[10-Q] BION ENVIRONMENTAL TECHNOLOGIES INC Quarterly Earnings Report
Bion Environmental Technologies (BNET) filed its Q1 FY2026 10‑Q, reporting a net loss of $581,329 on zero revenue. Operating expenses were $476,547 and interest expense was $104,791, narrowing the loss from $1,171,636 a year ago.
The company disclosed substantial doubt about its ability to continue as a going concern. Cash was $27,689 against current liabilities of $5,960,528, and total stockholders’ deficit was $5,905,960. Net cash used in operations was $248,217, offset by $271,465 from financing activities.
Management shifted focus to faster‑to‑deploy, bolt‑on ammonia recovery (ARS) projects for industrial biogas facilities and plans to raise $3,000,000 to $10,000,000, plus about $8,000,000 in project financing per initial ARS project. To bridge liquidity, Bion raised $816,000 in shareholder notes and has a BLG secured note bearing 9% interest, maturing January 15, 2026.
Capital structure was simplified via September 2025 settlements that issued 8,101,746 common shares and eliminated instruments that could have added up to 22,498,405 shares, a net reduction of about 14,369,659 fully diluted shares. As of November 1, 2025, common shares outstanding were 56,891,856.
- Fully diluted overhang reduced by about 14,369,659 shares via September 2025 settlements, simplifying the capital structure.
- Going concern warning with minimal cash of $27,689 and stockholders’ deficit of $5,905,960.
- Working capital strain with current liabilities of $5,960,528 versus modest financing inflows and zero revenue.
Insights
Going concern risk persists despite dilution reduction and bridge funding.
BNET posted a quarterly net loss of
The filing states “substantial doubt” about continuing as a going concern. Management targets
September 2025 settlements issued 8,101,746 shares while eliminating instruments representing up to 22,498,405 shares, cutting the fully diluted overhang by ~14.37 million. Execution depends on capital raises and converting ARS opportunities; timing is not specified in the provided excerpt.
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
SECURITIES EXCHANGE ACT OF 1934
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BION ENVIRONMENTAL TECHNOLOGIES, INC.
FORM 10-Q
TABLE OF CONTENTS
| PART I. FINANCIAL INFORMATION | Page | ||
| Item 1. | Condensed Consolidated Financial Statements (unaudited) | 2 | |
| Balance sheets | 2 | ||
| Statements of operations | 3 | ||
| Statement of changes in equity (deficit) | 4 | ||
| Statements of cash flows | 5 | ||
| Notes to unaudited condensed consolidated financial statements | 6 | ||
| Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations | 22 | |
| Item 3. | Quantitative and Qualitative Disclosures about Market Risk | 32 | |
| Item 4. | Controls and Procedures | 32 | |
| PART II. OTHER INFORMATION | |||
| Item 1. | Legal Proceedings | 33 | |
| Item 1A. | Risk Factors | 33 | |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 33 | |
| Item 3. | Defaults Upon Senior Securities | 33 | |
| Item 4. | Mine Safety Disclosures | 33 | |
| Item 5. | Other Information | 33 | |
| Item 6. | Exhibits | 34 | |
| Signatures | 35 | ||
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains 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 or similar terminology. The expectations reflected in forward-looking statements may prove to be incorrect.
| 1 |
BION
ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
| September 30, | June 30, | |||||||
| 2025 | 2025 | |||||||
| (unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash | $ | $ | ||||||
| Prepaid expenses | ||||||||
| Deposits and other assets | ||||||||
| Total current assets | ||||||||
| Property and equipment, net (Note 3) | — | — | ||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND EQUITY (DEFICIT) | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Deferred compensation (Note 4) | ||||||||
| Convertible notes payable (Note 5) | ||||||||
| Convertible bridge note payable (Note 5) | ||||||||
| Note payable - related party (Note 5) | ||||||||
| Demand note payable | — | |||||||
| Total current liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies | — | — | ||||||
| Equity (deficit): | ||||||||
| Bion's stockholders' equity (deficit): | ||||||||
| Series
A Preferred stock, $ | — | — | ||||||
| Series C
Convertible Preferred stock, $ | — | — | ||||||
| Common
stock, | — | — | ||||||
| Shares to be issued | — | |||||||
| Additional paid-in capital | ||||||||
| Subscription receivable - affiliates (Note 7) | — | ( | ) | |||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Bion's stockholders’ equity (deficit) | ( | ) | ( | ) | ||||
| Noncontrolling interest | ||||||||
| Total equity (deficit) | ( | ) | ( | ) | ||||
| Total liabilities and (deficit) | $ | $ | ||||||
See notes to condensed consolidated financial statements (unaudited)
| 2 |
BION ENVIRONMENTAL TECHNOLOGIES, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024
(UNAUDITED)
Three months ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Revenue | $ | — | $ | — | ||||
| Operating expenses: | ||||||||
| General and administrative (including stock-based compensation) | ||||||||
| Depreciation | ||||||||
| Research and development (including stock-based compensation) | ||||||||
| Total operating expenses | ||||||||
| Loss from operations | ( | ) | ( | ) | ||||
| Other (income) expense: | ||||||||
| Interest income | ( | ) | ( | ) | ||||
| Interest expense | ||||||||
| Total other expense | ||||||||
| Net (loss) | ( | ) | ( | ) | ||||
| Net (loss) attributable to the noncontrolling interest | — | — | ||||||
| Net (loss) applicable to Bion's common stockholders | $ | ( | ) | $ | ( | ) | ||
| Net (loss) applicable to Bion's common stockholders | ||||||||
| per basic and diluted common share | $ | ( | ) | $ | ( | ) | ||
| Weighted-average number of common shares outstanding: | ||||||||
| Basic and diluted | ||||||||
See notes to condensed consolidated financial statements (unaudited)
| 3 |
BION ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
THREE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024
(UNAUDITED)
| Bion's Stockholders' | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Series A Preferred Stock | Series C Preferred Stock | Common Stock | Common Stock | Additional | Subscription | |||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares to be Issued | Amount | paid-in capital | Receivables for Shares | Accumulated deficit | Noncontrolling interest | Total equity/(deficit) | ||||||||||||||||||||||||||||||||||||||||
| Balances, July 1, 2024 | — | $ | — | — | $ | — | $ | — | — | $ | — | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | |||||||||||||||||||||||||||||||
| Issuance of units for services | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Modification of warrants | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Modification of options | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | — | — | — | — | — | ( | ) | — | ( | ) | |||||||||||||||||||||||||||||||||||||
| Balances, September 31, 2024 | — | $ | — | — | $ | — | $ | — | — | $ | — | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||||||||||||||||
| Balances, July 1, 2025 | — | $ | — | — | $ | — | $ | — | — | $ | — | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | |||||||||||||||||||||||||||||||
| Cashless exercise of warrants | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
| Modification of warrants | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Giveback of convertible liabilities and debt from affiliates | — | — | — | — | — | — | ( | ) | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Recognition of interest accrued on subscription receivables cancelled in period | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Promissory note agreement to net against Deferred Compensation | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Commission | — | — | — | — | — | — | — | — | ( | ) | — | — | — | ( | ) | |||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | — | — | — | — | — | ( | ) | — | ( | ) | |||||||||||||||||||||||||||||||||||||
| Balances, September 31, 2025 | — | — | — | $ | — | $ | — | $ | $ | $ | — | ( | ) | $ | $ | ( | ) | |||||||||||||||||||||||||||||||||||
See notes to condensed consolidated financial statements (unaudited)
| 4 |
BION ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED CASH FLOWS
THREE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024
(UNAUDITED)
| 2025 | 2024 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net (loss) | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation expense | — | |||||||
| Accrued interest on loans payable, deferred compensation and other | ||||||||
| Stock- based compensation | ||||||||
| Stock-based compensation for services | — | |||||||
| (Decrease) in prepaid expenses | ( | ) | ( | ) | ||||
| Increase in accounts payable and accrued expenses | ||||||||
| (Increase) in operating lease assets and liabilities | — | ( | ) | |||||
| Increase in deferred compensation | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Net cash used in investing activities | — | — | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Proceeds from convertible notes payable | ||||||||
| Proceeds from demand note | — | |||||||
| Proceeds from note payable loan, related party | — | |||||||
| Commissions on proceeds from convertible notes payable | ( | ) | — | |||||
| Net cash provided by financing activities | ||||||||
| Net change in cash | ( | ) | ||||||
| Cash at beginning of year | ||||||||
| Cash at end of year | $ | $ | ||||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid for interest | $ | — | $ | — | ||||
| Non-cash investing and financing transactions: | ||||||||
| Adjustment for debt modification from giveback agreements | $ | $ | — | |||||
| Adjustment for offsetting subscription receivable with deferred compensation | $ | $ | — | |||||
See notes to condensed consolidated financial statements (unaudited)
| 5 |
BION ENVIRONMENTAL
TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED SEPTEMBER 30, 2025
AND 2024
| 1. | BUSINESS AND ORGANIZATION: |
Nature of Operations
Bion Environmental Technologies, Inc.'s ("Bion," "Company," "We," "Us," or "Our") was incorporated in 1987 in the State of Colorado.
Our patented and proprietary technology was developed to provide advanced waste treatment and resource recovery for large-scale livestock production facilities (also known as “Concentrated Animal Feeding Operations” or “CAFOs"). Our Gen3Tech can largely mitigate the environmental problems of CAFOs, while simultaneously improving operational/ resource efficiencies by recovering high-value co-products from the waste stream, including renewable energy, nutrients, and clean water. For the last several years, Bion was 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.
Until recently, we believed that the best opportunity for the Company to prove its technology, along with the sustainable beef concept, was with the Stovall Ranch, in Montana. In June 2024, Bion formed a strategic relationship with Turk Stovall and Stovall Ranching Companies. Bion and Stovall agreed to establish a JV, to be led by Mr. Stovall, with the goal of developing a 16,000-head sustainable beef project at Stovall’s Yellowstone Cattle Feeders (‘YCF’) location in Shepherd, Montana. We anticipated establishing the Stovall-Bion JV and creating related distribution agreements with key value chain partners during the 2024 calendar year, with the intent to begin construction in the first quarter of 2025. However, due to several factors, including 1) the extended development timeline to reach revenues at Stovall (which could be at least two years or more), 2) a need to prove our technology at full-scale as quickly as possible, and 3) enter the fertilizer markets with product in the 2026 growing season, we shifted our focus to smaller ‘bolt-on’ opportunities in both the animal waste and industrial sectors that we think can be developed more quickly.
