Bion Environmental anticipates $3M–$10M or more financing
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Bion Environmental Technologies, Inc. (BNET) reported no revenue and a net loss of $768,992 for the three months ended September 30, 2026, compared with a $581,329 loss a year earlier. Cash was $62,131 at September 30, 2026, versus $3,670 at June 30, 2026, while operating activities used $125,891 in cash. Current liabilities were $8,025,698 against total assets of $82,370. Bion said the combined factors raise substantial doubt about its ability to continue as a going concern; it anticipates seeking $3 million to $10 million or more in debt and/or equity during the next 12 months, with no assurance it can obtain the funding.
Bion now devotes almost all resources to standalone Ammonia Recovery System (ARS) ammonia-control solutions for biogas facilities; each ARS project is projected to cost $4 million to $20 million, depending on scope. In the Fair Oaks settlements, $1,774,513 owed to contractor Hamstra was reclassified from accounts payable to a secured convertible note, with $653,915 payable in cash at a qualified financing. A separate note issued to landlord North Prairie Holdings began at $162,500, with $50,000 payable in cash at a qualified financing.
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Hollow bars mark forward-looking points. How the balance works
Positive
- None.
Negative
- Major point. Forward-looking: it has not happened yet and may not happen.Going-concern doubt accompanies a $3 million to $10 million or more funding need.
- Moderate pointQuarterly net loss was $768,992, versus $581,329 in 2025.
Filing Explained
New funding can trigger 7,701,746 settlement shares, while a note-conversion financing also gates issuance of accrued director compensation in shares.
If a qualified financing closes, Bion must pay Hamstra
Separately,
Bion also accrued
Key Figures
Key Terms
going concern financial
Ammonia Recovery System technical
qualified financing financial
Concentrated Animal Feeding Operations technical
bolt-on technical
secured convertible promissory note financial
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
How much revenue and what net loss did BNET report for the quarter ended September 30, 2026?
How much financing does BNET expect to seek?
Why did BNET disclose substantial doubt about its ability to continue as a going concern?
What are BNET's cash payment terms under the Fair Oaks settlement notes?
AI-generated analysis. How Rhea-AI works. Not financial advice.
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
For the transition period from _______ to _________
Commission File No.
(Name of registrant in its charter)
| (State or other jurisdiction of incorporation or formation) | (I.R.S. employer identification number) |
(Address of principal executive offices)
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Securities Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| OTCQB |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
☒
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was
required to submit such files). ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | Accelerated filer ☐ | ||||
| Smaller reporting company |
|||||
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐
Yes ☒
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Not applicable.
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
On November 1, 2026, there were 58,116,620 Common
Shares issued and
BION ENVIRONMENTAL TECHNOLOGIES, INC.
FORM 10-Q
TABLE OF CONTENTS
| PART I. FINANCIAL INFORMATION | Page | ||
| Item 1. | Condensed Consolidated Financial Statements (unaudited) | 3 | |
| Balance sheets | 3 | ||
| Statements of operations | 4 | ||
| Statement of changes in equity (deficit) | 5 | ||
| Statements of cash flows | 7 | ||
| Notes to unaudited condensed consolidated financial statements | 8 | ||
| Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations | 27 | |
| Item 3. | Quantitative and Qualitative Disclosures about Market Risk | 33 | |
| Item 4. | Controls and Procedures | 33 | |
| PART II. OTHER INFORMATION | |||
| Item 1. | Legal Proceedings | 33 | |
| Item 1A. | Risk Factors | 34 | |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 34 | |
| Item 3. | Defaults Upon Senior Securities | 34 | |
| Item 4. | Mine Safety Disclosures | 34 | |
| Item 5. | Other Information | 34 | |
| Item 6. | Exhibits | 35 | |
| Signatures | 36 | ||
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.
| 2 |
BION ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
| September 30 | June 30, | |||||||
| 2026 | 2026 | |||||||
| (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 | ||||||||
| Convertible notes payable (Note 5) | — | |||||||
| Total liabilities | ||||||||
| Commitments and Contingencies (Note 8) | ||||||||
| 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 | ||||||||
| 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)
| 3 |
BION ENVIRONMENTAL TECHNOLOGIES, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 2026 AND 2025
(UNAUDITED)
| Three months ended September 30, | ||||||||
| 2026 | 2025 | |||||||
| 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)
| 4 |
BION ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
THREE MONTHS ENDED SEPTEMBER 30, 2026 AND 2025
(UNAUDITED)
Three months ended September 30, 2026 and 2025
| 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, 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 on the sale of units | — | — | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | — | — | — | — | — | ( | ) | — | ( | ) | |||||||||||||||||||||||||||||||||||||
| Balances, September 30, 2025 | — | $ | — | — | $ | — | $ | — | $ | $ | $ | — | $ | ( | ) | $ | $ | ( | ) | |||||||||||||||||||||||||||||||||
| Balances, July 1, 2026 | — | — | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||||||
| Modification of warrants | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Commission | — | — | — | — | — | — | — | — | ( | ) | — | — | — | ( | ) | |||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | — | — | — | — | — | ( | ) | — | ( | ) | |||||||||||||||||||||||||||||||||||||
| Balances, September 30, 2026 | — | $ | — | — | $ | — | $ | — | $ | $ | $ | — | $ | ( | ) | $ | $ | ( | ) | |||||||||||||||||||||||||||||||||
See notes to condensed consolidated financial statements (unaudited)
| 5 |
BION ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED CASH FLOWS
THREE MONTHS ENDED SEPTEMBER 30, 2026 AND 2025
(UNAUDITED)
| 2026 | 2025 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net (loss) | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation expense | ||||||||
| Stock- based compensation | ||||||||
| Accrued interest on loans payable, deferred compensation and other | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Decrease (increase) in prepaid expenses and other assets | ( | ) | ||||||
| Increase in accounts payable and accrued expenses | ||||||||
| Increase in deferred compensation | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Payments for purchase of fixed assets | ( | ) | — | |||||
| Net cash used in investing activities | ( | ) | — | |||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Proceeds from convertible notes payable | ||||||||
| Proceeds from demand note | — | |||||||
| Payments on demand note | ( | ) | — | |||||
| Proceeds from note payable loan, related party | ||||||||
| Commissions on proceeds from convertible notes payable | ( | ) | ( | ) | ||||
| Net cash provided by financing activities | ||||||||
| Net increase in cash | ||||||||
| Cash at beginning of period | ||||||||
| Cash at end of period | $ | $ | ||||||
| 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 | — | |||||||
| Settlement of Hamstra accounts payable to convertible note | — | |||||||
| Settlement of NPH accounts payable to convertible note | — | |||||||
See notes to condensed consolidated financial statements (unaudited)
| 6 |
BION ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
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, 2026
the Company had a loss of $
| 7 |
| BION ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) |
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 2026, which has continued during the 2027 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 the Company’s short-term
cash needs following the management challenges in 2024, three affiliates of the Company and two shareholders 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. The capital raised in these offerings allowed Bion to accomplish the steps needed to commercialize our technology, move forward with potential strategic partners, and position ourselves for the larger offering/ funding that will be required for that commercialization. As of the filing date, Bion has raised $1,399,800 in the Shareholder Note offerings and believes the Company is now positioned to attract investment from outside and/or institutional sources. (see Note 5, Convertible Notes (Shareholder Notes).
