(a) of the Exchange
Act
Section 16(a) of the Exchange Act requires our
officers and directors, and stockholders owning more than ten percent of a registered class of our equity securities, to file reports
of ownership and changes in ownership with the Securities and Exchange Commission. The Company is not aware of any persons who failed
to timely file reports under this section.
Involvement in Legal Proceedings
To the best of our knowledge, during the past
five years, none of the following occurred with respect to our directors or executive officers:
Audit Committee
The Company has no audit committee and is not
now required to have one, or an audit committee financial expert.
Code of Ethics
To date, the Company has not adopted a code of
business conduct and ethics applicable to its officers, directors or accounting officer.
Advisory Group
The Company, which has only five full-time employees/consultants
(all of whom are effectively ‘department heads’), has utilized many outside parties as consultants and contract workers for
various roles to augment our management capabilities and expertise. Over the last year the Company has begun to establish a more formal
‘advisory’ relationship with some of these people to insure their availability for consultation by our senior management (separate
from specific consulting engagements). At present, a) William Rupp (meat and beef industry), b) Matthew Lamb (agriculture/animal husbandry/dairy),
c) Stanley Rapp (government affairs), d) Dennis Tristao (agricultural tech, engineering and agricultural/environmental policy), e) Dennis
Bracht (organic seed, corn/feed grain cultivation and related matters), f) Steve Sands (former executive with performance Food Group),
Chris Cook (head of business development for Syngenta), and g) Lily Edwards-Callaway, PhD (animal health and welfare expert), have accepted
roles as members of our Advisory Group. The Company anticipates that additional persons will be added to this group over time.
ITEM 11. EXECUTIVE COMPENSATION.
The Company does not have a compensation committee
due to its small size and limited resources. The Board of Directors directly reviews and authorizes all compensation matters.
SUMMARY COMPENSATION TABLE