Bion’s patents were expanded in 2024 to include industrial and municipal wastewater sources, in addition to animal waste streams that were previously covered. To that end, Bion directed part of its limited resources to understanding and evaluating opportunities to apply its Ammonia Recovery System (ARS) as a bolt-on or ‘standalone’ ammonia control solution in the industrial sector. In such cases, the ARS would be deployed as an ammonia control solution (vs integrated into a Bion Gen3Tech livestock platform) for facilities (both new and existing) that produce biogas from organic waste streams, such as food, food processing, and livestock packing/slaughter. These facilities are subject to EPA-mandated discharge limits that require ammonia control or face other limitations on ammonia/nitrogen in the effluent from biogas production. It should be noted that central processing facilities that treat the waste from more than one farm are required to have discharge permits, like industrial facilities. We will also seek to identify opportunities to provide ammonia control solutions in the livestock/animal waste at existing farms with anaerobic digesters already in place (which will also shorten the development timeline). While we have not abandoned developing new integrated livestock projects with our Gen3tech platform, we believe there is a robust opportunity to provide bolt-on ammonia control solutions to others’ biogas facilities, and we are now devoting almost all of our resources to developing this opportunity.
Going Concern
The Company’s condensed 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.
Year to date ended September
30, 2025 the Company had a loss of $
| 6 |
The constraints on available
resources have had, and continue to have, negative effects on the pace and scope of the Company’s efforts to operate and develop
its business. The Company has had to delay payment of trade obligations and has had to economize in many ways that have potentially negative
consequences. If the Company is able to raise needed funds during the remainder of the current fiscal year (and subsequent periods), of
which there is no assurance, management will not need to consider deeper cuts (including additional personnel cuts) and/or curtailment
of ongoing activities including research and development activities. The Company will need to obtain additional capital to fund its operations
and technology development, to satisfy existing creditors, and to develop Projects. The Company anticipates that it will seek to raise
from $
The accompanying condensed consolidated financial statements do not include any adjustments relating to the recoverability or classification of assets or the amounts and classification of liabilities that may result should the Company be unable to continue as a going concern. The following paragraphs describe management’s plans with regard to these conditions.
Management’s Plan
The Company continues to explore sources of financing to satisfy its current operating requirements and future growth needs. The Company faced substantial demand for capital and operating expenditures during fiscal year 2025, which has continued during the 2026 fiscal year, and which we expect to increase for the periods thereafter as we move toward commercial implementation of our ARS (including costs associated with additions of personnel to carry out the business activities of the Company). As a result, the Company has faced, and continues to face, significant cash flow 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.
To help alleviate short-term cash needs for continued
operations, in August 2024, three affiliates of the Company (Greg Schoener, Interim COO & Director; Turk Stovall, previous
Director; Bob Weerts, now-deceased Director) and two shareholders (one of whom is the brother of Greg Schoener) began advancing money
to Bion to cover critical payables. They subsequently formed a loan group, BION BLG, LLC (“BLG”), and provided short-term
funding for Bion in a secured promissory note of up to $
In November 2024, the Company launched a series of secured promissory note offerings to previous investors/shareholders (and certain others) (“Shareholder Notes”) with similar terms to the BLG note. Based on feedback from shareholders and registered representatives with which the Company has long standing relationships, management believed at that time that sufficient capital could be raised with this group to 1) continue to cover critical payables to maintain operations that will allow the Company to finish the engineering report and technology demonstration at Fair Oaks, 2) move forward with pre-development work on the Stovall project, 3) continue discussions with potential strategic partners, and 4) position ourselves for the larger offering/ funding that will be required. As of the filing date, Bion has raised $816,000 in the Shareholder Note offerings. Further, Bion has changed its focus from pre-development work on the Stovall project, to an initial bolt-on project at an existing facility.
To date, the Company has primarily raised funds through private placements with accredited investors, often conducted through FINRA-registered broker/dealers. However, the Company anticipates moving forward, it will need to raise capital using a combination of financial instruments and sources, that could also include strategic and/or institutional investors, including family offices and private equity, brokered equity or debt offerings with both public and private investors, and banks and other ag lending institutions, among others, although there can be no assurance it will be successful. Many of these financing options may involve dilution, potentially substantial, for current shareholders. Management intends to augment its access to capital by adding one or more staff members (or consultants) with experience in the capital markets, as well as utilizing its current contacts and relationships in the capital markets.
Bion is currently in discussions with several potential strategic partners in engineering, renewable energy (biogas/RNG) and clean fuels, organic fertilizer distribution, and others involved in reducing the environmental footprint of biogas and livestock production. With today’s U.S, and global emphasis on decarbonizing energy and the food supply chain, and their impacts on water and air pollution, the sectors have become closely intertwined. They are evolving quickly, and integrated solutions have become increasingly desired, but complex. Bion is now evaluating engineering and construction firms, biogas operators, and others as potential development partners for industrial and livestock opportunities. Further, with the recent OMRI Listing for its commercial fertilizer, the Company has initiated discussions with several large U.S. fertilizer manufacturers and distributors that have expressed interest in the product. Bion believes that such relationships could entail a direct investment in Bion, licensing fee, or some other ‘up front’ financial benefit to Bion, although there is no assurance that they will. The Company recently completed its Technology-Optimization Report that is critical to demonstrating the technology performance and economics of its ammonia recovery technology to potential strategic partners.
| 7 |
THERE IS NO ASSURANCE THAT THE COMPANY WILL REACH OR APPROACH THE GOALS/TARGETS SET FORTH ABOVE. REACHING SUCH GOALS/TARGETS WILL REQUIRE RESOLUTION OF THE COMPANY’S EXISTING FINANCIAL DIFFICULTIES AND ACCESS TO VERY LARGE AMOUNTS OF CAPITAL (EQUITY AND DEBT) AS EACH BOLT-ON ARS PROJECT IS PROJECTED TO COST IN EXCESS OF $8 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.
| 2. | SIGNIFICANT ACCOUNTING POLICIES |
Principles of consolidation:
The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Bion Integrated Projects Group, Inc., Bion Technologies, Inc., BionSoil, Inc., Bion Services, Bion PA2 LLC and Bion 3G-1 LLC (“3G1”); and its 58.9% owned subsidiary, Centerpoint Corporation (“Centerpoint”). All significant intercompany accounts and transactions have been eliminated in consolidation.
The accompanying condensed consolidated financial statements have been prepared without audit pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and should be read in conjunction with the Companies latest 10K. The condensed consolidated financial statements reflect all adjustments (consisting of only normal recurring entries) that, in the opinion of management, are necessary to present fairly the financial position at September 30, 2025, the results of operations and cash flows of the Company for the three months ended September 30, 2025 and 2024. Operating results for the three months ended September 30, 2025 are not necessarily indicative of the results that may be expected for the year ending June 30, 2026.
Operating Segment:
The Company operates a single reportable segment: advanced waste treatment and resource recovery solutions for organic waste streams. While in the future the Company may pursue other segments—develop integrated livestock projects, implement CAFO retrofits, and exploit other opportunities to use its proprietary technology (as previously described)—at this time it is now focused entirely on bolt-on solutions for existing or planned biogas production facilities. The business is managed by the Chief Executive Officer who is the Chief Operating Decision Maker (“CODM”). The CODM evaluates segment performance based on the operating income (loss) for purposes of allocating resources and evaluating financial performance. The accounting policies of our single reportable segment are the same as those for the Company as a whole.
Cash and cash equivalents:
The Company considers all highly liquid investments
purchased with an original maturity of three months or less to be cash and cash equivalents. As of September 30, 2025 and June 30, 2025
there are
Property and equipment:
Property and equipment are stated at cost and are depreciated, when placed into service, using the straight-line method over the estimated useful lives of the related assets, generally three to twenty years. The Company capitalizes all direct costs and all indirect incrementally identifiable costs related to the design and construction of its Integrated Projects such as consulting fees, internal salaries and benefits and interest. The Company reviews its property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment loss would be recognized based on the amount by which the carrying value of the assets or asset group exceeds its estimated fair value and is recognized as a loss from operations.
Patents:
The Company has elected to expense all costs and filing fees related to obtaining patents (resulting in no related asset being recognized in the Company’s consolidated balance sheets) because the Company believes such costs and fees are immaterial (in the context of the Company’s total costs/expenses) and have no direct relationship to the value of the Company’s patents.
Stock-based compensation:
The Company follows the provisions of Accounting Standards Codification (“ASC”) 718, which generally requires that share-based compensation transactions be accounted and recognized in the statement of operations based upon their grant date fair values.
| 8 |
Derivative Financial Instruments:
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.
Options:
The Company has issued options to employees and consultants under the 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.
Concentrations of credit risk
The Company's financial instruments that are exposed to concentrations of credit risk consist of cash. The Company's cash is in demand deposit accounts placed with federally insured financial institutions and selected brokerage accounts. Such deposit accounts at times may exceed federally insured limits. The Company has not experienced any losses on such accounts.
Noncontrolling interests:
In accordance with ASC 810, “Consolidation”, the Company separately classifies noncontrolling interests within the equity section of the consolidated balance sheets and separately reports the amounts attributable to controlling and noncontrolling interests in the consolidated statements of operations. In addition, the noncontrolling interest continues to be attributed its share of losses even if that attribution results in a deficit noncontrolling interest balance.
Fair value measurements:
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal or most advantageous market. The Company uses a fair value hierarchy that has three levels of inputs, both observable and unobservable, with use of the lowest possible level of input to determine fair value.
Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2 – observable inputs other than Level 1, quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, and model-derived prices whose inputs are observable or whose significant value drivers are observable; and
Level 3 – assets and liabilities whose significant value drivers are unobservable.
| 9 |
Observable inputs are based on market data obtained from independent sources, while unobservable inputs are based on the Company’s market assumptions. Unobservable inputs require significant management judgment or estimation. In some cases, the inputs used to measure an asset or liability may fall into different levels of the fair value hierarchy. In those instances, the fair value measurement is required to be classified using the lowest level of input that is significant to the fair value measurement. Such determination requires significant management judgment.
The fair value of cash and accounts payable approximates their carrying amounts due to their short-term maturities. The fair value of the loan payable is indeterminable at this time due to the nature of the arrangement with a state agency and the fact that it is in default. The fair value of the redeemable preferred stock approximates its carrying value due to the dividends accrued on the preferred stock which are reflected as part of the redemption value. The fair value of the deferred compensation and convertible notes payable - affiliates are not practicable to estimate due to the related party nature of the underlying transactions.
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 condensed and 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 condensed and 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.
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 ASC 606 “Revenue from Contracts with Customers”.
Income (Loss) per share:
Basic income (loss) per share amounts are calculated using the weighted average number of shares of common stock outstanding during the period. Diluted income (loss) per share assumes the conversion, exercise, or issuance of all potential common stock instruments, such as options or warrants, unless the effect is to reduce the income (loss) per share or increase the earnings per share. During the three months ended September 30, 2025 and 2024, the basic and diluted income (loss) per share was the same, as the impact of potential dilutive common shares was anti-dilutive.