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, although management is committed to minimizing that dilution compared to recent share prices.
| 8 |
| BION ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) |
Bion is 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. The Company is evaluating a number of these as potential development and finance partners for project opportunities and on December 5, 2025, entered into an MOU with Kimmeridge Energy Management for a potential large RNG facility. The MOU includes a Right of First Refusal for Kimmeridge on 10 million shares of Bion stock at a premium to the current market. Effective June 6, 2026, the Company and Kimmeridge extended the MOU, including the Right of First Refusal, for six months under the same terms. 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 strong interest in the product. Bion believes that these developing relationships could also 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.
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 ARS PROJECT IS PROJECTED TO COST BETWEEN $4 MILLION AND $20 MILLION (DEBT/EQUITY/GRANTS), DEPENDING ON WHETHER IT IS A BOLT-ON OR AN INTEGRATED PROJECT, 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 Company’s 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, 2026, the results of operations and cash flows of the Company for the three months ended September 30, 2026 and 2025. Operating results for the three months ended September 30, 2026 are not necessarily indicative of the results that may be expected for the year ending June 30, 2027.
Operating Segment:
The
Company operates as a single
The Company's Chief Executive Officer is the chief operating decision maker ("CODM"). The CODM assesses performance and allocates resources based on consolidated net loss, as reported in the consolidated statements of operations. The CODM uses net loss, together with budget-to-actual comparisons and cash forecasts, to monitor spending, manage the Company's limited liquidity, and decide how to allocate resources to operations, research and development, and financing activities. The measure of segment assets is total consolidated assets, as reported in the consolidated balance sheets. The accounting policies of the segment are the same as those described in this Note.
The significant segment expenses and other segment items regularly provided to the CODM are as follows:
| Schedule of segment expenses and other segment items | ||||||||
| Three months ended September 30, 2026 | Three months ended September 30, 2025 | |||||||
| Revenue | $ | — | $ | — | ||||
| General and administrative (including stock-based compensation) | ||||||||
| Research and development (including stock-based compensation) | ||||||||
| Depreciation | — | — | ||||||
| Interest expense | ||||||||
| Other segment items (1) | ( | ) | ( | ) | ||||
| Segment and consolidated net loss | $ | $ | ||||||
| (1) |
| 9 |
| BION ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) |
Non-cash
stock-based compensation included in the expenses above was nil
The CODM’s measure of segment assets is
total consolidated assets, which were $
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, 2026 and June 30, 2026
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 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.
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.
| 10 |
| BION ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) |
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:
The Company measures fair value in accordance with ASC 820, Fair Value Measurement. 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. ASC 820 establishes a three-level fair value hierarchy that requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs. A fair value measurement is categorized in its entirety based on the lowest level of input that is significant to the measurement. The three levels are:
Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 – Inputs other than quoted prices included in Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities in active markets, or quoted prices for identical or similar assets or liabilities in markets that are not active.
Level 3 – Unobservable inputs that are supported by little or no market activity and that reflect management's own assumptions about the assumptions market participants would use.
The Company had no assets or liabilities measured at fair value on a recurring basis as of September 30, 2026 or June 30, 2026.
Lease Accounting:
The Company accounts for leases under ASC 842, Leases (“ASC 842”). Accordingly, the Company will determine whether an arrangement contains a lease at the inception of the arrangement. If a lease is determined to exist, the term of such lease is assessed based on the date on which the underlying asset is made available for the Company’s use by the lessor. The Company’s assessment of the lease term reflects the non-cancelable term of the lease, inclusive of any rent-free periods and/or periods covered by early-termination options which the Company is reasonably certain of not exercising, as well as periods covered by renewal options which the Company is reasonably certain of exercising. The Company also determines lease classification as either operating or finance at lease commencement, which governs the pattern of expense recognition and the presentation reflected in the consolidated statements of operations over the lease term.
For leases with a term exceeding 12 months, a lease liability is recorded on the Company’s consolidated balance sheet at lease commencement reflecting the present value of its fixed minimum payment obligations over the lease term. A corresponding right-of-use (“ROU”) asset equal to the initial lease liability is also recorded, adjusted for any prepaid rent and/or initial direct costs incurred in connection with execution of the lease and reduced by any lease incentives received. For purposes of measuring the present value of its fixed payment obligations for a given lease, the Company uses its incremental borrowing rate, determined based on information available at lease commencement, as rates implicit in its leasing arrangements are typically not readily determinable. The Company's incremental borrowing rate reflects the rate it would pay to borrow on a secured basis and incorporates the term and economic environment of the associated lease.
| 11 |
| BION ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) |
The Company has elected the short-term lease practical expedient available under ASC 842 for all asset classes. Under this election, for leases with a lease term of 12 months or less at commencement, and which do not include an option to purchase the underlying asset that the Company is reasonably certain to exercise, the Company does not recognize a lease liability or corresponding ROU asset on its consolidated balance sheets. Instead, lease payments associated with such short-term leases are recognized as expense in the consolidated statements of operations on a straight-line basis over the lease term.
