Annual Report
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
For the Fiscal Year Ended: June 30, 2024
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: (516) 586-5643
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 43,000,000
shares of voting stock held by non-affiliates of the Registrant as of June 30, 2024 approximated $21.5 million. As of August 1,
2024, the Registrant had 57,236,479 shares of common stock issued and 56,532,170 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.
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 anticipated retirement of Mark A. Smith, the Company’s President, General Counsel and Chief Financial
Officer, effective July 31, 2024.
Since the end of May 2024, a new core leadership team
has been installed (see H and I, below) and a short-term funding facility has been implemented (see J, below) while longer term capital
solutions are evaluated. Our new leadership team believes the financial and management difficulties Bion has faced are outweighed by the
success of our technology demonstration and optimization initiatives at our Fair Oaks facility. This success coincides with clear and
growing trends in both sustainable agriculture and clean fuels technology and policy that favor Bion’s technology and 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 to participate in transformational change at the intersection of agriculture, renewable
energy and clean fuels, clean air and water, and evolving 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 $5.8 million at June 30, 2024 which represents an increase of approximately $4.2 million from June 30, 2023 (largely
due to an increase in ‘accounts payable and accrued expenses’ totaling approximately $2.1 million and an increase in ‘current
debt’ of approximately $2.1 million as a result of the Company’s limited success in raising new financing (equity and/or debt)
and existing debt terms becoming current during the recent period combined with continued expenses (including those related to the Initial
Project). Similarly, the Company’s cash on hand decreased from approximately $626,000 to approximately $52,000 over the same period.
The Company extreme difficulty is obtaining needed funds during the entire 2023 fiscal year has continued throughout the first quarter
of the current fiscal year to date. See NOTE 1. Going Concern and Management’s Plans, Plan of Operations and Outlook and ITEM 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations and Note 11 Subsequent Events (below).
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 quarter 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 needed funds 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. As matters progressed,
including cost overruns, management and financial crises, etc., Bion was unable to proceed further at Fair Oaks. It was anticipated that
the ARS would 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 has been 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, 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. See Notes5 and 8 re Convertible Bridge Loan/Default and Note 11, Subsequent Events. 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 largest creditor---the general contractor for the Initial Project
--- has filed a mechanics lien in Indiana (and its largest sub-contractor has sent notices related to its intention to file a mechanics
lien) and other creditors are threatening to commence litigation and/or repossess/remove leased equipment).
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. 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 focused a portion of its limited
resources on understanding and evaluating opportunities to apply its ARS as a ‘standalone’ ammonia control solution in these
sectors. In such cases, the ARS would be deployed as a bolt-on ammonia solution (vs integrated into a Bion Gen3Tech livestock platform)
for facilities that produce biogas from organic waste streams, such as food, food processing, and livestock packing/slaughter, that are
subject to EPA-mandated discharge limits that require ammonia control. We believe at this time there is potentially a robust opportunity
to provide ammonia control solutions to others and we intend to pursue this opportunity in the coming year.
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, 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 has agreed to surrender not less than approximately 20% of its Company
holdings (as of December 2023) which surrender will increase to approximately 30% based on certain financing performances (see Form 8-K
dated April 3, 2024, Exhibit 10.1). The Bassani Family will elect exactly which Company securities it will surrender for cancellation
on or before June 30, 2024, the Company’s fiscal year end. The Bassani Family Agreement also sets 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 has 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 sets 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 provided the Company with their list regarding surrender of 20% of its Company holdings
(as of December 2023)(See Exhibit 10.1). As previously reported, MAS has previously completed 100% of his ‘give backs’.
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 will include 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 has been 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 15,000-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 is envisioned to produce premium quality Montana beef that we believe will be
the 'cleanest', most eco-friendly finished beef in the marketplace.
K: On August 23, 2024, Bion announced that
three affiliates of the Company (Greg Schoener, Interim COO & Director; Turk Stovall, Director; Bob Weerts, Director) and two shareholders
(one of whom is the brother of Greg Schoener) have agreed to advance to the Company, through a newly formed LLC, up to $500,000 in consideration
of a secured convertible promissory note. It is anticipated that others will join the LLC, although there can be no assurance they will.
The note instrument and agreements have not been executed at this time because terms and other details have not been finalized yet; however,
the group has begun advancing money to the Company. As of the date of the filing of this report, the aggregate sum of $201,564 has been
advanced to the Company, together with express directions on what items were to be paid with such funds. When a final agreement is executed,
it will be attached as an exhibit to a Form 8-K.