The following table represents the warrants and options (as if exercised) and convertible securities (as if converted) that have been excluded from the calculation of basic income (loss) per share:
| Schedule of basic income (loss) per share | ||||||||
| September 30, 2025 | September 30, 2024 | |||||||
| Warrants | ||||||||
| Options | ||||||||
| Convertible debt | ||||||||
| 10 |
The following is a reconciliation of the denominators of the basic and diluted income (loss) per share computations for the three months ended September 30, 2025 and 2024.
| Schedule of reconciliation of the denominators of the basic and diluted income (loss) per share | ||||||||
Three months ended September 30, 2025 | Three months ended September 30, | |||||||
| Shares issued – beginning of period | ||||||||
| Shares held by subsidiaries (Note 6) | ( | ) | ( | ) | ||||
| Shares outstanding – beginning of period | ||||||||
| Weighted average shares issued during the period | ||||||||
| Diluted weighted average shares – end of period | ||||||||
Use of estimates:
In preparing the Company’s condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Recent Accounting Pronouncements:
The Company continually assesses any new accounting pronouncements to determine their applicability. When it is determined that a new accounting pronouncement affects the Company’s financial reporting, the Company undertakes a study to determine the consequences of the change to its condensed consolidated financial statements and assures that there are proper controls in place to ascertain that the Company’s condensed consolidated financial statements properly reflect the change.
In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The ASU introduces new requirements to enhance the transparency and decision usefulness of income tax information for financial statement users.
Key provisions require all entities to disclose annually their income or loss before income tax, income tax expense (or benefit) from continuing operations, and income taxes paid (net of refunds received), each disaggregated by domestic, foreign, federal (national), and state components. Income taxes paid also require further disaggregation for significant individual jurisdictions. Public Business Entities (PBEs) have additional requirements for a more detailed tabular reconciliation of the effective tax rate, including percentages, amounts, and qualitative descriptions by jurisdiction.
The Company, is required to adopt ASU 2023-09 for its fiscal year ending June 30, 2026. The adoption is not expected to materially impact the Company's financial statements but will expand annual income tax disclosures. The Company is currently evaluating the full impact of the required disclosures and the adoption method.
| 3. | PROPERTY AND EQUIPMENT: |
Property and equipment consist of the following:
| Schedule of property and equipment | ||||||||
| September 30, 2025 | June 30, 2025 |
|||||||
| Computers and office equipment | ||||||||
| Property and equipment, gross | ||||||||
| Less accumulated depreciation | ( |
) | ( |
) | ||||
| Property and equipment, net | $ | — | $ | — | ||||
Depreciation expense was
nil
| 4. | DEFERRED COMPENSATION: |
The
Company owes deferred compensation to various employees, former employees and consultants totaling $
Family
members of the late Doninic Bassani, Bion’s former CEO and Mark A. Smith, previously a Director and President are owed a
balance of nil
Effective September 15, 2025, family members of the late Dominic Bassani and Smith, and Edward Schafer, previously a Director, each individually agreed to a settlement (“Settlement Agreements”) that will simplify Bion’s capital structure and substantially reduce the number of Fully Diluted Shares. In consideration of the cancellation of various obligations and security instruments held by Smith and Bassani, including without limitation deferred compensation, Smith and the Bassani heirs will receive shares of common stock, as described below in 6. STOCKHOLDERS’ EQUITY. Included in the Bassani family Settlement Agreement was a provision to cancel their remaining 5% obligation under their previous Giveback Agreement.
| 11 |
The Company owes deferred compensation to Craig Scott of $
Bill O’Neill, former CEO, is owed a balance of $
The Company also owes various consultants and employees, pursuant to
various agreements, for deferred compensation of $
The Company recorded interest expense of $
| 5. | NOTES PAYABLE: |
Adjusted 2020 Convertible Obligations and Adjusted September 2015 Convertible Notes
Effective February 1, 2023, three (3) directors/officers of the Company agreed to adjust the provisions of long term convertible obligations (including most of the 2020 Convertible Obligations and September 2015 Convertible Notes --- see below) owed to them by the Company in a manner which reduced the indebtedness of the Company by 80% (approximately $3.47 million, in aggregate while equitably maintaining existing conversion rights). The debt modification was treated as an equity transaction because the modifications were with affiliates that are related parties.
Mark A. Smith (the Company’s former President)(“Smith”),
Dominic Bassani (the Company’s former Chief Operating Officer) (“Bassani”) (NOTE: Dominic Bassani passed away
on November 11, 2023) and Ed Schafer (Director)(“Schafer”),
adjusted/reduced the principal owed to them by $
As of September 30, 2025, the Adjusted 2020 Convertible
Obligation balances, including accrued interest, owed Bassani (and his donees), Smith and Edward Schafer were nil, respectively. As
of June 30, 2025, the Adjusted 2020 Convertible Obligation balances, including accrued interest, owed Bassani (and his donees),
Smith and Edward Schafer were $
As of September 30, 2025 the Adjusted September 2015
Convertible Notes balances, including accrued interest, owed Bassani Family Trusts and Schafer were nil. As of June 30, 2025 the
Adjusted September 2015 Convertible Notes balances, including accrued interest, owed Bassani Family Trusts and Schafer were $
On September 15, 2025, a settlement was reached with the Bassani family and Mark Smith to cancel the 2020 Convertible Note, effective on that date. For details on the settlement agreement, see Stockholder Equity (Note 6).
| 12 |
2020 Convertible Obligations
The 2020 Convertible Obligations (which combined/replaced prior convertible instruments dating to 2017 (or earlier), which accrue interest at either 4% per annum or 4% compounded quarterly and effective January 1, 2020 were due and payable on July 1, 2024. The 2020 Convertible Obligations (including accrued interest, plus all future deferred compensation added subsequently), are convertible, at the sole election of the holder, into Units consisting of one share of the Company’s common stock and one half to one warrant to purchase a share of the Company’s common stock, at a price of $0.50 per Unit until July 1, 2024. The maturity date of the notes has been extended to July 15, 2025. The original conversion price of $0.50 per Unit approximated the fair value of the Units at the date of the agreements; therefore, no beneficial conversion feature exists. Management evaluated the terms and conditions of the embedded conversion features based on the guidance of ASC 815-15 “Embedded Derivatives” to determine if there was an embedded derivative requiring bifurcation. An embedded derivative instrument (such as a conversion option embedded in the deferred compensation) must be bifurcated from its host instruments and accounted for separately as a derivative instrument only if the “risks and rewards” of the embedded derivative instrument are not “clearly and closely related” to the risks and rewards of the host instrument in which it is embedded. Management concluded that the embedded conversion feature of the deferred compensation was not required to be bifurcated because the conversion feature is clearly and closely related to the host instrument, and because of the Company’s limited trading volume that indicates the feature is not readily convertible to cash in accordance with ASC 815-10, “Derivatives and Hedging”. Effective February 1, 2023, a large portion of the 2020 Convertible Obligations were adjusted as set forth herein. The maturity date of the notes has been extended to September 15, 2025.
Effective January 9, 2025, the Board of Directors amended the terms of the 2020 Adjusted Convertible Note owned by Ed Schafer, who retired from the Company’s Board of Directors on December 31, 2024. The maturity date of the 2020 Adjusted Convertible Note has been extended to September 15, 2025.
On September 15, 2025, a settlement was reached with Smith, Bassani and Schafer to cancel the 2020 Adjusted Convertible Note, effective on that date. For details on the settlement agreement, see Stockholder Equity (Note 6).
As of September 30, 2025, the remaining unadjusted
portion of the 2020 Convertible Obligation balances were nil. As of June 30, 2025, the remaining unadjusted portion of the 2020 Convertible
Obligation balances, including accrued interest, owed Bassani Family Trusts and Smith were $
The Company recorded interest expense of $
Effective February 1, 2023, three (3) directors/officers of the Company agreed to adjust the provisions of long-term convertible obligations (including most of the 2020 Convertible Obligations and September 2015 Convertible Notes) owed to them by the Company in a manner which reduced the indebtedness of the Company by 80% (approximately $3.47 million, in aggregate) while equitably maintaining existing conversion rights. Because the modifications were with affiliates that are related parties, the debt modification was treated as an equity transaction. The Company recorded a deemed dividend for the reductions.
Smith, Bassani and Schafer, adjusted/reduced
the principal owed to them by $
September 2015 Convertible Notes
During the year ended June 30, 2016, the Company entered into September 2015 Convertible Notes with Bassani, Schafer and a Shareholder which replaced previously issued promissory notes. The September 2015 Convertible Notes bear interest at 4% per annum, have maturity dates of July 1, 2024, and may be converted at the sole election of the noteholders into restricted common shares of the Company at a conversion price of $0.60 per share. As the conversion price of $0.60 approximated the fair value of the common shares at the date of the September 2015 Convertible Notes, no beneficial conversion feature exists. The maturity date of the notes has been extended to September 15, 2025 for all note holders. On September 15, 2025 the maturity date for two of the 2015 Convertible Notes was extended to September 15, 2027.
Effective January 16, 2025, Mr. Schafer voluntarily surrendered 36,918 shares of common stock that would have been issued as the result of the conversion of his $4,246 Adjusted 2015 Convertible Note. The note was convertible at $0.115 per share.
The balances of the September 2015
Convertible Notes as of September 30, 2025, including accrued interest owed Bassani, Schafer and Shareholder, are nil, nil, and
$
The Company recorded interest expense of $
| 13 |
Convertible Bridge Loan/Default
On September 28, 2023, the Company entered into an agreement for a
$
On May 10, 2024 the Company received $150,000 from affiliates of the Bridge Loan Lender on terms not yet finalized and included in an agreement. These funds were received in the context of negotiations/discussions regarding a potential larger investment by affiliates and/or associates of the Lender but no further funds were received and the larger transaction was never completed. The funds were used primarily to re-initiate operations at the Initial Project. The Company is currently involved in discussions with representatives of SEB in an effort to achieve a mutually satisfactory resolution.
The Company recorded interest expense
of $
Note payable - related party
On October 22, 2024, Bion's Board of Directors ratified an agreement
with the Bion BLG, LLC, loan group, effective October 15, 2024, to purchase a Convertible Promissory Note in the principal amount of
up to $
Three Bion Directors (Schoener, Stovall – former/resigned, and Weerts – former/deceased) are members of the loan group and together comprise 60% ownership of the loan group (each member owns 20%). The Note is secured by the Company's Intellectual Property (IP)/patents. The Note will convert into securities in the Company at the terms of a later capital raise (or other source of funding) in excess of $3.0 million, which must be completed within six (6) months.
On July 24, 2025, the Company entered into a Forbearance Agreement
with Bion BLG, LLC, (effective July 15, 2025) extending the maturity date of the BLG Note to
Effective October 15, 2024, the Company entered
into an Agreement with BLG, LLC, to purchase a Convertible Promissory Note in the principal amount of up to $
Effective May 29, 2025, the Company entered into
a Forbearance Agreement with Bion BLG, LLC, extending the maturity date of the BLG Note to
The balances of the 2024 Convertible Note Advances
including accrued interest owed is $
The Company recorded interest expense of $
| 14 |
May 2024 Convertible Notes
During the year ended June 30, 2024, the Company entered into May 2024 Convertible Notes with five individuals. The May 2024 Convertible Notes bear interest at 6% per annum, have maturity dates of December 31, 2025, and may be converted at the sole election of the noteholders into one restricted common shares and one warrant of the Company at a conversion price of $1.00 per unit. As the conversion price of $1.00 approximated the fair value of the common shares at the date of the May 2024 Convertible Notes, no beneficial conversion feature exists.