Loss Contingencies and Legal Costs:
The Company is subject to various legal proceedings, claims, and regulatory matters arising in the ordinary course of business. In accordance with ASC 450, Contingencies, the Company records an accrual for a loss contingency when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. When a loss is probable and a range of loss can be estimated, the Company accrues its best estimate within that range. If no amount within the range is a better estimate than any other, the Company accrues the minimum amount in the range. The Company reviews these accruals each reporting period and adjusts them to reflect negotiations, settlements, rulings, advice of legal counsel, and other developments relating to each matter. When a loss is reasonably possible but not probable, or is probable but not reasonably estimable, the Company does not record an accrual. Instead, it discloses the nature of the contingency and, where material, an estimate of the possible loss or range of loss, or states that such an estimate cannot be made. Legal costs associated with loss contingencies are expensed as incurred and are included in general and administrative expenses in the consolidated statements of operations.
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, 2026 and 2025, 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 antidilutive shares | ||||||||
| September 30, 2026 | September 30, 2025 | |||||||
| Warrants | ||||||||
| Options | ||||||||
| Convertible debt | ||||||||
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, 2026 and 2025.
| Schedule of reconciliation of the denominators of the basic and diluted income (loss) per share | ||||||||
Three months ended September 30, | 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 | ||||||||
| 12 |
| BION ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) |
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 new accounting pronouncements to determine their applicability. When a new accounting pronouncement affects the Company’s financial reporting, the Company evaluates the effect of the change on its condensed consolidated financial statements and establishes controls to ensure the change is properly reflected.
Recently Adopted Accounting Pronouncements:
ASU 2024-04, Debt—Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments. In November 2024, the FASB issued ASU 2024-04, which clarifies the criteria for determining whether a settlement of a convertible debt instrument should be accounted for as an induced conversion or as an extinguishment. The Company adopted ASU 2024-04 effective July 1, 2026, on a prospective basis. No convertible debt instruments were converted or settled during the three months ended September 30, 2026, and the adoption had no impact on the Company’s condensed consolidated financial statements.
ASU 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. In July 2025, the FASB issued ASU 2025-05, which provides a practical expedient for estimating expected credit losses on current accounts receivable and current contract assets. The Company adopted ASU 2025-05 effective July 1, 2026. The Company has no accounts receivable or contract assets, and the adoption had no impact on its condensed consolidated financial statements.
Accounting Pronouncements Issued But Not Yet Adopted:
ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40), as clarified by ASU 2025-01. This ASU requires disaggregated disclosure of specified categories of expenses, including employee compensation and depreciation, within relevant income statement expense captions. It is effective for the Company’s annual reporting period beginning July 1, 2027, and for interim periods beginning July 1, 2028. Early adoption is permitted. The Company is evaluating the standard, which is expected to affect disclosures only.
ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements. In December 2025, the FASB issued ASU 2025-11, which clarifies the form and content of interim financial statements, consolidates the required interim disclosures into Topic 270, and adds a principle requiring disclosure of events since the end of the last annual reporting period that have a material impact on the entity. It is effective for the Company’s interim periods beginning July 1, 2028, with early adoption permitted. The Company is evaluating the standard, which is expected to affect disclosures only.
| 13 |
| BION ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) |
Management does not believe that any other recently issued, but not yet effective, accounting pronouncements, if adopted, would have a material effect on the accompanying condensed consolidated financial statements.
3. PROPERTY AND EQUIPMENT:
Property and equipment consist of the following:
| Schedule of property and equipment | ||||||||
| September 30, 2026 | June 30, 2026 | |||||||
| Computers and office equipment | ||||||||
| Additions | — | |||||||
| Disposals | ( | ) | — | |||||
| Total property and equipment | ||||||||
| Less accumulated depreciation | ( | ) | ( | ) | ||||
| Property and equipment, net | $ | $ | — | |||||
During the three months ended September 30, 2026, the Company purchased
computer and office equipment for $
4. DEFERRED COMPENSATION:
The Company owes deferred compensation to various
employees, former employees and consultants totaling $
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 $
| 14 |
| BION ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) |
Director Compensation
On August 12, 2026, the Board of Directors adopted
a Director Compensation Policy (the “Policy”) applicable solely to the Company’s non-employee directors. Under the Policy,
each non-employee director is entitled to an annual retainer of $
For the fiscal years ended June 30, 2026 and ending June 30, 2027, retainers will be converted into shares at a price per share equal to the price in the Company’s anticipated financing expected to trigger conversion of the Company’s outstanding convertible notes (the “Note Conversion Financing”). The grant, issuance, vesting and payment of director compensation for those two fiscal years is expressly conditioned on the closing of the Note Conversion Financing. Beginning with the fiscal year commencing July 1, 2027, retainers will be earned in advance each July 1 by directors then serving on the Board. They will be converted into shares at the average closing price of the Company’s common stock for the ten trading days ending on the preceding June 30.
The Company recorded $
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 (former Director)(“Schafer”), adjusted/reduced the principal owed to them by $
As of September 30, 2026, the Adjusted 2020
Convertible Obligation balances, including accrued interest, owed Bassani (and his donees), Smith and Edward Schafer were nil
| 15 |
| BION ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) |
As of September 30, 2026 the Adjusted
September 2015 Convertible Notes balances, including accrued interest, owed Bassani Family Trusts and Schafer were nil
On September 15, 2025, settlements were reached with Smith, Schafer, and the Bassani family, to surrender additional securities. Included in these agreements were provisions to cancel these convertible note obligations, effective on that date.
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 Company evaluated the conversion feature under ASC 815 and determined that it does not require separate accounting as a derivative. Effective February 1, 2023, a large portion of the 2020 Convertible Obligations were adjusted. The maturity date of the notes was 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 was extended to September 15, 2025.
On September 15, 2025, a settlement was reached with Mr. Schafer to cancel the 2020 Adjusted Convertible Note, effective on that date.
As of September 30, 2026, the remaining unadjusted portion of the 2020 Convertible Obligation balances, including accrued interest, owed Bassani Family Trusts and Smith were nil. As of June 30, 2026, the remaining unadjusted portion of the 2020 Convertible Obligation balances, including accrued interest, owed Bassani Family Trusts (and his donees) and Smith, were nil.
