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; and
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 December 31, 2023, 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 (516)
586-5643.
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 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 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 other creditors are
threatening to commence litigation and/or repossess/remove leased equipment). The Company is also facing litigation from the Lessor of
the land on which the Initial Project is located as it is in default on lease rental payments.
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 2 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 largest creditor---the
general contractor for the Initial Project --- has filed a mechanics 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.
The Company is also facing 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, 2024 was approximately 1,539. 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 at this time.
During fiscal year 2023 the Company paid an aggregate dividend of $0 cash, respectively, on shares of Series B Preferred Stock and Series
C Preferred Stock which were outstanding during the year. A dividend of $1,000 was accrued on Series B Preferred Stock during the 2022
fiscal year. From July 1, 2014, the Company had 200 shares of Series B redeemable convertible Preferred stock outstanding with a par value
of $0.01 per share, convertible at the option of the holder at $2.00 per share, with dividends accrued and payable at 2.5% per quarter.
The Series B Preferred stock was mandatorily redeemable at $100 per share by the Company three years after issuance and accordingly was
classified as a liability. The 200 shares have reached their maturity date and the Company approved the redemption of the Series B preferred
stock during the quarter ended December 31, 2021 and the final 200 shares of Series B redeemable convertible Preferred stock were redeemed
for $41,000, which included the $21,000 in accrued dividend payable.
(d) Securities Authorized for Issuance Under
Equity Compensation Plans
In June 2006 the Company adopted its 2006 Consolidated
Incentive Plan, as amended ("Plan"), which terminated all prior plans and merged them into the Plan. The Plan was ratified
by the Company's shareholders in October 2006 (and has been amended multiple times since initial ratification). Under the Plan,
Directors may grant Shares, Options, Stand Alone Stock Appreciation Rights ("SAR's"), shares of Restricted Stock, shares of
Phantom Stock and Stock Bonuses and other items with respect to a number of Common Shares that in the aggregate does not exceed 36,000,000
shares. The maximum number of Common Shares for which Incentive Awards, including Incentive Stock Options, may be granted to any one Participant
shall not exceed 2,000,000 shares in any one calendar year; and the total of all cash payments to any one participant pursuant to the
Plan in any calendar year shall not exceed $1,500,000. As of June 30, 2024 5,001,600 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, 2024, 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, 2024, 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, 2024:
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.
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 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 Notes 5 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, 204, 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.
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 last CEO, Bion’s strategy shifted to executing multiple letters of intent and agreements
for sustainable beef JV projects and moving forward with development of those projects in quick succession. During our 2023 fiscal year,
Bion entered into three (3) letters of intent (“LOIs”): a) July 2022 letter of intent to develop a large-scale commercial
project - a 15,000-head sustainable beef cattle feeding operation together with the Ribbonwire Ranch (“Ribbonwire LOI”), in
Dalhart, Texas (with a provision to expand to 60,000 head) (“Dalhart Project”), b) January 2023 letter of intent to develop
a large-scale commercial project - a 15,000-head sustainable beef cattle feeding operation together with the Olson Feeders and TD Angus
(“Olson LOI”), near North Platte, Nebraska (with a provision to expand to 45,000 head or more) (“Olson Project”),
c) April 2023 letter of intent to develop a large-scale commercial project - a 15,000-head sustainable beef cattle feeding operation together
with Dakota Valley Growers (“DVG LOI”) near Bathgate, North Dakota (“DVG Project”). 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.
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.
____________________________________
The Company’s on-going difficulties raising
needed funds over the past two years have rendered the Company unable to meet its current creditor obligations on a timely basis. The
Company has engaged in discussion/negotiation with its larger creditors (including its largest creditor--- the primary contractor on the
Initial Project) but has been unable to reach agreements regarding payments due to the uncertainty as to if, when, and how much funding
the Company will be able to raise in future periods. As a result, the Company’s largest creditor---the general contractor for the
Initial Project --- has filed a mechanics in Indiana (and its largest sub-contractor has sent notices related to its intention to file
a mechanics lien), other creditors are threatening to commence litigation and/or repossess/remove leased equipment and the Company is
behind on its Lease payments related to the site of the Initial Project. On September 5, 2024, three members of the LLC (Subsequent Events,
Aug 23, 2024, below) met with representatives of two of the largest creditors: the primary contractor and the property lessor. Discussions
and ultimate resolution are ongoing and subject to Bion’s ability to raise capital in a timely manner. We have implemented extreme
cost savings measures: maintaining only mission-critical operations and funding, on a weekly basis, only those expenses needed to maintain
those operations. These measures will continue until we can execute a larger financing or obtain other sources of capital, such as a potential
strategic investor/partner or license agreement.