The balances of the May 2024 Convertible Notes
including accrued interest owed is $
The Company
recorded interest expense of $
November 2024 Convertible Notes
During the year ended June 30, 2025, the Company entered into November
2024 Convertible Notes with twelve individuals. The November 2024 Convertible Notes bear interest at
The balances of the November 2024 Convertible Notes
including accrued interest owed is $
The Company recorded interest expense of $
February 2025 Convertible Notes
During the year ended June 30, 2025, the Company
entered into February 2025 Convertible Notes with seven individuals. The February 2025 Convertible Notes bear interest at
The balances of the February 2025 Convertible Notes including
accrued interest owed is $
The Company recorded interest
expense of $
May 2025 Convertible Notes
During the year ended June 30, 2025,
the Company entered into May 2025 Convertible Notes with two individuals. The May 2025 Convertible Notes bear interest at
The balances of the May 2025 Convertible
Notes including accrued interest owed is $
July 2025 Convertible Notes
During the three months ended
September 30, 2025, the Company entered into July 2025 Convertible Notes with seven individuals. The July 2025 Convertible Notes
bear interest at
The balances of the July 2025
Convertible Notes including accrued interest owed is $
| 15 |
| 6. | STOCKHOLDERS’ EQUITY: |
Write down of carry value of Initial Project
Effective June 30, 2024, at the same time the
Initial Project was deemed placed in service, the Board of Directors determined that the capitalized carrying value of the Initial Project
on the Company balance sheet as of that date be reduced to $
“Giveback Agreements” and “Settlement Agreements” to Additional Paid in Capital
Effective April 1, 2024 the Company entered into two material definitive agreements (“Giveback 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”)(see Exhibit 10.1)(“Bassani Family Agreement”), and b) Mark A. Smith, recently retired President of the Company and a director (see Exhibit 10.2)(“MAS Agreement”). The Bassani Family and Smith 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 “giveback” agreements were treated as equity transactions because the forfeitures were with affiliates that are related parties.
The Bassani Family agreed to surrender not less than
approximately 20% of its Company holdings (as of December 2023), which surrender would increase to approximately 30% based on certain
financing performances. The Bassani Family elected to surrender deferred compensation of $
On January 18, 2025, under the Bassani Family Agreement described
above, Bion cancelled
MAS agreed to surrender approximately 30% of his Company holdings
(as of December 2023). Immediately upon the effectiveness of the MAS Agreement, he cancelled all Company options held by him (
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.
On January 9, 2025, the Company agreed to amend the terms of the agreements dated April 1, 2024 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”)(see Form 8-K dated April 3, 2024, Exhibit 10.1)(“Bassani Family Agreement”), and b) Mark A. Smith, President of the Company and a director (“MAS”)(see Form 8-K dated April 3, 2024, Exhibit 10.2)(“MAS Agreement”). 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 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 dated January 15, 2025, to April 15, 2025. No changes were made regarding any ‘give backs’ of securities of the Company.
Effective September 15, 2025, family members of the late Dominic Bassani,
Bion’s former CEO, Mark A. Smith, previously a Director and President, and Edward Schafer, previously a Director, have each individually
agreed to a settlement (“Settlement Agreements”) that will simplify Bion’s capital structure and substantially reduce
the number of Fully Diluted Shares. In consideration of the cancellation of various obligations, as noted below, and security instruments
held by the Holders, including without limitation deferred compensation, convertible notes, warrants, and options, that could have increased
the
On September 18, 2025 the
On September 17, 2025,
On September 18, 2025,
| 16 |
Series B Preferred stock:
Since July 1, 2014, the Company
had
During the three months ended September 30,
2025 and the year ended June 30, 2025, the Company declared dividends of nil
Common stock:
Holders of common stock are entitled to one vote per share on all matters to be voted on by common stockholders. In the event of liquidation, dissolution or winding up of the Company, the holders of common stock are entitled to share in all assets remaining after liabilities have been paid in full or set aside and the rights of any outstanding preferred stock have been satisfied. Common stock has no preemptive, redemption or conversion rights. The rights of holders of common stock are subject to, and may be adversely affected by, the rights of the holders of any outstanding series of preferred stock or any series of preferred stock the Company may designate in the future.
Centerpoint holds
During the three months ended September 30, 2025,
Warrants:
As of September 30, 2025, the Company
had approximately
The weighted-average exercise price for the outstanding
warrants is $
On July 15, 2025 the Company modified
On July 15, 2025 the Company modified
On September 30, 2025 the Company modified
On September 15, 2025, settlements were reached with Mr. Smith, the Bassani family and Schafer, to surrender additional securities. Included in the Bassani family agreement was a provision to cancel their remaining 5% obligation under the Giveback Agreement. For details on the settlement agreement, see Giveback and Settlement Agreements above.
Stock options:
On April 7, 2022 the Company’s shareholders
approved the Bion Environmental Technologies, Inc. 2021 Equity Incentive Award Plan (the “Equity Plan”). The
Equity Plan provides for the issuance of options (and/or other securities) to purchase up to
The Company’s 2006 Consolidated Incentive
Plan, as amended during the year ended June 30, 2021 (the “2006 Plan”), provides for the issuance of options (and/or other
securities) to purchase up to
The Company recorded compensation expense
related to employee stock options of nil
On July 15, 2024 the Company modified
On September 15, 2025, a settlement was reached with Mr. Schafer to cancel the 2020 Adjusted Convertible Note and surrender 1,215,000 options, effective on that date. For details on the settlement agreement, see giveback and settlement agreements above.
| 17 |
A summary of option activity under the 2006 Plan for three months ended September 30, 2025 is as follows:
| Schedule of stockholders' equity | ||||||||||||||||||
| Options | Weighted- Average Exercise Price |
Weighted- Average Remaining Contractual Life |
Aggregate Intrinsic Value |
|||||||||||||||
| Outstanding at July 1, 2025 | $ | $ | — | |||||||||||||||
| Granted | — | — | ||||||||||||||||
| Exercised | — | — | ||||||||||||||||
| Forfeited | ( |
) | ||||||||||||||||
| Expired | — | — | ||||||||||||||||
| Outstanding at September 30, 2025 | $ | $ | — | |||||||||||||||
The total fair value of stock options that
vested during the three months ended September 30, 2025 and 2024 was nil
| 7. | SUBSCRIPTION RECEIVABLE - AFFILIATES: |
As of September 15, 2025 the subscription receivable balance of $
As of September 15, 2025 the subscription receivable balance of $
As of September 30, 2025, the Company and Scott agreed to offset the
subscription receivable with the Deferred Compensation balance; $
As of September 30, 2025, the Company and an employee agreed to offset
the subscription receivable with the Deferred Compensation balance; $
| 18 |
| 8. | COMMITMENTS AND CONTINGENCIES: |
A: Employment/Consulting (and related) agreements:
Stephen Craig Scott (“Scott”)
was appointed interim CEO effective June 1, 2024. Scott had previously been working with the Company as an employee/consultant since
1993 in various positions including Director of Communications, SVP- Capital Markets and Head of Business Development. On October
25, 2023, Scott entered into an agreement with the Company which included provisions for a monthly salary of $
William O’Neill (“O’Neill”)
was hired as the Company’s Chief Executive Officer (“CEO”) effective May 1, 2022 and he elected not to complete his
contractual term and ended his service with the Company effective May 31, 2024. O’Neill had previously been working with the Company
as a consultant and had been employed by the Company as its CEO during 2010-2011. (Upon the hiring of O’Neill, Bassani, CEO of
the Company from 2011, assumed the position of COO while retaining existing operational management responsibilities and working with
O’Neill on ‘commercialization’ of the Company’s technology and work related to JVs (and other transactions) based
on the Company’s Gen3 Technology and related matters until his recent death. Bassani’s compensation arrangements with the
Company were not altered in the context of the change of positions.) The Company and O’Neill entered into a thirty- seven (37)
month employment agreement with compensation of $
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”)(“Bassani Family Agreement”), and b) Mark A. Smith, recently retired President of the Company and a director (“MAS”) (“MAS Agreement”), as described in multiple places herein.
Until his retirement on July 31, 2024, Smith held the positions of Director, President, Interim Chief Financial Officer and General Counsel of Company (and its subsidiaries) under various agreements (and extensions) and terms since March 2003. Over the years, Smith accumulated various obligations and security instruments, including without limitation deferred compensation, convertible notes, warrants, and options, as noted above in 6. STOCKHOLDERS EQUITY, Giveback and Settlement Agreements. On September 18, 2025, Smith surrendered all obligations and security instruments and accepted 400,000 common shares in settlement. For the three months ended September 30, 2025 and 2024, Smith was paid nil and nil, respectively, of cash compensation.
Dominic Bassani, who was serving as the Company’s Chief Operating
Officer (‘COO’) at the time, passed away on November 11, 2023. He had served as the Company’s Chief Executive Officer
(‘CEO’) since 2011 (any reference to Brightcap or Bassani for all purposes are referring to the same individual). Over the
years, Bassani accumulated various obligations and security instruments, including without limitation deferred compensation, convertible
notes, warrants, and options, as noted above in 6. STOCKHOLDERS EQUITY, Giveback and Settlement Agreements. On September 18, 2025, the
Bassani family surrendered all obligations and security instruments and accepted 7,200,000 common shares in settlement. For the three
months ended September 30, 2025 and 2024, Bassani/Brightcap was paid nil
| 19 |
B: Initial Project:
On January 28, 2022 Bion Environmental Technologies,
Inc. (‘Bion’), on behalf of Bion 3G1 LLC (‘3G1’), a wholly-owned subsidiary, entered into a Purchase Order Agreement
with Buflovak and Hebeler Process Solutions (collectively ‘Buflovak’) in the amount of $
Buflovak (a division of Hebeler Process Solutions)
has worked with the Company on design and testing of its 3G Tech over several years. The basic design for the Initial Project’s
ARS System, fabrication and delivery of equipment from Buflovak, and assembly/construction were completed in July 2023, followed by system
startup. Steady-state operations were achieved in September 2023, after which time we began optimization of the ARS in preparation for
providing final design for full-scale systems, as well as demonstrating its performance and economics for an independent engineering
report. Due to delays and interruptions in our ability to operate the system (as below), those efforts have continued to date. We worked
in concert with Integrated Engineering Services, the primary site engineering firm for the facility, on the integration of all project
components/modules at the Initial Project site during assembly/construction. Additional agreements were entered into with various professional
services providers (engineers, surveyors, utilities, etc.) for work related to the Initial Project. The Company has incurred costs of
$
Management previously 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. Additionally, due to some
recent equipment break-downs, the Initial Project was in maintenance mode at that time (and not 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 had been ‘placed in service’
at the June 30, 2024, fiscal year end. Further, after extensive discussion, it was determined that the ‘carrying value’ of
the Initial Project on the Company balance sheet as of that date be reduced to $0 in order to conform to accepted 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 below in Item 2, Management’s Discussion and Analysis). As a result, a large ‘one time/non-recurring’
‘non-cash’ charge of $
C: Lease:
The Company entered into an agreement on September 23, 2021, to lease approximately four acres of land near Fair Oaks, Indiana, for the development site of its Initial Project. The original lease ended on December 31, 2024 and there is an agreement to extend month to month at the same rate.
| 20 |
The Company has not made consistent lease payments
since October 16, 2023. The Company made a payment of $
D: Litigation (and related matters):
On April 16, 2025, the Company was served a summons by Hamstra Builders, Inc. (“Hamstra”) along with three other defendants: Bion Technologies, Inc. (“Biontech”), Bion 3G-1, LLC (“3G-1”), both entities of Bion Environmental Technologies, Inc., and North Prairie Holdings, LLC (‘NPHLLC”) the property lessor. The Hamstra suit is related to the Notice of Intent to file a Mechanic’s Lien, that was filed April 16, 2024, and has been disclosed in our public filings since that date. Bion has retained counsel in Indiana to represent the company in these actions. Hamstra is seeking to recover $1,494,513 in unpaid invoices related to the construction of Bion’s Ammonia Recovery System at Fair Oaks, Indiana. This sum includes $653,915 owed to Dilling Group, Inc., a subcontractor of Hamstra. Dilling filed suit to recover that amount on March 31, 2025, which was disclosed in Bion’s 8-K, dated April 7, 2025. These amounts are included in Accounts payable and accrued expenses.