The Company recorded interest expense of nil
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. The Company evaluated the conversion feature under ASC 815 and determined that it does not require separate accounting as a derivative. The maturity date of the notes was 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.
As of September 30, 2026, the remaining unadjusted
portion of the 2015 Convertible Notes balances including accrued interest owed Bassani, Schafer and Shareholder are nil, nil and $
| 16 |
| BION ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) |
The Company recorded interest expense of $
On September 15, 2025, settlements were reached with Smith, Schafer, and the Bassani family to surrender additional securities. Included in these agreements were provisions to cancel these convertible note obligations, effective on that date.
Convertible Bridge Loan/Default
On September 28, 2023, the Company entered into
an agreement for a $
The balances of the Convertible Bridge Loan, including
accrued interest, are $
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 $
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
The balances of the May 2024 Convertible Notes
including accrued interest owed is $
The Company recorded interest expense of $
Note payable - related party (BLG)
To help alleviate the company’s short-term cash needs following the management challenges in 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. Schoener, Weerts, and the two non-affiliate members were also large Bion shareholders, prior to the formation of BLG.
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 $
| 17 |
| BION ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) |
At that time, three Bion Directors (Schoener, Stovall – former/resigned, and Weerts – former/deceased) were members of the loan group and together comprised 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 price of a later capital raise (or other source of funding) in excess of $3.0 million, which had to be completed within six (6) months. The Company evaluated the conversion feature under ASC 815 and determined that it does not require separate accounting as a derivative.
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 May 30, 2025).
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
On January 8, 2026, BLG informed Bion it was extending the maturity date of its Convertible Promissory Note’s Second Forbearance
Agreement, with an effective date of July 15, 2025 (see 8-K filed July 24, 2025), under the same terms and conditions (including the collateral
sharing agreement), until June 30, 2026. In the fourth forbearance signed July 14, 2026, BLG extended the maturity date to
The balances of the BLG note payable including
accrued interest owed is $
The Company recorded interest expense of $
Convertible notes (shareholder notes)
The Company has issued multiple series of convertible
notes to various individuals from November 1, 2024 through September 30, 2026. The convertible notes bear interest at a rate of
The Notes will automatically convert into units of the Company ("Units") upon the closing of a later capital raise in which the Company raises aggregate capital of at least $3 million. The conversion will occur at the price of that future capital raise. The Company evaluated the conversion feature under ASC 815 and determined that it does not require separate accounting as a derivative. The Notes are secured by the Company's Intellectual Property (IP)/patents, which security is shared with the BLG.
The aggregate balances of all convertible notes,
including accrued interest, are $
The Company recorded interest expense of $
Convertible notes payable – related party
Included in the July 2025 convertible notes is
a $
As of September 30, 2026 and June 30, 2026, the
balance of the note, including accrued interest, was $
| 18 |
| BION ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) |
Demand note payable – related party
On August 11, 2025, the Company issued an unsecured
demand note payable to Salvatore Zizza, a member of the Company's Board of Directors, in exchange for cash proceeds of $
As of September 30, 2026 and June 30, 2026, the
balance of the note, including accrued interest, was $
Interest expense on the note was ($
Convertible note payable – Hamstra (settlement note)
On July 14, 2026, the Company executed a Settlement Agreement with Hamstra Builders, Inc. (“Hamstra”), the general contractor for the Company’s Ammonia Recovery System demonstration facility at Fair Oaks, Indiana. Together with a separate agreement between Hamstra and its subcontractor, Dilling Group, Inc., the settlement resulted in the dismissal of all mechanic’s liens and litigation related to the construction of the facility.
Under the Settlement Agreement, the Company issued
Hamstra a secured convertible promissory note (the “Hamstra Note”) in the principal amount of $
On issuance of the Hamstra Note, the $
The balance of the Hamstra Note, including accrued
interest, was $
The Company recorded interest expense of $
Convertible note payable – North Prairie Holdings (settlement note)
On August 25, 2026, the Company executed a Settlement
and Mutual Release Agreement with North Prairie Holdings, LLC (“NPH”), the landlord of the property in Newton County, Indiana
on which the Fair Oaks facility is located. In connection with the settlement, the Company issued NPH a convertible promissory note (the
“NPH Note”) in the initial principal amount of $
Rent of $6,250 due on the first of each month is added to the principal of the NPH Note until maturity or conversion. The NPH Note bears interest at 10% per annum, compounded monthly, and matures on the earlier of January 3, 2027 or the closing of a qualified financing. At the closing of a qualified financing, the Company is required to pay NPH $50,000 in cash, applied first to accrued interest.
The remaining balance converts into shares of the Company’s common stock at the price per share of that financing. The Company evaluated the conversion feature under ASC 815 and determined that it does not require separate accounting as a derivative. After maturity or conversion, monthly rent payments resume. The NPH Note is unsecured and provides for default interest of up to 18% per annum.
The delinquent rent had been included in accounts payable and accrued expenses. On issuance of the NPH Note, it was reclassified to convertible notes payable in a non-cash transaction. September 2026 rent of $6,250 was added to principal during the quarter.
The balance of the NPH Note, including accrued
interest, was $
The Company recorded interest expense of $
| 19 |
| BION ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) |
6. STOCKHOLDERS’ EQUITY:
“Give-back” 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, 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, former 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
Smith 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.
| 20 |
| BION ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) |
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 members of the Bassani Family and b) Smith. 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 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 Bassani,
Smith and Edward Schafer, 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,
On January 22, 2026, the Board of Directors ratified
granting a 90-day extension to the issuance of
On April 15, 2026, at the request of Danielle Lominy, Christopher Parlow, Edward Schafer, and Dominic Bassani’s spouse, Bion agreed to extend the issuance of their settlement shares to December 31, 2026, subject to a capital raise or other source of funding which would trigger the immediate issuance of the shares.
Series B Preferred stock:
The Company has
| 21 |
| BION ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) |
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
As of September
30, 2026,
Warrants:
As of September 30, 2026, the Company had approximately
The weighted-average exercise price for the outstanding
warrants is $
On
September 30, 2026 the Company modified
On August
31, 2026 the Company modified
During the
three months ended September 30, 2026, the Company modified a total of
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 stock options of nil
| 22 |
| BION ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) |
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.