Bion is currently (and has been for some time) in
discussions with several companies related to potential strategic partnerships in renewable energy – 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 desired, but complex. 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. Bion believes that such
a relationship would entail a direct investment in Bion, licensing fee, or some other ‘up front’ financial benefit to Bion.
Bion’s new leadership team is strongly committed
to Bion’s continuation, its future success, and its shareholders. We have returned the company to its earlier approach of focusing
on building a ‘flagship’ first project to prove the concept and markets and provide a development and finance model for future
projects, instead of attempting to move forward on multiple projects simultaneously or in rapid succession. We believe this will put us
on a more achievable path. Further, this strategy will substantially reduce our need for capital, and we believe that a more reasonable
and credible objective will make it easier to raise that capital. We also believe that the recent changes in leadership, including the
addition of Turk Stovall to that leadership team, will lend validation and credibility to Bion and its business plan, making it easier
to raise capital from potential strategic, institutional, and retail investors. For several reasons, we think that the best opportunity
to finance a project, and to prove the sustainable beef concept, is with the Stovall Ranch JV in Montana and we are exploring a wide range
of alternatives related to funding both the JV and Bion.
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 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, 3, 4, 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, 2024
and 2023, 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, 2024 COMPARED TO THE
YEAR ENDED JUNE 30, 2023
Revenue
Total revenues were nil for both the years
ended June 30, 2024 and 2023.
General and Administrative
Total general and administrative expenses were
$2,046,000 and $3,072,000 for the years ended June 30, 2024 and 2023, respectively.
Salaries and related payroll tax expenses were
$600,000 and $730,000 for the years ended June 30, 2024 and 2023, respectively. Consulting costs were $488,000 and $485,000 for the years
ended June 30, 2024 and 2023, respectively. The $130,000 decrease in salary costs is due to Bill O’Neill resigning, Dominic Bassani
passing away and the Company not replacing the position and a reduction in salary for Mark Smith. Investor relations expenses were $328,000
and $697,000 for the years ended June 30, 2024 and 2023, respectively, and the $367,000 decrease was due to less investor related activity
during the fiscal year in order to conserve cash. Legal costs were $34,000 and $83,000 for the years ended June 30, 2024 and 2023, respectively.
Stock-based compensation for the years ended
June 30, 2024 and 2023 were ($16,000) and $442,000, respectively. The $458,000 variance is due to less stock-based compensation issued
in 2024 and the reversal of stock options expense for unvested options for Bill O’Neill.
Depreciation
Total depreciation expense was $1,582 and $1,645
for the years ended June 30, 2024 and 2023, respectively.
Research and Development
Total research and development expenses were
$23,000 and $83,000 for the years ended June 30, 2024 and 2023, respectively, representing an $60,000 decrease due to less consulting
and other expenses being allocated to research and development.
Salaries and related payroll tax expenses were
$6,000 and $9,000 for the years ended June 30, 2024 and 2023, respectively. Consulting costs were $4,000 and $43,000 for the years ended
June 30, 2024 and 2023, respectively. The decrease of $39,000 was due to none of Brightcap’s consulting cost being allocated to
research and development.
Loss from Operations
As a result of the factors described above,
the loss from operations was $2,071,000 and $3,157,000 for the years ended June 30, 2024 and 2023 respectively.
Other (Income)/Expense
Other expense was $9,600,000 and $33,000 for
the years ended June 30, 2024 and 2023, 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 $222,000 and $218,000 for the years ended June 30, 2024 and 2023, 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, 2024 and 2023, 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 $11,691,000 and $3,189,000 for the years ended June 30, 2024 and 2023, respectively,
and the net loss per basic common share was $.22 and $.07 for the years ended June 30, 2024 and 2023, respectively.