The Company currently is not involved in any other material litigation or similar events.
| 9. | SUBSEQUENT EVENTS: |
The Company has evaluated events that occurred subsequent to September 30, 2025 for recognition and disclosure in the financial statements and notes to the financial statements.
As of November
14, 2025 ,the Company had subscription agreements on the July 2025 Notes for $
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Statements made in this Form 10-Q 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 statement represents management's best judgment as to what may occur in the future. However, forward-looking statements are subject to risks, uncertainties and important factors beyond our control that could cause actual results and events to differ materially from historical results of operations and events and those presently anticipated or projected.
These factors include potential conflicts of interest related to the BLG loan group, its control by three of Bion’s Directors and key management, and its security position in the Company’s IP (see I below), adverse economic conditions, entry of new and stronger competitors, inadequate capital and limited ability to obtain financing, needed personnel and equipment, unexpected costs, failure (or delay) to gain product certifications and/or regulatory approvals in the United States (or particular states) or foreign countries, loss (permanently or for any extended period of time) of the services of members of the Company’s small core management team and failure to obtain access to new markets. Additional risks and uncertainties that may affect forward looking statements about Bion's business and prospects include: i) the possibility that markets for eco-friendly/sustainable beef, organic and low-carbon fertilizer products, and clean fuels will be slow to develop (or not develop at all), ii) the possibility that competitors will develop more comprehensive and/or less expensive environmental solutions, iii) delays in market awareness of Bion and our Systems, iv) uncertainties and costs increases related to research and development efforts to update and improve Bion’s technologies and applications thereof, and/or v) delays and/or costs exceeding expectations relating to Bion's development of the Initial Project, JVs and/or Projects and vi) failure of marketing strategies, each of which could have both immediate and long term material adverse effects by placing us behind our competitors and requiring expenditures of our limited resources.
Bion disclaims any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.
The following discussion and analysis should be read in conjunction with the Condensed Consolidated Financial Statements and Notes to Condensed Consolidated Financial Statements filed with this Report.
BUSINESS OVERVIEW AND PLAN
The Company has been under substantial financial and management stress over the past four (4) years. Covid-related delays during technology pilot development at Buflovak in New York, followed by post-Covid supply chain disruptions during construction of our demonstration facility at Fair Oaks, have led to extreme difficulties in raising needed funds. These delays prevented us from meeting our project development and related capital timelines, and were further compounded by the death (following extended illness) of Dominic Bassani, who most recently served as our COO from May 2022 after serving as our CEO for the prior decade, the subsequent resignation of Bill O’Neill, Dominic’s replacement at the CEO position, effective May 31, 2024, followed by the retirement of Mark A. Smith, the Company’s President, General Counsel and Chief Financial Officer, effective July 31, 2024.
At the end of May 2024, a new core leadership team was installed (see G and H below) and a short-term funding strategy was implemented (see I, below) while longer term capital solutions were pursued. These efforts are ongoing. Our new leadership team believes the difficulties Bion has faced are outweighed by our recent successes that include the technology demonstration and optimization at our Fair Oaks facility and the initial responses from our fertilizer outreach. This is coupled with strong recent interest in our ammonia control solution from the biogas operators and developers that will be needed to ensure a supply of feedstock for our fertilizer products. These successes coincide with growing trends in sustainable agriculture and fuels and the circular economy that favor Bion’s business opportunities. Bion leadership believes this confluence of events positions the Company, assuming it aligns with appropriate strategic partners and obtains sufficient financing, to exploit a unique opportunity at the intersection of agriculture, renewable energy, the environment, and consumer demand.
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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 $6.0 million at September 30, 2025 which represents a decrease of approximately $1.2M from June 30, 2025 (largely due to Settlement Agreements detailed in P below). Similarly, the Company’s cash on hand increased from approximately $4,400 to approximately $27,700 over the same period. The Company has faced extreme difficulty obtaining needed funding during the entire 2025 fiscal year, which has continued throughout the first three months of the current fiscal year to date.
B: Effective June 30, 2024, at the same time the Initial Project was deemed placed in service, it was determined that because the Company’s Initial Project at Fair Oaks, IN, was i) largely a research & development facility and ii) is located on land subject to a short-term lease, it no longer had commercial value and its ‘carrying value’ was reduced to $0 on the Company balance sheet, in order to conform with accepted accounting practices. As a result, a large ‘one time/non-recurring’ ‘non-cash’ charge of $9,460,425 was taken by the Company, 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. GAAP accounting rules required the write-down and zero carrying value; however, the Fair Oaks facility has been and continues to be the most important asset of the Company. In addition to providing data needed to optimize a full-scale commercial system, Bion has conducted dozens of demonstrations with developers and operators, engineering firms, potential fertilizer and finance partners, and others. Further, Fair Oaks is operating at capacity to produce samples of Bion’s Ammonium Bicarbonate fertilizers for testing by various stakeholders. For more details on the Initial Project, see the Company’s Form 10-K for 2025.
C: On September 28, 2023, the Company entered into an agreement for a $1,500,000 bridge loan and executed a convertible promissory note with SEB LLC , a non-affiliated party. SEB and the note represented a strategic investment that would ‘anchor’ a larger capital raise, alongside Bion shareholders and new retail and institutional investors introduced by Titan Partners, the NY investment banking firm Bion engaged to underwrite the offering. An initial $250,000 tranche was received from SEB on October 5, 2023. During early November 2023 SEB informed the Company verbally that it did not intend to fulfill its obligations and since such time SEB has been in default. The default (which is continuing) has created substantial problems for and materially damaged the Company, since Titan was unwilling to participate in the offering. This rendered the Company unable to meet its creditor obligations on a timely basis and also contributed to the substantial increase in the Company’s ‘Current Liabilities’, including ‘accounts payable’, over recent periods. The Company is currently evaluating its rights regarding the default by SEB and has been in contact with SEB through a third-party. For more details on the SEB transactions, see the Company’s Form 10-K for 2025.
D: On January 2, 2024, Bion received a new (continuation) patent that broadened the claims related to its Ammonia Recovery System (ARS) to include industrial and municipal wastewater sources, in addition to animal waste streams that were previously covered. Since that time, Bion has a directed part of its limited resources to understanding and evaluating opportunities to apply its ARS as a ‘standalone’ or ‘bolt-on’ ammonia control solution in these sectors. In such cases, the ARS would be deployed as a standalone ammonia control solution (vs integrated into a Bion Gen3Tech platform) for facilities (both new and existing) that produce biogas from organic waste streams, such as food, food processing, and livestock packing/slaughter. These facilities are subject to EPA-mandated discharge limits that require ammonia control or face other limitations on ammonia/nitrogen in the effluent from biogas production. We believed then, and at this time, that there is a robust opportunity to provide bolt-on ammonia control solutions to others in the industrial and animal waste sectors. During fiscal 2025, and continuing, we have devoted increasing resources to pursuing the bolt-on opportunity in both of these sectors.
E: Effective April 1, 2024, the Company entered into two material definitive agreements (Giveback Agreements) regarding voluntary surrender for cancellation of securities of the Company (and related matters) by: a) members of the family of Dominic Bassani, recently deceased former Chief Executive Officer and (with his family) the Company’s largest shareholder (collectively “Bassani Family”), and b) Mark A. Smith, recently retired President of the Company and a director (“MAS”). MAS agreed to ‘give back’ 30 percent of his holdings. The Bassani Family agreed to surrender approximately 20% of its Company holdings immediately, and an additional 10 percent if Bion met certain terms and conditions. On January 18, 2025, the Bassani Family surrendered an additional 5 percent of their holdings after Bion met the first of those conditions. On September 15, 2025, as part of a subsequent Settlement Agreement (see P below), the Bassani family’s remaining 5 percent obligation under this agreement was cancelled. For more details on the Bassani Family and Smith 2024 Giveback Agreements, see the Company’s Form 10-K for 2025.
F: 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.
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G: 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. Bob Weerts, another Bion shareholder and a successful serial entrepreneur from Winnebago, Minnesota, also accepted a position on Bion’s Board of Directors (Mr. Weerts recently passed away).
H: On June 18, 2024, Bion formed a strategic relationship with Turk Stovall and Stovall Ranching Companies with the goal of developing a 16,000-head sustainable beef project at Stovall’s Yellowstone Cattle Feeders (YCF) location in Shepherd, Montana. The YCF feedyard is a traditional outdoor dirt feedlot that today is permitted to feed up to 25,000 head. Mr. Stovall also agreed to join Bion's Board of Directors and lead a joint venture between Stovall Ranching Companies and Bion to develop the project. The facility was envisioned to produce premium quality Montana beef that we believed would be the 'cleanest', most eco-friendly finished beef in the marketplace. (Note Stovall resignation and Bion shift in M, below).
I: To help alleviate short-term cash needs for continued operations, in August, three affiliates of the Company (Greg Schoener, Interim COO & Director; Turk Stovall, Director (at that time); Bob Weerts, (now-deceased former Director) and two shareholders (one of whom is the brother of Greg Schoener) began advancing money to Bion to cover critical payables. They subsequently formed a loan group, BION BLG, LLC (“BLG”), and provided short-term funding for Bion in a secured promissory note of up to $500,000. Schoener, Weerts, and the two non-affiliate members were also large Bion shareholders, prior to the formation of BLG. As a group, Schoener, Stovall, and Weerts own 60% of BLG, which has a security interest in the Company’s Intellectual Property. The BLG note will bear interest at a rate of 7.5% per annum and the maturity date is April 15, 2025. As of the filing date, BLG has advanced $440,213. The BLG note will convert into Units (shares and/or warrants) in the Company at the terms of a later capital raise, in which Bion crosses the threshold of $3 (three) million in aggregate capital raised (or other source of funding, and other terms as defined in the note). If the Company is unable to complete such funding within six (6) months, it will be in default of the BLG note, which is secured by the Company’s Intellectual Property (“IP” “Collateral”). BLG will share the Collateral on a pro rata basis with investors in a Note with similar terms being offered to previous Bion investors. The BLG note and security agreements contain other terms set forth therein and are included as exhibits to this filing.
