What changed in this filing

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Item 9A. Controls and Procedures

2021-09-29 compared with 2020-09-22 · 1893 added, 1783 removed, 571 unchanged (87% of the section changed)

CONTROLS AND PROCEDURES.

Controls and Procedures

As of June 30,

2020, under the supervision and with the participation of the Company's President and Principal Financial Officer (the same person),

management has evaluated the effectiveness of the design and operations of the Company's disclosure controls and procedures.

Based on that evaluation, the President and Principal Financial Officer concluded that the Company's disclosure controls and procedures

were not effective as of June 30, 2020 as a result of the material weakness in internal control over financial reporting discussed

in Internal Control over Financial Reporting

There were no

changes in internal control over financial reporting that occurred during the last fiscal quarter covered by this report that

have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

Report on Internal Control over Financial Reporting

Our management

is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in

the Securities Exchange Act of 1934 Rule 13a-15(f).

Our Chief Executive Officer and Principal Financial Officer (the same person)

conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal

Control - Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO Framework")

and the related guidance provided in Internal Control Over Financial Reporting –

Guidance for Smaller Public Companies,

also issued by the Committee of Sponsoring Organizations.

Based on this

evaluation, management has concluded that our internal control over financial reporting was not effective as of June 30, 2020.

Our President and Principal Financial Officer concluded we have a material weakness due to our control environment, and one condition

caused by this is an inadequate of segregation of duties.

Our size has prevented us from being able to employ sufficient resources

to enable us to have an adequate level of supervision and segregation of duties within our internal control system.

person involved in the processing of the Company's accounting and banking transactions and a single person with overall supervision

and review of the cash disbursements and receipts and the overall accounting process.

Disclosure Controls and Procedures

As of June 30, 2021, under the supervision and with

the participation of the Company's President and Principal Financial Officer (the same person), management has evaluated the effectiveness

of the design and operations of the Company's disclosure controls and procedures.

Based on that evaluation, the President and Principal

Financial Officer concluded that the Company's disclosure controls and procedures were not effective as of June 30, 2021 as a result of

the material weakness in internal control over financial reporting discussed below.

Changes in Internal Control over Financial Reporting

There were no changes in internal control over financial

reporting that occurred during the last fiscal quarter covered by this report that have materially affected, or are reasonably likely

to materially affect, the Company's internal control over financial reporting.

Management's Report on Internal Control over

Financial Reporting

Our management is responsible for establishing and

maintaining adequate internal control over financial reporting, as such term is defined in the Securities Exchange Act of 1934 Rule 13a-15(f).

Our Chief Executive Officer and Principal Financial Officer (the same person) conducted an evaluation of the effectiveness of our internal

control over financial reporting based on the framework in Internal Control - Integrated Framework, issued by the Committee of Sponsoring

Organizations of the Treadway Commission ("COSO Framework") and the related guidance provided in Internal Control Over Financial

Reporting –

Guidance for Smaller Public Companies, also issued by the Committee of Sponsoring Organizations.

Based on this evaluation, management has concluded

that our internal control over financial reporting was not effective as of June 30, 2021.

Our President and Principal Financial Officer

concluded we have a material weakness due to our control environment, and one condition caused by this is an inadequate of segregation

of duties as well as a lack of timely review and approval of related party transactions.

Our size has prevented us from being able to

employ sufficient resources to enable us to have an adequate level of supervision and segregation of duties within our internal control

There is one person involved in the processing of the Company's accounting and banking transactions and a single person with overall

supervision and review of the cash disbursements and receipts and the overall accounting process.

Therefore, while there are some compensating

controls in place, it is difficult to ensure effective segregation of accounting duties.

While we strive to segregate duties as

much as practicable, there is an insufficient volume of transactions to justify additional full time staff.

As a result of this

material weakness, we have implemented remediation procedures whereby in May 2006 we engaged an outside accounting and consulting

firm with SEC and US GAAP experience to assist us with the preparation of our financial statements, evaluation of complex accounting

issues and the implementation of systems to improve controls and review procedures over all financial statement and account balances.

We believe that this outside consultant's review improved our disclosure controls and procedures.

If this review is effective

throughout a period of time, we believe it will help remediate the segregation of duties material weakness.

However, we may not

be able to fully remediate the material weakness unless we hire more staff.

We will continue to monitor and assess the costs

and benefits of additional staffing.

report does not include an attestation report of the Company's independent registered public accounting firm regarding internal

control over financial reporting.