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 by deploying our Gen3Tech platform/business
model (discussed below) in ventures focused on the ‘feeder’ space of the livestock production/value chain. The Gen3Tech will
allow us to supply verifiably sustainable premium meat products, together with environmentally friendly, sustainable and/or organic co-products
from the production process. Bion primarily focused on the beef industry because we believe it faces the most challenges of all the livestock
sectors and can benefit the most from the application of Bion’s technology and business strategy. We believe the Stovall-Bion JV
represents the best opportunity to prove our strategy and plan to supply sustainable beef at scale. It is our primary focus.
Our patented and proprietary technology was developed
specifically to provide advanced waste treatment and resource recovery for large-scale livestock production facilities (also known as
“Concentrated Animal Feeding Operations” or “CAFOs"). Livestock production and its waste, particularly from CAFOs,
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 has also demonstrated that it has applications
in the industrial and municipal wastewater sectors, as described below, and we are currently 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 (ARS or Initial Project), our commercial scale demonstration facility located near Fair Oaks, Indiana. Through the end
of 2023, and 2024 to date, Bion has 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 now also includes standalone ‘bolt-on’ ammonia control solutions
for industrial and municipal 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 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 a strategic partner with specific expertise and an operating footprint in the biogas/
renewable natural gas (RNG) and/or clean fuels spaces, including sustainable aviation fuel (SAF). 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 improve the well-being of
those enterprises utilizing our technology, create value for our shareholders, and improve the planet.
Change 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 our former 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”). Based on our experience, we
believe it will 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, are in place.
The pivot in strategy to a faster development timeline
was based on several basic assumptions that proved incorrect (or, at least, premature): a) that there was a large, ready market for sustainable
beef, waiting to be filled, b) that the beef industry status quo was eager for change and would be supportive of a transition to sustainable
beef, and c) that the substantial investment that would be required to retool production at scale was readily available. It also relied
on Bion establishing strategic partnerships and relationships related to i) clean fuels/ renewable energy, ii) fertilizer, iii) beef retail/food
service distribution, iv) corporate and project finance, and v) others, that would allow us to ‘plug in’ feeders into an existing
value chain that included distribution/ offtake agreements for protein and byproducts. Multiple factors have contributed to our inability
(to date) to secure these relationships: covid-related delays and cost increases with our technology pilot; additional delays in the construction,
optimization, and demonstration of the ARS technology at commercial scale at Fair Oaks that prevented us from proving the technology’s
effectiveness; compounded by the extended illness and death of our former CEO and other management issues. These factors also made it
increasingly difficult for us to raise capital.
Bion’s new leadership team has returned the
company to its earlier approach, focusing on building a ‘flagship’ first project to prove concept feasibility and to provide
a development and finance model for future projects. 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.
Leadership believes for several reasons that the best
opportunity for the Company to prove its sustainable beef concept at this time is 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 have agreed to establish a JV, to be led by Mr. Stovall, with the goal of developing a 15,000-head
sustainable beef project at Stovall’s Yellowstone Cattle Feeders (‘YCF’) location in Shepherd, Montana. We anticipate
establishing the Stovall-Bion JV and creating related distribution agreements with key value chain partners during the current calendar
year, with the intent to begin construction before the end of 2024.
Bion will focus almost exclusively on moving that
project forward over the current year. Upon completion of the first facility at YCF, the JV intends to immediately begin development of
a second set of barns and process equipment for additional capacity. Ultimately, the JV envisions bringing a robust cattle feeding industry
to Montana, with additional feedyards in the eastern part of the state, which it currently lacks, along with sufficient corn production
and packing/ slaughter capacity. We believe that our Gen3Tech platform and barns will mitigate the extreme weather that has limited outdoor
cattle feeding in the northern states. Currently, Montana ships approximately 1.2 million feeder calves south to Colorado, Kansas, Nebraska
and other Midwest states to be fed. Bion and Stovall Ranching Companies believe that indoor feeding, with its enhanced efficiencies, will
support the development of infrastructure that will allow premium Eco-friendly beef to be produced wholly in Montana, from calving to
packing. We also believe that the State of Montana, like many states in the northern Midwest, will support such development that will
bring generational change and benefits to the state and its agricultural communities.