Effective May 29, 2025, the Company entered into a Forbearance Agreement with Bion BLG, LLC, extending the maturity date of the BLG Note to July 15, 2025 (See Bion’s Form 8-K, dated April 17, May 30 and July 24, 2025). Under the terms of the Forbearance Agreement, the amounts outstanding under the Note began to bear interest at a rate of 9% per annum.
On July 24, 2025, the Company entered into a Forbearance Agreement with Bion BLG, LLC, (effective July 15, 2025) extending the maturity date of the BLG Note to January 15, 2026 (attached as exhibit). The agreement was ratified by Bion’s Board on July 24, 2025. Under the terms of the Forbearance Agreement, the amounts outstanding under the Note will continue to bear interest at a rate of 9% per annum. Bion agreed to a new formula to determine BLG’s obligation for up to $100,000 in legal costs related to litigation over delinquent payment for construction costs incurred at Bion’s demonstration facility near Fair Oaks, IN (see Bion’s Forms 8-K, dated April 7 and 17, 2025). Bion BLG, LLC, also extended their agreement to share their collateral with investors in the three prior Shareholder Note offerings, with investors participating in a new offering, dated July 25, 2025.
J: In November, the Company launched a secured promissory note offering (Shareholder Notes) to previous investors/shareholders (and certain others) with similar terms to the BLG note. Based on feedback from shareholders and registered representatives with which the Company has long standing relationships, management believed at that time that sufficient capital could be raised with this group to 1) continue to cover critical payables to maintain operations that will allow the Company to finish the engineering report and technology demonstration at Fair Oaks, 2) move forward with pre-development work on the Stovall project, 3) continue discussions with potential strategic partners, and 4) position the Company for the larger offering/ funding that will be required. As of filing date, Bion has raised $916,000 in the Shareholder Note offerings. Further, Bion has changed its focus from pre-development work on the Stovall project, to an initial bolt-on project at an existing or planned facility.
K: On April 16, 2025, the Company was served a summons by Hamstra Builders, Inc. (“Hamstra”) along with three other defendants: Bion Technologies, Inc. (“Biontech”), Bion 3G-1, LLC (“3G-1”), both entities of Bion Environmental Technologies, Inc., and North Prairie Holdings, LLC (‘NPHLLC”) the property lessor. The Hamstra suit is related to the Notice of Intent to file a Mechanic’s Lien, that was filed April 16, 2024, and has been disclosed in our public filings since that date. Bion has retained counsel in Indiana to represent the company in these actions. Hamstra is seeking to recover $1,494,513 in unpaid invoices related to the construction of Bion’s Ammonia Recovery System at Fair Oaks, Indiana. This sum includes $653,915 owed to Dilling Group, Inc., a subcontractor of Hamstra. Dilling filed suit to recover that amount on March 31, 2025, which was disclosed in Bion’s 8-K, dated April 7, 2025.
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L: In May 2025, Bion secured its first non-binding offtake commitments for its AB10 nitrogen fertilizer. The agreements were with Perfect Blend and Yield RNG, large West Coast organic fertilizer distributors. The agreements are attached as exhibits to Bion’s 8-k, dated May 30, 2025). Bion subsequently executed a similar offtake with a large integrated U.S. agribusiness concern that requested confidentiality. These three initial offtakes represent 250,000 gallons of Bion’s liquid AB10.
M: On May 30, 2025, Bion named Stephen J Posner to its Board of Directors and accepted the resignation of Turk Stovall as a director. Mr. Poser is a long-term Bion shareholder who spent a 50-year career in financial services and capital markets. Mr. Stovall, through his various roles and activities in the cattle business, was exposed to a wide range of potential conflicts of interest. It was mutually agreed that both Bion and Mr. Stovall’s interests would be better served by his focus on Stovall Ranching Companies and Yellowstone Cattle Feeders, while Bion focused on its opportunities independently. At this time, Bion turned its attention solely to its bolt-on opportunity and securing offtake agreements and identifying projects to supply them.
N: In June, Bion completed and released its Technology-Optimization Report, that details the development and 18-month optimization of the ARS at the demonstration facility in Fair Oaks, Indiana. The optimized ARS demonstrated it is stable and can maintain continuous steady-state operations, reliable, and scalable. The ARS also showed it can achieve its ammonia reduction targets by evaporating one-third less water than was anticipated and modeled. That translates to significantly better economics, including lower fertilizer production costs. The platform is now ready for the final design process of a full-scale commercial system, which is subject to project-specific details, location, and feedstock characteristics.
O: In August, Bion engaged Josh Rapport, MS, PhD, to find projects and strategic partners. He brings over 20 years' experience in researching, designing, building and operating anaerobic digesters for heat, power, and renewable natural gas (RNG), as well as in digestate treatment and utilization. He was VP Engineering for Brightmark, one of the largest RNG companies in the U.S. In less than four years, Brightmark launched 30 RNG projects worth over $500 million under his guidance, before he left the company in 2023 to start an independent consulting business. Josh joined Bion as a consultant with a success-based compensation package and it is anticipated he will join Bion as an employee if/when Bion initiates its first commercial project.
P: Effective September 15, 2025, two affiliates of the Company (Danielle Lominy and Christopher Parlow, family members of the late Dominic Bassani, Bion’s former CEO), and three non-affiliates of the Company (Dominic Bassani’s spouse, Mark A. Smith, previously a Director and President, and Edward Schafer, previously a Director) (referred to hereinafter collectively as ‘Holders’) have each individually agreed to a settlement (“Settlement Agreements”) that will simplify Bion’s capital structure and substantially reduce the number of Fully Diluted Shares. In consideration of the cancellation of various obligations and security instruments held by the Holders, including without limitation deferred compensation, convertible notes, warrants, and options, the Holders (as a whole) will receive, in aggregate, 8,101,746 shares of common stock. If all the instruments they forfeited had been converted or exercised, it could have increased the Company’s shares outstanding by 22,498,405. The transactions represent a net reduction in fully diluted shares of 14,369,659 and an increase in outstanding shares of 8,101,746 (approximately). The shares will be issued by January 15, 2026, or earlier upon the election of the individual Holders. Formal agreements attached as an exhibit to Bion’s Form 8-K, dated September 18, 2025.
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 Bill O’Neill, our immediately previous 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”) to develop large integrated beef projects. It became increasingly apparent that while it was easy to find feeders/cattle production partners, finding partners that could and would commit to beef and coproduct offtake agreements was much more difficult. Without such partners, it would be all but impossible to finance integrated projects. As described above, Mr. O’Neill decided he was unable to accomplish this strategy and departed Bion in May 2024.
Bion’s new leadership team returned the company to its earlier approach, focusing on building an initial ‘flagship’ project to prove the ARS technology and the Gen3Tech platform it supports. New leadership continued to focus on beef, for several reasons, and believed the best opportunity for the Company to prove its sustainable beef concept was with the Stovall Ranch JV in Montana. In June 2024, Bion formed a strategic relationship with Turk Stovall and Stovall Ranching Companies. Turk Stovall is a fifth-generation Montana cattleman, with an extensive graduate-level education in cattle husbandry and an MBA in agribusiness, and he is the largest custom cattle feeder in Montana. He also has broad experience and relationships with both the U.S. and Montana’s beef industry and important state leaders, resources, and agencies. Bion and Stovall agreed to establish a JV, that was to be led by Mr. Stovall, with the goal of developing a 16,000-head sustainable beef project at Stovall’s Yellowstone Cattle Feeders (‘YCF’) location in Shepherd, Montana. However, over the following months, it became apparent to Bion’s leadership that a) Bion did not have the requisite strategic partners or resources needed to develop these large integrated projects, even a single one, b) that project development timelines would be much longer than anticipated, and c) it was unlikely Bion would be able to raise sufficient capital to execute such a plan.
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Bion pivoted to devote almost all its resources to the bolt-on business opportunity: using the ARS as a standalone ammonia control solution for others’ biogas production facilities. We are currently focused on both existing and planned large-scale livestock facilities integrated with digesters, since they have waste streams for which the ARS has been optimized. Further, we have and will continue to devote resources to pursuing opportunities in the industrial wastewater sector, where regulatory drivers already exist, and we believe the ARS and its byproducts may give us a competitive advantage over existing solutions. We have not abandoned our opportunity to develop integrated sustainable livestock projects, which we believe our technology and business model is best suited for. However, we believe the bolt-on business opportunity has the advantage of requiring substantially less capital and could represent a much shorter path to fertilizer production and revenues. We intend to revisit integrated projects if and when it is in our interests to do so.
The Company’s on-going difficulties raising needed funds over the past two years have rendered the Company unable to meet its current creditor obligations on a timely basis. The Company has engaged in discussion/negotiation with its larger creditors (including its largest creditor--- the primary contractor on the Initial Project) but has been unable to reach agreements regarding payments due to the uncertainty as to if, when, and how much funding the Company will be able to raise in future periods. As a result, the primary contractor has filed a mechanics in Indiana and is pursuing action in federal court, and other creditors are threatening to commence or have commenced litigation and/or repossess/remove leased equipment. The Company is behind on its lease payments related to the site of the Initial Project. We have resumed payments to certain creditors, whose services the Company requires to continue operations at Fair Oaks, including partial lease payments to the property lessor (and ongoing supplier of digestate). Discussions and ultimate resolution are ongoing and subject to court proceedings (see K, above) and Bion’s ability to raise capital in a timely manner.
Bion has continued to raise minimal capital through our Shareholder Note Offerings and we have implemented extreme cost savings measures: maintaining only mission-critical operations and funding. Despite the Company’s financial state, the technology has been optimized and proven, the requisite organic approvals for the fertilizer have been obtained, initial offtake partners have been identified, and (nonbinding) agreements executed. We are now in discussions with several potential strategic partners in engineering, renewable energy (biogas/RNG) and clean fuels, organic fertilizer distribution, and others involved in reducing the environmental footprint of biogas, agriculture, and livestock production. Bion is now evaluating a number of these as potential development and finance partners for project opportunities. Further, the Company has initiated discussions with several large U.S. organic fertilizer manufacturers and distributors that have demonstrated interest in the product. Bion believes that any of these industry relationships could entail a direct investment in Bion, licensing fee, or some other ‘up front’ financial benefit to Bion, although there is no assurance that they will.
Bion’s new leadership team is strongly committed to Bion’s continuation, its future success, and its shareholders. We have refocused the Company’s efforts to the bolt-on opportunity, which should allow us to prove the technology at full scale and reach revenues more quickly. We believe this puts us on a more achievable path, that we will be able to move forward with at least one project in the current or next quarter, and that we will be able to execute a larger financing or obtain other sources of capital, such as a potential strategic investor/partner or a license agreement.