A summary of option activity under the 2006 Plan for three months ended September 30, 2026:
| Schedule of stockholders' equity | ||||||||||||||||||
| Options | Weighted- Average Exercise Price | Weighted- Average Remaining Contractual Life | Aggregate Intrinsic Value | |||||||||||||||
| Outstanding at July 1, 2026 | $ | $ | — | |||||||||||||||
| Granted | — | — | — | — | ||||||||||||||
| Exercised | — | — | — | — | ||||||||||||||
| Forfeited | — | — | — | — | ||||||||||||||
| Expired | — | — | — | — | ||||||||||||||
| Outstanding at September 30, 2026 | $ | $ | — | |||||||||||||||
The total fair value of stock options that vested
during the three months ended September 30, 2026 and 2025 was nil and nil, respectively. As of September 30, 2026, the Company had
7. SUBSCRIPTION RECEIVABLE - AFFILIATES:
The Company previously held interest-bearing, secured promissory notes received from affiliates and an employee as consideration for the purchase of warrants. These notes were recorded as subscription receivable – affiliates, a reduction of stockholders’ equity, and were settled during the three months ended September 30, 2025 as follows:
Effective September 15, 2025, subscription receivables
from the Bassani family and Smith totaling $
As of September 30, 2025, the Company and Craig
Scott agreed to offset his subscription receivable against his deferred compensation balance. The $
As of September 30, 2025, the Company and an employee
agreed to offset the employee’s subscription receivable against the employee’s deferred compensation balance. The $
The Company had no subscription receivables outstanding as of September 30, 2026 or June 30, 2026.
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| BION ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) |
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 $
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: the Bassani family and Smith.
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, 2026 and 2025, Smith
was paid nil
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, 2026 and 2025, Bassani/Brightcap was
paid nil
B: Initial Project:
On January 28, 2022, Bion entered into a Purchase
Order Agreement with Buflovak and Hebeler Process Solutions (collectively ‘Buflovak’) in the amount 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. 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 $
| 24 |
| BION ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) |
GAAP accounting rules notwithstanding, 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.
On April 16, 2025, the Company was served a summons by Hamstra Builders, Inc. (“Hamstra”) related to a 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. 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.
On July 14, 2026, Bion executed a Settlement Agreement with Hamstra Builders, Inc. The settlement, along with a separate agreement between Hamstra and Dilling Group, a subcontractor, results in the dismissal by both parties of all mechanics liens and litigation related to the construction of the Ammonia Recovery System at Fair Oaks. See Note 5, Notes Payable for more details on the settlement with Hamstra, Dilling, and NPHLLC.
C: Lease:
The Company entered into an agreement on September 23, 2021, with North Prairie Holdings, LLC (“NPH”) to lease approximately four acres of land near Fair Oaks, Indiana, the site of its Ammonia Recovery System demonstration facility. The original lease term ended December 31, 2024. The lease continues on a month-to-month basis at the same rate of $6,250 per month. Because the lease term is 12 months or less, the Company applies the short-term lease practical expedient and recognizes rent expense as incurred, with no right-of-use asset or lease liability recorded.
The Company had not made consistent lease payments since October 16,
2023. As of June 30, 2026, the Company owed $
On August 25, 2026, the Company executed a Settlement and Mutual Release
Agreement with NPH. In connection with the settlement, the Company issued NPH a convertible promissory note in the initial principal amount
of $162,500, representing delinquent rent of 26 months through August 2026 at $
As of September 30, 2026, no delinquent lease payments were included in accounts payable. See Note 5, Convertible note payable – North Prairie Holdings. The Settlement Agreement and note are filed as exhibits to the Company’s Form 8-K dated August 27, 2026.
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.
On July 14, 2026, Bion executed a Settlement Agreement with Hamstra Builders, Inc. The settlement, along with a separate agreement between Hamstra and Dilling Group, a subcontractor, results in the dismissal by both parties of all mechanics liens and litigation related to the construction of the Ammonia Recovery System at Fair Oaks. See Note 5, Notes Payable for details on the settlement with Hamstra, Dilling, and NPHLLC.
The Company currently is not involved in any other material litigation or similar events.
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| BION ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) |
9. SUBSEQUENT EVENTS:
The Company has evaluated subsequent events through the date these condensed consolidated financial statements were issued and determined that there were no subsequent events requiring recognition or disclosure.
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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 one of Bion’s Directors and key management, and its security position in the Company’s IP (see Note 5 Note payable – related party (BLG)), 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 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 the 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 six (6) 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, 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 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 Smith, the Company’s President, General Counsel and Chief Financial Officer, effective July 31, 2024.
Until May 2024 (prior to Mr. O’Neill’s departure), Bion was focused on building multiple integrated beef projects as described below.
At the end of May 2024, a new core leadership team was installed that pivoted Bion away from large integrated livestock projects to devote almost all its resources on the bolt-on business opportunity: using the ARS as a standalone ammonia control solution for others’ biogas production facilities that simultaneously supply us with feedstock from which to produce our unique fertilizer products. A short-term funding strategy was implemented (see Note 5, BLG and Shareholder Note Group) while longer term capital solutions were pursued; these efforts are ongoing. We have implemented extreme cost savings measures: maintaining only mission-critical operations and funding. These measures will continue until we can execute a larger financing or obtain other sources of capital, such as a potential strategic investor/partner or license agreement.
Our leadership team believes, despite the difficulties Bion has faced, the Company is now ready for successful commercial launch, having accomplished the following:
| - | Capital structure cleanup and significant debt settled |
Settlement agreements were executed with legacy principals that substantially simplified the capital structure and reduced potential dilution (see Notes 6 & 8, Giveback and Settlement Agreements);
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Settlement agreements were executed with creditors related to the Fair Oaks demonstration facility (see Notes 5 and 8 for details on the Hamstra and North Prairie Holdings Settlements).
| - | Technology now commercial-ready |
Completed optimization; value proposition proven; ready for final design.
| - | Strong fertilizer demand demonstrated |
Several non-binding offtake commitments for AB10 nitrogen fertilizer have been executed. Letters of support for a federal grant application (that was unsuccessful) were received that exceeded the anticipated initial commercial project’s production capacity.
| - | Demonstrated developers/operators demand for ammonia control solutions |
There is tremendous uncertainty over RNG policy and pricing. Optimizing existing facilities has become a key focus for the biogas/RNG industry that is actively seeking comprehensive resource recovery. Bion believes its ARS and AB10 represent the best ammonia recovery value proposition available today.
| - | Built a strong core team to execute a commercial strategy |
Bion has added key talent in engineering, agronomy, project management, and marketing.
| - | Built key relationships: engineering, finance, fertilizer distribution |
Bion has proven to be a serious and respected solutions provider that has attracted the attention of a wide range of stakeholders in engineering, finance, agriculture, and fertilizer.