The Stovall-Bion JV (and future beef projects) will
be developed to produce blockchain-verified, sustainable beef in customized covered barns (resulting in reduced stress on cattle caused
by extreme weather, higher feed/weight gain efficiency, and shortened finishing times) with ongoing manure transfer (through slatted floors)
to anaerobic digesters (AD) that harvest biogas/ renewable natural gas (RNG) for sale. After the digester, Bion’s ARS will capture
and stabilize the ammonia, to recover its nutrient value that is now being lost, as well as to remediate the environmental/carbon impacts
usually associated with cattle feedlots and CAFOs. Bion’s patented Gen3Tech platform will refine the waste stream into valuable
coproducts that include clean water, RNG, and fertilizer products, both ‘Climate- and Water-Smart’ and/or organic. All steps
and stages in the animal raising and waste treatment process will be third-party verified, providing the basis for additional revenues,
including carbon and/or renewable energy-related credits and, eventually, payment for a range of ecosystem services, including potentially
nutrient credits. The same verified data will be used to substantiate the claims of a USDA-certified sustainable brand that will support
premium pricing for the meat/ animal protein products that are produced in Bion facilities.
Once Bion’s technology and production platform,
business model, and consumer demand have been proven, it may create the opportunity for joint ventures between the Company and larger
livestock/food/fertilizer industry participants. To accomplish Bion’s goals in this sector, we anticipate that we will ‘partner’
with other technology and service companies who provide solutions for different links of the beef (and other livestock) value chain and
with strategic partners up and down the supply chain. We anticipate this will result in substantial long-term value for Bion.
In the context of such JVs, we believe that the verifiable sustainable branding opportunities (conventional and organic) in meat will
represent one of the larger enhanced revenue contributors provided by Bion to the JVs (and Bion licensees). The Company believes that
a large portion of its business will be conducted through such JVs, but a material portion may involve licensing and or other approaches.
Renewable Energy/ Clean Fuels Strategic Partner
Bion is currently (and has been) in discussions with
several companies related to strategic partnerships in renewable energy production – RNG and solar – and clean fuels, as well
as reducing the carbon footprint of livestock production, especially beef. With today’s U.S, and global emphasis on decarbonizing
energy and the food supply chain, 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 ability 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 for its own beef project(s), animal waste treatment for others, both here and in the EU, as well as a
development partner in industrial and municipal 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 and municipal wastewater, both in the U.S. and in Europe (See Standalone Opportunity below).
Bion is now focused primarily on: i) operation
and final testing at the Initial Project, our commercial-scale ARS installation at Fair Oaks, IN, for support of final design, feasibility
studies and/or engineering reports related to our initial JV Project (and further optimization of its operational parameters), ii) pre-development
planning of the Montana Stovall-Bion JV beef project, including distribution agreements for beef and co-products, iii) identifying a biogas/
clean fuels partner(s) for both livestock and industrial projects, iv) developing applications and markets for its low carbon ‘Climate-Smart’
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) and its sustainable (conventional and organic) animal protein
products, v) discussions regarding initiation and development of agreements and joint ventures (“JVs” as discussed herein)
based on the augmented capabilities of our Gen3Tech platform (in the sustainable beef and other livestock segments), (vi) exploring opportunities
related to stand-alone ARS markets, and vii) ongoing R&D activities. 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.
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.
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, based on results to date
and testing anticipated to be completed by the end of September 2024. 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 largely 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. The Company expects final optimization to continue through
the end of September 2024 and provide the data required to support final design/engineering for commercial project modules.
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
corn side dressing, and hydroponic and greenhouse applications. Bion also expects demand in regions where nitrogen inputs are required
to maximize the benefits of cover crops that store carbon and improve soil and microbial health. Further, Bion is also evaluating opportunities
in regenerative practices that include fertilized pastures to graze cattle. At this time, Bion intends to continue producing liquid and
crystal 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 intends to engage Hebeler Process Solutions/ Buflovak, our technology development-engineering
firm, during the upcoming quarter to prepare an evaluation and report of the ARS and its economics, while also moving forward on final
commercial design for the Stovall JV project. Bion anticipates it will also engage a nationally-recognized and unrelated engineering firm
to produce a third-party engineering report, describing the processes and economics of its Ammonia Recovery System, which is a requirement
for USDA loan guarantees. We believe this data will also provide potential stakeholders, including a) cattle producers and feeders, packers,
distributors, retailers in the agricultural segment, 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 will 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.