Management's report was not subject to attestation by the Company's independent registered public

accounting firm pursuant to rules of the SEC that permit the Company to provide only management's report on internal control in

this annual report.

While we strive to segregate duties as much as

practicable, there is an insufficient volume of transactions to justify additional full time staff.

As a result of this material weakness,

we have implemented remediation procedures whereby in May 2006 we engaged an outside accounting and consulting firm with SEC and US GAAP

experience to assist us with the preparation of our financial statements, evaluation of complex accounting issues and the implementation

of systems to improve controls and review procedures over all financial statement and account balances.

We believe that this outside consultant's

review improved our disclosure controls and procedures.

If this review is effective throughout a period of time, we believe it will help

remediate the segregation of duties material weakness.

However, we may not be able to fully remediate the material weakness unless we

hire more staff.

We will continue to monitor and assess the costs and benefits of additional staffing.

This annual report does not include an attestation

report of the Company's independent registered public accounting firm regarding internal control over financial reporting.

report was not subject to attestation by the Company's independent registered public accounting firm pursuant to rules of the SEC that

permit the Company to provide only management's report on internal control in this annual report.

Hacking/Theft

On Saturday morning, July 17, 2021, our historical website domain –

biontech.com –

and email services were compromised and disabled.

Research indicated that an unknown party had ‘hijacked’

the domain in a theft attempt.

On September 10, 2021, the Company filed a federal

lawsuit ‘in rem’

to recover the <biontech.com> domain and the unknown ‘John Doe’

who hacked and attempted

to steal the website.

The litigation has been filed in the United States District Court for the Eastern District of Virginia, Alexandria

Division under the heading ‘Bion Environmental Technologies, Inc., Plaintiff, vs John Doe and <biontech.com>, Defendants’

1:21-cv-01034), seeking recovery of the domain name and other relief as set forth therein.

No shareholder, sensitive or confidential information

was available to be breached which has limited damages from the hack/theft to date.

However, the Company’s email operations have

been subject disruption and expenses have been incurred related to the matter including legal fees.

The Company has had to create ‘work-arounds’

While these issues are being resolved, Bion Environmental Technologies, Inc.

has moved our website (and email) to a new domain:

bionenviro.com .

Website access is now www.bionenviro.com .

To send emails to Bion personnel, one uses the same name identifier

previously used, but in the address, substitute ‘bionenviro.com’

for ‘biontech.com’:

For example, cscott@biontech.com

(no longer functional) will now be cscott@bionenviro.com and mas@biontech.com (no longer functional) will now be mas@bionenviro.com.

OTHER INFORMATION

DIRECTORS, EXECUTIVE

OFFICERS AND CORPORATE GOVERNANCE.

Our directors,

executive officers and significant employees/consultants, along with their respective ages and positions are as follows:

and Officers:

Chairman, President, General Counsel, Chief Financial Officer and Director

Chairman and Director

Executive Officer

Smith (70) currently serves Bion Environmental Technologies, Inc.

as Executive Chairman, President, General Counsel, Chief

Financial Officer and a director and has continually served in senior positions since late March 2003.

Since that time, he has

also served as sole director, President and General Counsel of Bion's wholly-owned subsidiaries including Project Group and Services

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

Our directors, executive officers and significant

employees/consultants, along with their respective ages and positions are as follows:

Directors and Officers:

Executive Chairman, President, General Counsel, Chief Financial Officer and Director

Vice Chairman and Director

Secretary and Director

Dominic Bassani

Chief Executive Officer

Smith (71) currently serves

Bion Environmental Technologies, Inc.

as Executive Chairman, President, General Counsel, Chief Financial Officer and a director and has

continually served in senior positions since late March 2003.

Since that time, he has also served as sole director, President and General

Counsel of Bion's wholly-owned subsidiaries including Project Group and Services Group.

Since mid-February 2003, Mr.

Smith has served as sole director and President and General Counsel of Bion's majority-owned

subsidiary, Centerpoint Corporation.

Smith also serves as Manager of Bion PA1, LLC and Bion PA2, LLC.

Previously, from May

21, 1999 through January 31, 2002, Mr.

Smith served as a director of Bion.

From July 23, 1999, when he became President of Bion,

until mid-2001 when he ceased to be Chairman, Mr.

Smith served in senior positions with Bion on a consulting basis.

Additionally,

Smith was the president of RSTS Corporation prior to its acquisition of Bion Technologies, Inc.

Smith received

a Juris Doctor Degree from the University of Colorado School of Law, Boulder, Colorado (1980) and a BS from Amherst College, Amherst,

Massachusetts (1971).