During the past two years, Bion has worked to establish itself as a credible and capable participant in the livestock waste treatment, renewable energy, and sustainable agriculture markets. Management believes its ARS technology has the potential to fundamentally change the economics of manure and digestate management by recovering nitrogen as a high-value organic fertilizer rather than treating it as waste. These successes coincide with long term trends in sustainable agriculture, renewable fuels, and the circular economy that favor Bion’s business opportunities. Bion leadership believes this confluence of events positions the Company, assuming it continues to align with appropriate strategic partners and obtains sufficient financing, to exploit a unique and growing opportunity at the intersection of agriculture, renewable energy, the environment, U.S. food security and public health, and consumer demand.
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 ARS PROJECT IS PROJECTED TO COST BETWEEN $4 MILLION AND $20 MILLION (DEBT/EQUITY/GRANTS), DEPENDING ON WHETHER IT IS A BOLT-ON OR AN INTEGRATED PROJECT, 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, 6 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 years.
CRITICAL ACCOUNTING POLICIES
Revenue Recognition
The Company currently does not generate revenue and if and when the Company begins to generate revenue the Company will comply with the provisions of Accounting Standards Codification (“ASC”) 606 “Revenue from Contracts with Customers”.
Stock-based compensation
The Company follows the provisions of ASC 718, which generally requires that share-based compensation transactions be accounted and recognized in the statement of income based upon their grant date fair values.
Pursuant to ASC Topic 815 “Derivatives and Hedging” (“Topic 815”), the Company reviews all financial instruments for the existence of features which may require fair value accounting and a related mark-to-market adjustment at each reporting period end. Once determined, the Company assesses these instruments as derivative liabilities. The fair value of these instruments is adjusted to reflect the fair value at each reporting period end, with any increase or decrease in the fair value being recorded in results of operations as an adjustment to fair value of derivatives. As of September 30, 2026 and 2025, there are no derivative financial instruments.
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Options:
The Company has issued options to employees and consultants under its 2006 Plan to purchase common shares of the Company. Options are valued on the grant date using the Black-Scholes option-pricing model. The expected volatility is based on the historical price volatility of the Company’s common stock. The dividend yield represents the Company’s anticipated cash dividend on common stock over the expected term of the stock options. The U.S. Treasury bill rate for the expected term of the stock options was utilized to determine the risk-free interest rate. The expected term of stock options represents the period of time the stock options granted are expected to be outstanding based upon management’s estimates.
Warrants:
The Company has issued warrants to purchase common shares of the Company. Warrants are valued using a fair value based method, whereby the fair value of the warrant is determined at the warrant issue date using a market-based option valuation model based on factors including an evaluation of the Company’s value as of the date of the issuance, consideration of the Company’s limited liquid resources and business prospects, the market price of the Company’s stock in its mostly inactive public market and the historical valuations and purchases of the Company’s warrants. When warrants are issued in combination with debt or equity securities, the warrants are valued and accounted for based on the relative fair value of the warrants in relation to the total value assigned to the debt or equity securities and warrants combined.
Lease Accounting:
The Company accounts for leases under ASC 842, Leases (“ASC 842”). Accordingly, the Company will determine whether an arrangement contains a lease at the inception of the arrangement. If a lease is determined to exist, the term of such lease is assessed based on the date on which the underlying asset is made available for the Company’s use by the lessor. The Company’s assessment of the lease term reflects the non-cancelable term of the lease, inclusive of any rent-free periods and/or periods covered by early-termination options which the Company is reasonably certain of not exercising, as well as periods covered by renewal options which the Company is reasonably certain of exercising. The Company also determines lease classification as either operating or finance at lease commencement, which governs the pattern of expense recognition and the presentation reflected in the consolidated statements of operations over the lease term.
For leases with a term exceeding 12 months, a lease liability is recorded on the Company’s consolidated balance sheet at lease commencement reflecting the present value of its fixed minimum payment obligations over the lease term. A corresponding right-of-use (“ROU”) asset equal to the initial lease liability is also recorded, adjusted for any prepaid rent and/or initial direct costs incurred in connection with execution of the lease and reduced by any lease incentives received. For purposes of measuring the present value of its fixed payment obligations for a given lease, the Company uses its incremental borrowing rate, determined based on information available at lease commencement, as rates implicit in its leasing arrangements are typically not readily determinable. The Company's incremental borrowing rate reflects the rate it would pay to borrow on a secured basis and incorporates the term and economic environment of the associated lease.
The Company has elected the short-term lease practical expedient available under ASC 842 for all asset classes. Under this election, for leases with a lease term of 12 months or less at commencement, and which do not include an option to purchase the underlying asset that the Company is reasonably certain to exercise, the Company does not recognize a lease liability or corresponding ROU asset on its consolidated balance sheets. Instead, lease payments associated with such short-term leases are recognized as expense in the consolidated statements of operations on a straight-line basis over the lease term.
THREE MONTHS ENDED SEPTEMBER 30, 2026 COMPARED TO THE THREE MONTHS ENDED SEPTEMBER 30, 2025
Revenue
Total revenues were nil for both the three months ended September 30, 2026 and 2025.
General and Administrative
Total general and administrative expenses were $652,000 and $470,000 for the three months ended September 30, 2026 and 2025, respectively.