THERE IS NO ASSURANCE THAT THE COMPANY WILL REACH OR APPROACH THE GOALS/TARGETS SET FORTH ABOVE. REACHING SUCH GOALS/TARGETS WILL REQUIRE RESOLUTION OF THE COMPANY’S EXISTING FINANCIAL DIFFICULTIES AND ACCESS TO VERY LARGE AMOUNTS OF CAPITAL (EQUITY AND DEBT) AS EACH BOLT-ON ARS PROJECT IS PROJECTED TO COST IN EXCESS OF $8 MILLION (DEBT/EQUITY/GRANTS) TO CONSTRUCT AND WILL REQUIRE MOBILIZATION OF SUBSTANTIAL PERSONNEL, TECHNICAL RESOURCES AND MANAGEMENT SKILLS. THE COMPANY DOES NOT POSSESS EITHER THE FINANCIAL OR PERSONNEL RESOURCES INTERNALLY AND WILL NEED TO SOURCE SUCH RESOURCES FROM OUTSIDE ITSELF.
For expanded information regarding our ‘HISTORY, BACKGROUND AND CURRENT ACTIVITIES’, see discussion within the Notes (particularly Notes 1, 4, 5, and 8) included in this report, in Forms 8-K filed earlier this year and Item 1 (and other sections) in our Annual Reports on Form 10-K filed in previous fiscal years.
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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”.
Operating Segment
The Company operates a single reportable segment: advanced waste treatment and resource recovery solutions for organic waste streams. While in the future the Company may pursue other segments—develop integrated livestock projects, implement CAFO retrofits, and exploit other opportunities to use its proprietary technology (as previously described)—at this time it is now focused entirely on bolt-on solutions for existing or planned biogas production facilities. The business is managed by the Chief Executive Officer who is the Chief Operating Decision Maker (“CODM”). The CODM evaluates segment performance based on the operating income (loss) for purposes of allocating resources and evaluating financial performance. The accounting policies of our single reportable segment are the same as those for the Company as a whole.
Stock-based compensation
The Company follows the provisions of ASC 718, which generally requires that share-based compensation transactions be accounted and recognized in the statement of income based upon their grant date fair values.
Pursuant to ASC Topic 815 “Derivatives and Hedging” (“Topic 815”), the Company reviews all financial instruments for the existence of features which may require fair value accounting and a related mark-to-market adjustment at each reporting period end. Once determined, the Company assesses these instruments as derivative liabilities. The fair value of these instruments is adjusted to reflect the fair value at each reporting period end, with any increase or decrease in the fair value being recorded in results of operations as an adjustment to fair value of derivatives. As of March 31, 2025 and 2024, there are no derivative financial instruments.
Options:
The Company has issued options to employees and consultants under its 2006 Plan to purchase common shares of the Company. Options are valued on the grant date using the Black-Scholes option-pricing model. The expected volatility is based on the historical price volatility of the Company’s common stock. The dividend yield represents the Company’s anticipated cash dividend on common stock over the expected term of the stock options. The U.S. Treasury bill rate for the expected term of the stock options was utilized to determine the risk-free interest rate. The expected term of stock options represents the period of time the stock options granted are expected to be outstanding based upon management’s estimates.
Warrants:
The Company has issued warrants to purchase common shares of the Company. Warrants are valued using a fair value based method, whereby the fair value of the warrant is determined at the warrant issue date using a market-based option valuation model based on factors including an evaluation of the Company’s value as of the date of the issuance, consideration of the Company’s limited liquid resources and business prospects, the market price of the Company’s stock in its mostly inactive public market and the historical valuations and purchases of the Company’s warrants. When warrants are issued in combination with debt or equity securities, the warrants are valued and accounted for based on the relative fair value of the warrants in relation to the total value assigned to the debt or equity securities and warrants combined.
Lease Accounting:
The Company accounts for leases under ASC 842, Leases (“ASC 842”). Accordingly, the Company will determine whether an arrangement contains a lease at the inception of the arrangement. If a lease is determined to exist, the term of such lease is assessed based on the date on which the underlying asset is made available for the Company’s use by the lessor. The Company’s assessment of the lease term reflects the non-cancelable term of the lease, inclusive of any rent- free periods and/or periods covered by early-termination options which the Company is reasonably certain of not exercising, as well as periods covered by renewal options which the Company is reasonably certain of exercising. The Company also determines lease classification as either operating or finance at lease commencement, which governs the pattern of expense recognition and the presentation reflected in the condensed and 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 condensed and 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.
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THREE MONTHS ENDED SEPTEMBER 30, 2025 COMPARED TO THE THREE MONTHS ENDED SEPTEMBER 30, 2024
Revenue
Total revenues were nil for both the three months ended September 30, 2025 and 2024.
General and Administrative
Total general and administrative expenses were $470,000 and $959,000 for the three months ended September 30, 2025 and 2024, respectively.
Salaries and related payroll tax expenses were $89,000 and $95,000 for the three months ended September 30, 2025 and 2024, respectively. Consulting costs were $59,000 and $45,000 for the three months ended September 30, 2025 and 2024, respectively. Investor relations expenses were $17,000 and $($57,000) for the three months ended September 30, 2025 and 2024, respectively. Legal costs were $8,000 and nil for the three months ended September 30, 2025 and 2024, respectively.
Stock-based compensation for the three months ended September 30, 2025 and 2024 were $117,000 and $659,000, respectively.
Depreciation
Total depreciation expense was nil and $285 for the three months ended September 30, 2025 and 2024, respectively.
Research and Development
Total research and development expenses were $6,500 and $6,400 for the three months ended September 30, 2025 and 2024, respectively.
Salaries and related payroll tax expenses were $1,400 and $1,400 for the three months ended September 30, 2025 and 2024, respectively. Consulting costs were nil and nil for the three months ended September 30, 2025 and 2024, respectively.
Loss from Operations
As a result of the factors described above, the loss from operations was $477,000 and $966,000 for the three months ended September 30, 2025 and 2024 respectively.
Other (Income)/Expense
Other expense was $105,000 and $206,000 for the three months ended September 30, 2025 and 2024, respectively.
Interest expense related to deferred compensation, loan payable and convertible notes prior to capitalization was $44,000 and $25,000 for the three months ended September 30, 2025 and 2024, respectively. Interest expense related to warrant modifications was $61,000 and $181,000 for the three months ended September 30, 2025 and 2024, respectively.
Net Loss Attributable to the Noncontrolling Interest
The net loss attributable to the noncontrolling interest was nil and nil for the three months ended September 30, 2025 and 2024, respectively.
Net Loss Attributable to Bion’s Common Stockholders
As a result of the factors described above, the net loss attributable to Bion’s stockholders was $581,000 and $1,172,000 for the three months ended September 30, 2025 and 2024, respectively, and the net loss per basic common share was $.01 and $.02 for the three months ended September 30, 2025 and 2024, respectively.
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LIQUIDITY AND CAPITAL RESOURCES
The Company's condensed consolidated financial statements for the nine months ended September 30, 2025 have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. The Report of our Independent Registered Public Accounting Firm on the Company's consolidated financial statements as of and for the year ended June 30, 2025 includes a "going concern" explanatory paragraph which means that the auditors stated that conditions exist that raise substantial doubt about the Company's ability to continue as a going concern.
Operating Activities
As of September 30, 2025, the Company had cash of approximately $28,000. During the three months ended September 30, 2025, net cash used in operating activities was $248,000, 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. Cash expenditures were offset in part by proceeds from financing activities, a total of $271,000 in debt funding. During the three months ended September 30, 2024, net cash used in operating activities was $218,000, primarily consisting of cash operating expenses related to salaries and benefits, and other general and administrative costs such as insurance, legal, accounting, consulting and investor relations expenses as well as the purchase of property and equipment. Cash expenditures were offset by proceeds from financing activities, a total of $202,000 in debt funding.
As previously noted, the Company is currently not generating significant revenue and accordingly has not generated cash flows from operations. The Company does not anticipate generating sufficient revenues to offset operating and capital costs for a minimum of two to five years. While there are no assurances that the Company will be successful in its efforts to develop and construct its Projects and market its Systems, it is certain that the Company will require substantial funding from external sources. As stated in multiple places in this report, over the last three 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 three months ended September 30, 2025 and 2024, the Company invested nil and nil in the purchase of property and equipment, respectively. The decrease was due to the Company’s effort to conserve cash.
Financing Activities
During the three months ended September 30, 2025, the Company received net cash proceeds of $240,000 from convertible notes payable, less $1,250 in commissions, $25,000 from demand note and $8,000 from notes payable from related parties.
As of September 30, 2025, the Company has debt obligations, including accrued interest, consisting of: a) deferred compensation of $1,087,000, b) convertible notes payable of $1,315,000, c) convertible bridge note payable of $464,000, d) notes payable related party of $440,000 and demand note of $25,000. As of September 30, 2024, the Company had debt obligations of a) deferred compensation of $957,000, and b) convertible notes payable – affiliates of $1,718,000 and c) current note payable including accrued interest of $630,000 and d) notes payable including accrued interest of $127,000.
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Plan of Operations and Outlook
As of September 30, 2025, the Company had cash of approximately $28,000.
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 2024 and 2023 (as a whole), the Company faced less difficulty in raising equity funding (but was subject to substantial equity dilution from the larger amounts of equity financing during the periods) than was experienced in the prior 3 years. However, this positive trend did not continue during the 2025 fiscal year (and the first two quarters of 2026 through the date of this report). The Company raised very limited equity funds during such periods to meet some of its immediate needs, and therefore, the Company needs to raise substantial additional funds in the upcoming periods. The Company has faced substantial demand for capital and operating expenditures for the fiscal year 2025 that we anticipate will continue (or increase) during the 2026 fiscal year and periods thereafter as it moves toward commercial implementation of its 3G Tech and development of JVs (including costs associated with additions of personnel to carry out the business activities of the Company) and, therefore, is likely to continue to face, significant cash flow management issues due to limited capital resources and working capital constraints which had only begun to be alleviated during 2024 and 2023. As a result, the Company has faced, and continues to face, significant cash flow management challenges due to material working capital constraints. To partially mitigate these working capital constraints, the Company's core senior management and some key employees and consultants have been deferring most of their cash compensation and/or are accepting compensation in the form of securities of the Company and members of the Company's senior management have from time-to-time made loans to the Company in the past and may do so in future periods.
The Company continues to explore sources of additional financing (including potential agreements with strategic partners – both financial 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.
Going Concern and Management’s Plans:
The Company’s condensed 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.
For the three months ended September 30, 2025 the Company had a loss of $581,000 including $117,000 non-cash compensation expenses related to extension of warrants and options.
During the fiscal year ended June 30, 2025, the Company had a loss of $2,380,000 including $844,000 non-cash compensation expenses related to extension of warrants and options.