Smith has engaged in the private practice of law in Colorado since 1980.

Smith has served

as sole director and President and General Counsel of Bion's majority-owned subsidiary, Centerpoint Corporation.

Smith also serves

as Manager of Bion PA1, LLC and Bion PA2, LLC.

Previously, from May 21, 1999 through January 31, 2002, Mr.

Smith served as a director

From July 23, 1999, when he became President of Bion, until mid-2001 when he ceased to be Chairman, Mr.

Smith served in senior

positions with Bion on a consulting basis.

Additionally, Mr.

Smith was the president of RSTS Corporation prior to its acquisition of Bion

Technologies, Inc.

Smith received a Juris Doctor Degree from the University of Colorado School of Law, Boulder, Colorado

(1980) and a BS from Amherst College, Amherst, Massachusetts (1971).

Smith has engaged in the private practice of law in Colorado

In addition, Mr.

been active in running private family companies, Stonehenge Corporation (until 1994), LoTayLingKyur, Inc.

(1994-2002) and LoTayLingKyur,

LLC (2007-present).

Smith has been active in running private family companies, Stonehenge Corporation (until 1994), LoTayLingKyur,

(1994-2002) and LoTayLingKyur, LLC (2007-present).

Until returning to Bion during March 2003, Mr.

Smith had been in retirement with focus on charitable work

and spiritual retreat.

Smith had been in retirement with

focus on charitable work and spiritual retreat.

From July 2018 to March 2020 Mr.

Smith served as a senior executive and director at Grow-Ray Technologies,

Inc., a private LED lighting company based in Boulder, Colorado, on a consulting basis.

Schafer (74) Edward Schafer previously served the Company's senior management team as Executive Vice Chairman and has

been a member of the Company's Board of Directors since January 1, 2011.

Schafer has served as a consultant to Bion since

Schafer served as a director of Continental Resources (NYSE-CLR) 2011-2016.

He also chairs the Board of Directors

of Dynamic Food Ingredients and the Theodore Roosevelt Medora Foundation.

In addition he has served on the Board of Governors

of Amity Technology LLP since 2009, the Board of Directors of AGCO-Amity JV since it was formed in 2011.

Schafer served as

a trustee of the Investors Real Estate Trust (NASDAQGS-IRET) from September 2009 to October 2011.

He also served as a trustee

of the IRET from September 2006 through December 2007, when he resigned from the IRET's Board to serve as Secretary of the U.S.

Smith served as a senior executive and director at Grow-Ray

Technologies, Inc., a private LED lighting company based in Boulder, Colorado, on a consulting basis.

Schafer (74) Edward Schafer

previously served the Company's senior management team as Executive Vice Chairman and has been a member of the Company's Board of Directors

since January 1, 2011.

Schafer has served as a consultant to Bion since July 2010.

Schafer served as a director of Continental

Resources (NYSE-CLR) 2011-2016.

He also chairs the Board of Directors of Dynamic Food Ingredients and the Theodore Roosevelt Medora Foundation.

In addition he has served on the Board of Governors of Amity Technology LLP since 2009, the Board of Directors of AGCO-Amity JV since

it was formed in 2011.

Schafer served as a trustee of the Investors Real Estate Trust (NASDAQGS-IRET) from September 2009 to October

He also served as a trustee of the IRET from September 2006 through December 2007, when he resigned from the IRET's Board to serve

as Secretary of the U.S.

Department of Agriculture under President George W.

Schafer, a private investor, is a two-term former Governor

of North Dakota.

He served as Chief Executive Officer of Extend America, a telecommunications company, from 2001 to 2006, and

he has been a member of the Boards of RDO Equipment Co., a privately-owned agricultural and construction equipment company (August

Schafer, a private investor, is a two-term

former Governor of North Dakota.

He served as Chief Executive Officer of Extend America, a telecommunications company, from 2001 to 2006,

and he has been a member of the Boards of RDO Equipment Co., a privately-owned agricultural and construction equipment company (August

2001 to July 2003) and the University of North Dakota Foundation (June 2005 to December 2007).

Since 2019 Mr.

Schafer has served

on the Board of Directors of Cellular Biomedicine Group (NASDAQ:

Schafer has served on the

Board of Directors of Cellular Biomedicine Group (NASDAQ:

CBMG) and is Chairman of its Audit Committee.

Schafer serves

as a board member of the Center for Innovation at the University of North Dakota and teaches a leadership class at North Dakota

State University.