Salaries and related payroll tax expenses were $89,000 and $89,000 for the three months ended September 30, 2026 and 2025, respectively. Consulting costs were ($36,000) and $59,000 for the three months ended September 30, 2026 and 2025, respectively. The decrease of $95,000 is due to Kimmeridge reimbursement of operating expenses from the current quarter and the prior fiscal year. Investor relations expenses were $6,000 and $17,000 for the three months ended September 30, 2026 and 2025, respectively. The difference of $11,000 was a result of reducing investor relations spending to conserve cash. Legal costs were $8,000 and $8,000 for the three months ended September 30, 2026 and 2025, respectively.
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Non-cash stock-based compensation was nil and $117,000 for the three months ended September 30, 2026 and 2025, respectively. Non-cash accrued director compensation was $425,000 and nil for the three months ended September 30, 2026 and 2025, respectively.
Depreciation
Total depreciation expense was nil and nil for the three months ended September 30, 2026 and 2025, respectively.
Research and Development
Total research and development expenses were $3,000 and $6,500 for the three months ended September 30, 2026 and 2025, respectively.
Salaries and related payroll tax expenses were $1,000 and $1,400 for the three months ended September 30, 2026 and 2025, respectively. Consulting costs were nil and nil for the three months ended September 30, 2026 and 2025, respectively. Legal costs were $1,000 and $4,000 for the three months ended September 30, 2026 and 2025, respectively.
Loss from Operations
As a result of the factors described above, the loss from operations was $655,000 and $477,000 for the three months ended September 30, 2026 and 2025, respectively.
Other (Income)/Expense
Other expense was $114,000 and $105,000 for the three months ended September 30, 2026 and 2025, respectively.
Interest expense related to deferred compensation, loan payable and convertible notes was $95,000 and $44,000 for the three months ended September 30, 2026 and 2025, respectively. Interest expense related to warrant modifications was $19,000 and $61,000 for the three months ended September 30, 2026 and 2025, 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, 2026 and 2025, 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 $769,000 and $581,000 for the three months ended September 30, 2026 and 2025, respectively, and the net loss per basic common share was $.01 and $.01 for the three months ended September 30, 2026 and 2025, respectively.
LIQUIDITY AND CAPITAL RESOURCES
The Company's condensed consolidated financial statements for the three months ended September 30, 2026 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, 2026 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, 2026, the Company had cash of approximately $62,000. During the three months ended September 30, 2026, net cash used in operating activities was $126,000, 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. Cash expenditures were offset by proceeds from financing activities, primarily in debt funding.
As previously noted, the Company is currently not generating significant revenue and accordingly has not generated cash flows from operations. The Company does not anticipate generating sufficient revenues to offset operating and capital costs for a minimum of two to five years. While there are no assurances that the Company will be successful in its efforts to develop and construct its Projects and market its Systems, it is certain that the Company will require substantial funding from external sources. As stated in multiple places in this report, over the last fiscal year the Company has had only very limited success in raising needed funds which lack of success has had material negative effects on the Company and its business. Given the unsettled state of the current credit and capital markets for companies such as Bion, there is no assurance the Company will be able to raise the funds it needs on reasonable terms.
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Investing Activities
During the three months ended September 30, 2026 and 2025, the Company invested $3,000 and nil in the purchase of property and equipment or other investing activities, respectively.
Financing Activities
During the three months ended September 30, 2026, the total net cash provided from financing activities was $187,000. The Company received net cash proceeds of $185,000 from convertible notes less $750 commission, $8,000 from BLG advance, and made $5,000 demand note payment.
During the three months ended September 30, 2025, the total net cash provided from financing activities was $271,000. 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, 2026, the Company has debt obligations consisting of: a) deferred compensation of $1,867,000, b) convertible notes payable of $4,133,000, c) current note payable including accrued interest of $493,000, d) convertible bridge note payable of $500,000 and e) demand note payable of $17,000. As of June 30, 2026, the Company has debt obligations consisting of: a) deferred compensation of $1,368,000, b) convertible notes payable of $1,935,000, c) current note payable including accrued interest of $476,000, d) convertible bridge note payable of $491,000 and e) demand note payable of $22,000.
Plan of Operations and Outlook
As of September 30, 2026, the Company had cash of approximately $62,000.
The Company continues to explore sources of additional financing to satisfy its current operating requirements as it is not currently generating any significant revenues. The Company faced substantial difficulty raising capital during the 2025 and 2026 fiscal years (and the first quarter of 2027 through the date of this report) as it emerged from its management challenges and change in direction. The Company raised very limited debt (convertible notes) 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 2026 that we anticipate will continue (or increase) during the 2027 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. 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 much or most of their cash compensation and/or are accepting compensation in the form of securities of the Company and members of the Company's senior management have from time-to-time made loans to the Company in the past and may do so in future periods.
The Company continues to explore sources of additional financing (including potential agreements with strategic partners – both financial, renewable energy- and ag-industry) to satisfy its current and future operating and capital expenditure requirements as it is not currently generating any significant revenues. Bion’s leadership team’s new approach, focusing on the bolt-on opportunity and developing a single proof-of-concept project vs multiple projects developed simultaneously, will substantially reduce the company’s need to raise capital. Further, leadership believes this approach represents a more achievable goal that will reinspire confidence in our own shareholders, as well as assure potential new strategic and institutional investors, and make it easier to raise funds.
Going Concern and Management’s Plans:
The Company’s 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.
During the three months ended September 30, 2026 the Company had a loss of $769,000 including $425,000 non-cash compensation expenses
related to accrued director compensation.
During the fiscal year ended June 30, 2026, the Company had a loss of $1,958,000 including $125,000 non-cash compensation expenses related to extension of warrants and options.
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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 has faced substantial demand for capital and operating expenditures for the fiscal year 2026 that we anticipate will increase during the 2027 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 the company’s short-term cash needs following the management challenges in 2024, three affiliates of the Company and two shareholders 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. The note 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 that has been offered to previous Bion investors. The Company has entered into four forbearance agreements with BLG, the last that extended the maturity date to January 31, 2027 (see Note 5 Note payable – related party (BLG)).
In November 2024, the Company launched a secured promissory note offering to previous investors/shareholders (and certain others) (“Shareholder Notes”) with similar terms to the BLG note. This and subsequent shareholder offerings have allowed Bion to accomplish the steps needed to commercialize our technology, move forward with potential strategic partners, and position ourselves for the larger offering/ funding that will be required for that commercialization. As of the filing date, Bion has raised $1,399,800 in the Shareholder Note offerings and believes the Company is now positioned to attract investment from outside and/or institutional sources. (see Note 5, Convertible Notes (Shareholder Notes)).