The constraints on available resources have had, and continue to have, negative effects on the pace and scope of the Company’s efforts to operate and develop its business. The Company has had to delay payment of trade obligations and has had to economize in many ways that have potentially negative consequences. If the Company is able to raise needed funds during the remainder of the current fiscal year (and subsequent periods), of which there is no assurance, management will not need to consider deeper cuts (including additional personnel cuts) and/or curtailment of ongoing activities including research and development activities. The Company will need to obtain additional capital to fund its operations and technology development, to satisfy existing creditors, and to develop Projects. The Company anticipates that it will seek to raise from $3,000,000 to $10,000,000 or more debt and/or equity through sale of its equity securities (common, preferred and/or hybrid) and/or debt (including convertible) securities, and/or through use of ‘rights’ and/or warrants (new and/or existing) and/or license payments and/or through other means during the next twelve months. Further, Bion may be required to raise $8 million (or more) to fund its initial project, in a combination of debt financing and equity investment. However, as discussed above, there is no assurance, especially in light of the difficulties the Company has experienced in many recent years and the extremely unsettled capital markets that presently exist for small pre-revenue companies like us, that the Company will be able to obtain the funds that it needs to stay in business, complete its technology development or to successfully develop its business and Projects. Ultimately, in the event the Company cannot secure additional financial resources, or complete a strategic transaction in the longer term, the Company may need to curtail or suspend its operational plans or current initiatives, or potentially liquidate its business interests, and investors may lose all or part of their investment.
The accompanying condensed 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.
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Management’s Plan
The Company continues to explore sources of financing to satisfy its current operating requirements and future growth needs. The Company has faced substantial demand for capital and operating expenditures for the fiscal year 2025 that we anticipate will increase during the 2026 fiscal year and periods thereafter as we move toward commercial implementation of our ARS and 3G Tech and development of JVs (including costs associated with additions of personnel to carry out the business activities of the Company). As a result, the Company has faced, and continues to face, significant cash flow challenges due to material working capital constraints. To partially mitigate these working capital constraints, the Company's core senior management and some key employees and consultants have been deferring most of their cash compensation and/or are accepting compensation in the form of securities of the Company and members of the Company's senior management have from time-to-time made loans to the Company in the past and may do so in future periods.
To help alleviate short-term cash needs for continued operations, in August 2024, three affiliates of the Company (Greg Schoener, Interim COO & Director; Turk Stovall, previous Director; Bob Weerts, now-deceased Director) and two shareholders (one of whom is the brother of Greg Schoener) began advancing money to Bion to cover critical payables. They subsequently formed a loan group, BION BLG, LLC (“BLG”), and provided short-term funding for Bion in a secured promissory note of up to $500,000. Schoener, Weerts, and the two non-affiliate members were also large Bion shareholders, prior to the formation of BLG. As a group, Schoener, Stovall, and Weerts own 60% of BLG, which has a security interest in the Company’s Intellectual Property. The BLG note bears interest at a rate of 9% per annum and the maturity date is January 15, 2026. As of the filing date, BLG has advanced $407,384. The BLG note will convert into Units (shares and/or warrants) in the Company at the terms of a later capital raise, in which Bion crosses the threshold of $3 (three) million in aggregate capital raised (or other source of funding, and other terms as defined in the note). If the Company is unable to complete such funding within six (6) months, it will be in default of the BLG note, which is secured by the Company’s Intellectual Property (“IP” “Collateral”). BLG will share the Collateral on a pro rata basis with investors in a secured promissory note with similar terms being offered to previous Bion investors. The BLG note and security agreements contain other terms set forth therein and are included as exhibits to this filing. The Company has entered into two forbearance agreement that raised the interest rate to 9% and extended the maturity date to January 15, 2026.
In November, the Company launched a secured promissory note offering to previous investors/shareholders (and certain others) (“Shareholder Notes”) with similar terms to the BLG note. Based on feedback from shareholders and registered representatives with which the Company has long standing relationships, management believed at that time that sufficient capital could be raised with this group to 1) continue to cover critical payables to maintain operations that will allow the Company to finish the engineering report and technology demonstration at Fair Oaks, 2) move forward with pre-development work on the Stovall project, 3) continue discussions with potential strategic partners, and 4) position ourselves for the larger offering/ funding that will be required. As of the filing date, Bion has raised $816,000 in the Shareholder Note offerings. Further, Bion has changed its focus from pre-development work on the Stovall project, to an initial bolt-on project at an existing or planned facility.
To date, the Company has primarily raised funds through private placements with accredited investors, often conducted through FINRA-registered broker/dealers. However, the Company anticipates moving forward, it will need to raise capital using a combination of financial instruments and sources, that could also include strategic and/or institutional investors, including family offices and private equity, brokered equity or debt offerings with both public and private investors, and banks and other ag lending institutions, among others, although there can be no assurance it will be successful. Many of these financing options may involve dilution, potentially substantial, for current shareholders. Management intends to augment its access to capital by adding one or more staff members (or consultants) with experience in the capital markets, as well as utilizing its current contacts and relationships in the capital markets.
Bion is in discussions with several potential strategic partners in engineering, renewable energy (biogas/RNG) and clean fuels, organic fertilizer distribution, and others involved in reducing the environmental footprint of biogas, agriculture, and livestock production. Bion is now evaluating a number of these as potential development and finance partners for project opportunities. Further, with the recent OMRI Listing for its commercial fertilizer, the Company has initiated discussions with several large U.S. fertilizer manufacturers and distributors that have demonstrated interest in the product. Bion believes that these industry relationships could entail a direct investment in Bion, licensing fee, or some other ‘up front’ financial benefit to Bion, although there is no assurance that they will.
CONTRACTUAL OBLIGATIONS
The Company entered into an agreement on September 23, 2021, to lease approximately four acres of land near Fair Oaks, Indiana, for the development site of its Initial Project. The lease ended December 31, 2024 and there is an agreement to extend month to month at the same rate.
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The Company has not made consistent lease payments since October 16, 2023. The Company made a payment of $10,500 in Oct 2024, $6,250 in February 2024 and subsequent to quarter end a payment of $6,250 in October 2025. The Company owes $125,000 in lease payments at September 30, 2025.
OFF-BALANCE SHEET ARRANGEMENTS
The Company does not have any off-balance sheet arrangements (as that term is defined in Item 303 of Regulation S-K) that are reasonably likely to have a current or future material effect on our financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Not applicable.
Item 4. Controls and Procedures.
| (a) | Evaluation of Disclosure Controls and Procedures. |
The term "disclosure controls and procedures" is defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). This term refers to the controls and procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files under the Exchange Act is recorded, processed, summarized, and reported within the required time periods. Our Chief Executive Officer and Principal Financial Officer has evaluated the effectiveness of the design and operations of our disclosure controls and procedures as of the end of the period covered by this quarterly report, and has concluded that, as of that date, our disclosure controls and procedures were not effective at ensuring that required information will be disclosed on a timely basis in our reports filed under the Exchange Act, as a result of the material weakness in internal control over financial reporting discussed in Item 9(A) of our Form 10-K for the year ended June 30, 2025.
| (b) | Changes in Internal Control over Financial Reporting. |
No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II – OTHER INFORMATION
Item 1. Legal Proceedings.
The Company is currently in discussions/negotiations with its creditors, as described in Management’s Discussion and Analysis, Note C. These negotiations could escalate to litigation if a mutually satisfactory resolution is not achieved.
As is described in the Company’s Financial Statements included herein and discussed above in Management’s Discussion and Analysis, Note C, the Company’s on-going difficulties raising needed funds for its operations/activities over the past 2 years has 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, Hamstra Builders, the primary contractor filed a mechanics lien in Indiana (as did its largest sub- contractor, Dilling Group) and other creditors are threatening to commence litigation and/or repossess/remove leased equipment.
On April 16, 2025, the Company was served a summons by Hamstra Builders, Inc. (“Hamstra”) along with three other defendants: Bion Technologies, Inc. (“Biontech”), Bion 3G-1, LLC (“3G-1”), both entities of Bion Environmental Technologies, Inc., and North Prairie Holdings, LLC (‘NPHLLC”) the property lessor. The Hamstra suit is related to the Notice of Intent to file a Mechanic’s Lien, that was filed April 16, 2024, and has been disclosed in our public filings since that date. Bion has retained counsel in Indiana to represent the company in these actions. Hamstra is seeking to recover $1,494,513 in unpaid invoices related to the construction of Bion’s Ammonia Recovery System at Fair Oaks, Indiana. This sum includes $653,915 owed to Dilling Group, Inc., a subcontractor of Hamstra. Dilling filed suit to recover that amount on March 31, 2025, which was disclosed in Bion’s 8-k, dated April 7, 2025.
The Company currently is not involved in any other material litigation or similar events.
Item 1A. Risk Factors.
Risk Factors now include the potential conflicts of interest related to the BLG loan group, its control by three of Bion’s Directors and key management, and its security position in the Company’s IP. See above, Item 2, Management’s Discussion and Analysis.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
During the three months ended September 30, 2025, 209,689 shares of restricted common stock were issued as cashless warrant exercises.
Item 3. Defaults Upon Senior Securities.
Not applicable.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
During the three months ended
September 30, 2025, no director or officer of the Company
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Item 6. Exhibits.
(a) Exhibits required by Item 601 of Regulation S-K.
Exhibit Incorporated by Reference Filed/Furnished
| Exhibit | Incorporated by Reference | Filed/Furnished | |||||||||
| No. | Description | Form | Exhibit | Filing Date | Herewith | ||||||
| 10.1 | Bassani Family Settlement Agreement | 8-K | 10.1 | 10/8/2025 | |||||||
| 10.2 | Mark Smith Settlement Agreement | 8-K | 10.2 | 10/8/2025 | |||||||
| 10.3 | Edward Schafer Settlement Agreement | 8-K | 10.3 | 10/8/2025 | |||||||
| 31.1* | Certification of Principal Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act | Filed | |||||||||
| 32.1** | Certification of Principal Accounting Officer Pursuant to Section 906 of the Sarbanes-Oxley Act | Furnished | |||||||||
| 101.INS* | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | Filed | |||||||||
| 101.SCH* | Inline XBRL Taxonomy Extension Schema Document | Filed | |||||||||
| 101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document | Filed | |||||||||
| 101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document | Filed | |||||||||
| 101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document | Filed | |||||||||
| 101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document | Filed | |||||||||
| 104* | Inline XBRL for the cover page of this Quarterly Report on Form 10-Q, included in the Exhibit 101 Inline XBRL Document Set. | Filed | |||||||||
* Filed herewith.
**Furnished herewith.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| BION ENVIRONMENTAL TECHNOLOGIES, INC. | ||
| Date: November 14, 2025 | By: | /s/ Stephen Craig Scott |
| Stephen Craig Scott, Chief Executive Officer | ||
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FAQ
What was BNET’s Q1 FY2026 net loss and revenue?
What is BNET’s cash position and liabilities?
Did BNET issue a going concern warning?
How did BNET change its strategy?
How much capital does BNET plan to raise?
What capital structure changes occurred in September 2025?
How many shares were outstanding?