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, or mineral sources, except
that such term shall not apply to substances created by naturally occurring biological processes.” In evaluating and approving Bion’s
liquid ammonia for OMRI listing, Bion’s patented ammonia recovery system was not deemed synthetic. That is an important distinction
for future Bion product filings based upon the same patented process.
Irrespective of an organic certification,
Bion believes that its crystalline ammonium bicarbonate will have use in another, potentially large, fertilizer market: production of
corn grown for ethanol that is then upgraded to sustainable aviation fuel (SAF). The Company is exploring the market potential for its
fertilizer (in liquid and/or solid forms) as a verifiably low carbon/ ‘Climate Smart’ product (potentially a much larger market
than the organic market) with focus on producing corn used for biofuels. The carbon footprint (Carbon Intensity) of clean fuels (and therefore
the tax credits available for their use) is determined by a ‘life cycle analysis’ (LCA) that considers all the energy inputs
to the fuel and its production processes, compared to a fossil-fuels baseline. In the case of corn ethanol that can be upgraded to SAF,
one of the largest inputs is the fertilizer used to grow the corn. The baseline for that fertilizer is urea. We believe Bion’s ability
to substantially reduce the carbon footprint of the fertilizer, and therefore that of the entire chain, will create significant value
for our partners and customers.
This will require working with industry and academic entities to develop
appropriate metrics and produce an independent ‘life cycle assessment’ (LCA) for Bion’s
ammonium nitrogen fertilizer product, which can be compared to conventional nitrogen fertilizer products, like urea. Because Bion’s
ARS recovers both nitrogen and CO2 from the waste stream (including using CO2 usually vented to the atmosphere as a stabilizing agent),
it creates added carbon offsets compared to natural gas utilized as feedstock in chemical ammonia production, which reduction will be
reflected in the LCA. This LCA will assess environmental impacts associated with fertilizer production in support of the beef cattle supply
chain for both the existing conventional approach (primarily fossil fuel-based Haber-Bosch production methods) and the largely decarbonized
Bion production approach. We believe a series of coincident, yet significant LCA benefits accrue from Bion’s patented fertilizer
production approach that will lead to a very low carbon footprint. Further, Bion believes that current evaluations of the carbon impact
from feedlot operations materially underestimate the negative impacts because existing models do not properly include significant ‘downstream’
carbon impacts of required energy intensive wastewater treatment for re-deposited ammonia nitrogen. The Company believes there is a significant
‘Climate Smart’ opportunity for our fertilizer products, such an LCA can be completed (based in part on data from the Initial
Project) and support marketing efforts well prior to operational dates for the Company’s initial large-scale JV Gen3Tech projects.
Bion has conducted a preliminary LCA – while it is not considered ‘independent’, it used the internationally-accepted
GREET model – and it demonstrates our ammonium bicarbonate has a dramatically lower carbon footprint compared to the urea baseline.
3) Sustainable Brand Premium:
Consumers have demonstrated a willingness
to pay a premium for safe and sustainable food choices. Based on Bion’s recognition of the potential opportunities created by such
willingness, beginning in 2015, Bion worked with the USDA’s Process Verified Program (“PVP”) – the ‘gold
standard’ in food verification and branding – to establish a USDA PVP-certified sustainable brand. Bion received conditional
approval from the PVP related to its Kreider 1 project (utilizing 2G Tech). It is our intention to submit an application for the Gen3Tech
platform when the initial Gen3Tech Project is operational and seek an approval for certification based on third-party-verified reductions
in nutrient impacts, greenhouse gases and pathogens in the waste stream (and other attributes), based on our Gen3Tech platform. PVP certification
incorporated as part of a recognizable brand (together with point-of-sale information) will provide consumers with products and brands
that can be trusted. Bion believes that such a brand and livestock product line will command a pricing premium for Bion’s livestock
JVs and their customers.
Food safety and sustainability are
issues of growing importance in the U.S. and worldwide. Bion’s branding initiative reflects trends already underway in the livestock
industry. Driven by growing consumer demand, large food retailers (such as Walmart and Costco) and restaurant chains (including Chipotle
and McDonalds) are increasingly demanding greater responsibility and improved sustainability in food production practices from their suppliers.