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.
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 and signed an MOU with Kimmeridge Energy Management in December 2026 for a potential large RNG facility, that includes a Right of First Refusal on 10 million shares of Bion stock at a premium to the current market. The MOU was extended in June 2026. 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 and potentially other industry relationships could also 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, with North Prairie Holdings, LLC (“NPH”) to lease approximately four acres of land near Fair Oaks, Indiana, the site of its Ammonia Recovery System demonstration facility. The original lease term ended December 31, 2024. The lease continues on a month-to-month basis at the same rate of $6,250 per month. Because the lease term is 12 months or less, the Company applies the short-term lease practical expedient and recognizes rent expense as incurred, with no right-of-use asset or lease liability recorded.
The Company had not made consistent lease payments since October 16, 2023. As of June 30, 2026, the Company owed $150,000 in delinquent lease payments, which were included in accounts payable and accrued expenses.
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On August 25, 2026, the Company executed a Settlement and Mutual Release Agreement with NPH. In connection with the settlement, the Company issued NPH a convertible promissory note in the initial principal amount of $162,500, representing delinquent rent of 26 months through August 2026 at $6,250 per month. The delinquent rent was reclassified from accounts payable to convertible notes payable. Under the note, monthly rent due on the first of each month is added to principal until the note matures or converts, after which monthly rent payments resume. September 2026 rent of $6,250 was added to principal during the quarter.
As of September 30, 2026, no delinquent lease payments were included in accounts payable. See Note 5, Convertible note payable – North Prairie Holdings. The Settlement Agreement and note are filed as exhibits to the Company’s Form 8-K dated August 27, 2026.
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, 2026.
(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.
PART II – OTHER INFORMATION
Item 1. Legal Proceedings.
1) Convertible Bridge Loan/Default
On September 28, 2023, the Company entered into an agreement for a $1,500,000 bridge loan with SEB LLC, a non-affiliated party (the "Lender"), and executed a convertible promissory note (the "Note") and a binding subscription agreement (together, the "Bridge Loan Agreements"). The Bridge Loan Agreements required the Lender to loan the Company $1,500,000 in six monthly tranches of $250,000 beginning in October 2023. All amounts advanced, together with interest accrued at 9% per annum, were due and payable on October 1, 2024, if not previously converted. The Note is convertible at the sole election of the Lender at $1 per unit, each unit consisting of one share of the Company's common stock and a warrant to purchase one-half share. The Company received the initial $250,000 tranche on October 5, 2023. In early November 2023, the Lender informed the Company verbally that it did not intend to fund the remaining tranches, and no further tranches were received.
On May 10, 2024, the Company received an additional $150,000 from affiliates of the Lender, in connection with discussions regarding a potential larger investment by affiliates and/or associates of the Lender. The larger transaction was never completed. The Company has included the $150,000 in the convertible bridge note balance and accrues interest on it at 9% per annum, consistent with the terms of the Note. The funds were used primarily to restart operations at the Initial Project.
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The Note matured on October 1, 2024 and has not been repaid or converted. As a result, the Company has been in default under the Note since that date. The balance of the Note, including accrued interest, was $500,405 as of September 30, 2026. The Company is in discussions with representatives of the Lender in an effort to reach a mutually satisfactory resolution. The Lender's failure to fund the remaining tranches materially damaged the Company and contributed to the substantial increase in its current liabilities, including accounts payable, over recent periods. See Note 5 to the condensed consolidated financial statements and Item 2, Management's Discussion and Analysis of Financial Condition and Results of Operations.
2) Creditor Matters
Hamstra Builders and Dilling Group. On March 31, 2025, Dilling Group, Inc., a subcontractor on the Company's Ammonia Recovery System demonstration facility at Fair Oaks, Indiana, filed suit to recover unpaid invoices, as disclosed in the Company's Form 8-K dated April 7, 2025. On April 16, 2025, the Company was served a summons by Hamstra Builders, Inc. ("Hamstra"), the general contractor of the project, which named as defendants the Company, Bion Technologies, Inc. and Bion 3G-1, LLC (both subsidiaries of the Company), and North Prairie Holdings, LLC, the property lessor. The Hamstra suit related to a Notice of Intent to file a Mechanic's Lien filed April 16, 2024. Together, the two suits sought to recover $1,494,513 in unpaid invoices.
On July 14, 2026, the Company executed a Settlement Agreement with Hamstra, which, together with a separate agreement between Hamstra and Dilling Group, resulted in the dismissal of all mechanic's liens and litigation related to the construction of the Fair Oaks facility. Under the Settlement Agreement, the Company issued Hamstra a convertible promissory note of $1,774,513, which bears interest at 10% per annum and matures December 31, 2026. The note requires a cash payment of $653,915 at the closing of a future Company financing, with the remaining balance convertible into the Company's common stock at the price of that financing. The amounts due to Hamstra, including $284,828 of interest accrued in connection with the settlement, are included in accounts payable and accrued expenses as of June 30, 2026. On issuance of the note in July 2026, these amounts were reclassified to convertible notes payable. See Notes 5 and 8 to the condensed consolidated financial statements.
North Prairie Holdings. On August 25, 2026, the Company executed a Settlement and Mutual Release Agreement with North Prairie Holdings, LLC, the landlord of the property in Newton County, Indiana on which the Fair Oaks facility is located, resolving amounts owed under the lease. In connection with the settlement, the Company issued North Prairie Holdings a convertible promissory note in the initial principal amount of $162,500. The Settlement Agreement and note are filed as exhibits to the Company's Form 8-K dated August 27, 2026. See Notes 5 and 8 to the condensed consolidated financial statements.
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 ownership structure that includes a Bion Director and parties related to him, 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, 2026, no shares of common stock were issued.
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, 2026,
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 | ||||||
| 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 13, 2026 | By: | /s/ Stephen Craig Scott |
|
Stephen Craig Scott Interim Chief Executive Officer, Interim Principal Executive Officer and Interim Principal Financial Officer | ||
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