Schafer serves as a board

member of the Center for Innovation at the University of North Dakota and teaches a leadership class at North Dakota State University.

Schafer is a past chair of the Republican Governors Association, the Midwestern Governors’

the Interstate Oil and Gas Compact, the Western Governors’

Association and served as the 29th United States Secretary of

Agricultural from 2008 to 2009.

Association, the Interstate Oil and

Gas Compact, the Western Governors’

Association and served as the 29th United States Secretary of Agricultural from 2008 to 2009.

Schafer holds a Master’s degree in Business Administration from the University of Denver.

Schafer brings the following experience, qualifications, attributes and skills to the Company:

general business management,

budgeting and strategic planning experience from his service as Chief Executive Officer of Extend America and extensive government,

regulatory, strategic planning, budgeting administrative and public affairs experience from his service as Governor of North Dakota

and Secretary of the US Department of Agriculture.

(77) has served as our Secretary and a Director since March of 2003.

Since September 2001 he has been self employed as

a consultant with a practice focused on business buyer advocacy.

Northrop is one of our founders and served as our Chief Executive

Officer and a Director from our inception in September 1989 until August 2001.

Before founding Bion Technologies, Inc., he served

in a wide variety of managerial and executive positions.

He was the Executive Director of Davis, Graham & Stubbs, one of Denver's

largest law firms, from 1981 to 1989.

Prior to his law firm experience, Mr.

Northrop worked at Samsonite Corporation's Luggage

Division in Denver, Colorado, for over 12 years.

His experience was in all aspects of manufacturing, systems design and implementation,

and planning and finance, ending with three years as the Division's Vice President, Finance.

Northrop has a bachelor's degree

in Physics from Amherst College, Amherst, Massachusetts (1965), an MBA in Finance from the University of Chicago, Chicago, Illinois

(1969), and spent several years conducting post graduate research in low energy particle physics at Case Institute of Technology,

Bassani (73) has served as Chief Executive Officer of Bion Environmental Technologies, Inc.

Schafer brings the following experience,

qualifications, attributes and skills to the Company:

general business management, budgeting and strategic planning experience from his

service as Chief Executive Officer of Extend America and extensive government, regulatory, strategic planning, budgeting administrative

and public affairs experience from his service as Governor of North Dakota and Secretary of the US Department of Agriculture.

Jon Northrop (78) has served as our

Secretary and a Director since March of 2003.

Since September 2001 he has been self employed as a consultant with a practice focused on

business buyer advocacy.

Northrop is one of our founders and served as our Chief Executive Officer and a Director from our inception

in September 1989 until August 2001.

Before founding Bion Technologies, Inc., he served in a wide variety of managerial and executive

He was the Executive Director of Davis, Graham & Stubbs, one of Denver's largest law firms, from 1981 to 1989.

his law firm experience, Mr.

Northrop worked at Samsonite Corporation's Luggage Division in Denver, Colorado, for over 12 years.

His experience

was in all aspects of manufacturing, systems design and implementation, and planning and finance, ending with three years as the Division's

Vice President, Finance.

Northrop has a bachelor's degree in Physics from Amherst College, Amherst, Massachusetts (1965), an MBA in

Finance from the University of Chicago, Chicago, Illinois (1969), and spent several years conducting post graduate research in low energy

particle physics at Case Institute of Technology, Cleveland.

Dominic Bassani (74) has served as Chief

Executive Officer of Bion Environmental Technologies, Inc.

since April 2011.

he was a full-time consultant to the Company and served as the General Manager of Bion's Projects Group subsidiary from April

2003 through September 2006.

From September 15, 2008 he has served as Director-Special Projects and Strategic Planning of the

Company and our Projects Group subsidiary.

He has been an investor in and consultant to Bion since December 1999.

He is an independent

investor and since 1990 has owned and operated Brightcap, a management consulting company that provides management services to

early stage technology companies.

He was a founding investor in 1993 in Initial Acquisition Corp.

that subsequently merged in

1995 with Hollis Eden Corp.

Previously he was a full-time consultant to the Company and

served as the General Manager of Bion's Projects Group subsidiary from April 2003 through September 2006.

From September 15, 2008 he has

served as Director-Special Projects and Strategic Planning of the Company and our Projects Group subsidiary.

He has been an investor in

and consultant to Bion since December 1999.

He is an independent investor and since 1990 has owned and operated Brightcap, a management

consulting company that provides management services to early stage technology companies.

He was a founding investor in 1993 in Initial

Acquisition Corp.

that subsequently merged in 1995 with Hollis Eden Corp.