LIQUIDITY AND CAPITAL RESOURCES
The Company's consolidated financial statements for
the year ended June 30, 2024 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, 2024 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, 2024, the Company had cash of approximately
$52,000. During the year ended June 30, 2024, net cash used in operating activities was $849,000, 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 the exercise of warrants and sale of common shares. As previously noted, the Company is currently not
generating significant revenue and accordingly has not generated cash flows from operations. The Company does not anticipate generating
sufficient revenues to offset operating and capital costs for a minimum of two to five years. While there are no assurances that the Company
will be successful in its efforts to develop and construct its Projects and market its Systems, it is certain that the Company will require
substantial funding from external sources. As stated in multiple places in this report, over the last 12 months 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, 2024, the Company
invested $869,000 in the purchase of property and equipment, primarily related to the Initial Project construction in process.
Financing Activities
During the year ended June 30, 2024, the Company
received net cash proceeds of $590,000 from the sale of units for $611,000 less commissions of $20,000.
During the year ended June 30, 2024, the Company received
gross cash proceeds of $400,000 from a convertible bridge loan and $125,000 from a convertible loan.
As of June 30, 2024, the Company has debt obligations
consisting 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) notes payable including accrued interest of $125,600. As of June 30, 2023, the Company had
debt obligations of a) deferred compensation of $865,000, b) convertible notes payable – affiliates of $1,716,000, and c) current
note payable including accrued interest of nil.
Plan of Operations and Outlook
As of June 30, 2024, the Company had cash of approximately
$52,000.
The Company continues to explore sources of additional
financing to satisfy its current operating requirements as it is not currently generating any significant revenues. During fiscal years
2023 and 2022 (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 last quarter of the 2023 fiscal year and the entirety of fiscal year 2024 (and the first quarter of 2025 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 2024 that we anticipate will continue (or increase) during the 2025 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 2022 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 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, 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, which coupled with
the addition of new leadership, including Turk Stovall to lead Bion’s beef efforts, will reinspire confidence in our own shareholders,
as well as assure potential new strategic and institutional investors, and make it easier to raise funds.
During the years ended June 30, 2024 and 2023, the
Company received gross proceeds of approximately $1,140,000 and $4,038,000, respectively, from the sale of its debt and equity securities.
The Company raised gross proceeds of approximately $639,000 and $4,038,000, respectively, from the sale of equity securities and warrant
exercises. The Company paid commissions on the exercise of warrants in the amount of $20,000 and $86,000 in 2024 and 2023, respectively.
During the year ended June 30, 2024 the Company received proceeds of $400,000 from a convertible bridge loan but the provider of the bridge
loan during November 2023 (and on an ongoing basis since such time) breached its contractual obligation/binding subscription agreement
to fund an additional $1,100,000 to the Company, which breach (combined with management stresses related to the final illness and passing
of Dominic Bassani, Bion’s then COO and former CEO, and required management transitions) has created substantial cash flow difficulties
for the Company which are ongoing. During the year ended June 30, 2024 the Company received proceeds of $125,000 from a convertible note.
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 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) in order to conform to the applicable accounting practices, 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 above in Item 7, Management’s
Discussion and Analysis). This charge reduced the Company shareholders’ equity to ($5,809,000) and resulted in a loss of $11,691,115
for the 2024 fiscal year. Current liabilities were approximately $5.8 million and $1.6 million at June 30, 2024 and 2023, respectively,
the increase of approximately $4.2 million was largely due to an increase in ‘accounts payable and accrued expenses’ and debt
moving from long term to current liabilities. Similarly, the Company’s cash on hand decreased from approximately $626,000 to approximately
$52,000 over the same period. The Company’s extreme difficulty in obtaining needed funds during the entire 2024 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.
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, to develop Projects. The Company anticipates that it will seek to raise from $20,000,000 to $80,000,000 or more debt
and/or equity through joint ventures, strategic partnerships and/or 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 through
other means during the next twelve months. 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
To help alleviate short-term cash needs and continue current operations,
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 additional investors will join the LLC, and that the funds available
to Bion will increase, 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.
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