The Global Roundtable for Sustainable Beef (“Roundtable”) was created to advance a sustainable global beef value chain that
is “environmentally sound, socially responsible and economically viable”. The Roundtable represents members from across the
supply chain, including U.S., Canadian and Australian cattlemen’s associations, Cargill, JBS, Elanco, McDonalds and A&W.
Large institutional investors have
begun to pressure the livestock industry. Ceres and several other large activist institutional investors have already expressed concerns
about carbon footprint, water quality, antibiotic usage and animal welfare in letters to management of their investment holdings in the
food production industry. The Collier Farm Animal Investment Risk & Return (“FAIRR”) Initiative was recently launched
to highlight the environmental, social, and governance (“ESG”) risks associated with large-scale livestock production.
In past years, the UN FAO has issued
several highly critical reports of the livestock industry, more recently focused on its impacts on climate change. While some of their
early reports were based on incomplete data and faulty methodologies and have since been somewhat quietly ‘retracted’, a wide
array of activist groups, including climate, animal rights, and anti-factory farming advocates, have seized on them to create a global
“anti-meat” messaging campaign. Their messaging is predicated on the (incorrect) notion that agriculture, and the livestock
sector specifically, is the largest contributor to climate change, greater than the energy and transportation sectors. While this fact
has been publicly ‘debunked’, the anti-meat campaign has been joined and amplified by various other stakeholders, governments,
and more recently, competitors in the alternative protein space, such as plant-based and cellular meats.
Over the last few years, most large
meat and dairy product retailers have announced ‘sustainability’ initiatives, although the definition of sustainability is
often unclear. Based on recent statements from the industry regarding sustainability policy, many that identify goals that are 10 to 30
years in the future, Bion believes that sustainability on the production side will look a lot like what the Company’s Gen3Tech
platform can provide today. The Gen3Tech platform can deliver verifiable metrics that demonstrate meaningful improvements in sustainability
for livestock production that are unmatched in the industry today, including a dramatically reduced carbon and nutrient footprint; lower
negative impacts to water, soil and air; increased pathogen destruction; and other environmental and public health impacts. The Covid-19
pandemic has further heightened consumer awareness and concerns related to a) environmental sustainability, b) food safety, c) sourcing
and traceability and d) humane treatment of both animals and workers.
The more the livestock industry’s supply chain practices
become transparent and known by consumers, the more consumers are seeking alternatives. Bion’s ‘Sustainable’ branding
program is designed to address a wide array of consumer concerns including: a) ‘where does your food come from?’ (animal heritage
information); b) climate change (carbon) and other key environmental impacts (air/water/soil); c) antibiotic use/ standards; d) animal
welfare/ humane treatment; e) laborer welfare/ working conditions. These issues can be addressed with the consumer through general advertising
and/or at the point of sale with a QR code on the packaging that links back to product-specific data. The verification processes that
will be employed by Bion’s Gen3Tech platform support block chain traceability, providing accountability throughout that part of
the supply chain addressed by Bion’s platform and enabling any quality issues to be quickly identified by lot and location, minimizing
risk to its consumers. In essence, Bion’s comprehensive technology platform will enable its livestock JVs and other adopters to
be not only the provider of the product the consumer wants, but also the businesses that shares their consumers’ values.
4) Water Quality Trading/ Nutrient Credits:
In parallel with technology development,
Bion has worked (which work continues) to implement market-driven strategies designed to stimulate private-sector participation in the
overall U.S. nutrient and carbon reduction strategy. These market-driven strategies can generate “payment for ecosystem services”,
in which farmers or landowners are rewarded for managing their land and operations to provide environmental benefits that will generate
additional revenues. Existing renewable energy credits for the production and use of biogas are an example of payment for ecosystem services.
Another such strategy is nutrient trading (or water quality trading), which will potentially create markets (in Pennsylvania and other
states) that will utilize taxpayer funding for the purchase of verified pollution reductions from agriculture (“nutrient credits”)
by the state (or others) through competitively-bid procurement programs. Such credits then can be used as a ‘qualified offset’
by an individual state (or municipality) to meet its federal clean water mandates at significantly lower cost to the taxpayer. Market-driven
strategies, including competitive procurement of verified credits, are supported by U.S. EPA, the Chesapeake Bay Commission, national
livestock interests, and other key stakeholders. Legislation in Pennsylvania to establish the first such state competitive procurement
program passed the Pennsylvania Senate by a bi-partisan majority during March 2019 but has not yet crossed other hurdles required for
actual adoption.
Bion believes that nutrient reduction (and