(HEPH), a biotech company specializing in immune response drugs.

From early 1998 until June 1999 he

was a consultant to Internet Commerce Corp.

(re-named EasyLink Services International Corporation) (ESIC), a leader in business-to-business

transactions using the Internet.

He is presently an investor in numerous private and public companies primarily in technology

related businesses.

From early 1998 until June 1999 he was a consultant to Internet Commerce Corp.

(re-named EasyLink Services International Corporation)

(ESIC), a leader in business-to-business transactions using the Internet.

He is presently an investor in numerous private and public companies

primarily in technology related businesses.

From 1980 until 1986, Mr.

Bassani focused primarily on providing management reorganization services to manufacturing

companies and in particular to generic pharmaceutical manufacturers and their financial sponsors.

Relationships

There are currently

no family relationships among our Directors and Executive Officers.

with Section 16(a) of the Exchange Act

Section 16(a)

of the Exchange Act requires our officers and directors, and stockholders owning more than ten percent of a registered class of

our equity securities, to file reports of ownership and changes in ownership with the Securities and Exchange Commission.

Company is not aware of any persons who failed to timely file reports under this section.

in Legal Proceedings

of our knowledge, during the past five years, none of the following occurred with respect to our directors or executive officers:

bankruptcy petition filed by or against any business of which one of them was a general partner or executive officer either at

the time of the bankruptcy or within two years prior to that time;

conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other

minor offenses);

subject to any order, judgment or decree of any court of competent jurisdiction, permanently or temporarily inquiring, barring,

suspending or otherwise limiting involvement in any type of business, securities or banking activities;

Bassani focused primarily on providing management reorganization

services to manufacturing companies and in particular to generic pharmaceutical manufacturers and their financial sponsors.

Family Relationships

There are currently no family relationships among

our Directors and Executive Officers.

Compliance with Section 16(a) of the Exchange

Section 16(a) of the Exchange Act requires our officers

and directors, and stockholders owning more than ten percent of a registered class of our equity securities, to file reports of ownership

and changes in ownership with the Securities and Exchange Commission.

The Company is not aware of any persons who failed to timely file

reports under this section.

Involvement in Legal Proceedings

To the best of our knowledge, during the past five

years, none of the following occurred with respect to our directors or executive officers:

bankruptcy petition filed by or against any business of which one of them was a general partner or executive officer either at the time

of the bankruptcy or within two years prior to that time;

conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);

subject to any order, judgment or decree of any court of competent jurisdiction, permanently or temporarily inquiring, barring, suspending

or otherwise limiting involvement in any type of business, securities or banking activities;

found by a court of competent jurisdiction, the SEC or the CFTC to have violated Federal or state securities or commodities laws.

has no audit committee and is not now required to have one, or an audit committee financial expert.

Company has not adopted a code of business conduct and ethics applicable to its officers, directors or accounting officer.

Audit Committee

The Company has no audit committee and is not now

required to have one, or an audit committee financial expert.

Code of Ethics

To date, the Company has not adopted a code of business

conduct and ethics applicable to its officers, directors or accounting officer.

EXECUTIVE COMPENSATION.

The Company does not have a compensation

committee due to its small size and limited resources.

The Board of Directors directly reviews and authorizes all compensation

The Company does not have a compensation committee due to its small size

and limited resources.

The Board of Directors directly reviews and authorizes all compensation matters.

SUMMARY COMPENSATION TABLE

The following table sets forth the compensation paid

to, or accrued for, each of our current executive officers during each of our last two fiscal years.

Summary Compensation

The following

table sets forth the compensation paid to, or accrued for, each of our current executive officers during each of our last two

fiscal years.

Name and Principal

March 25, 2003,

Brightcap/Dominic

- Special Projects & Strategic

Executive Officer

Vice Chairman and Director

Includes compensation

paid by Bion Environmental Technologies, Inc.

Name and Principal Position

Option Awards (2)

Non-Equity Incentive Plan

Compen- sation

Deferred Compensation Earnings

Other Compen -sation

President and Chief

Financial Officer Since March 25, 2003,

Brightcap/Dominic Bassani (4)

VP - Special Projects & Strategic

Planning and Chief Executive Officer

Edward Schafer (5)

Executive Vice Chairman and Director

Includes compensation paid by Bion Environmental Technologies, Inc.

and our wholly owned subsidiaries.

Reflects the dollar amount

expensed by the Company during the applicable fiscal year for financial statement

Effective October 2015,

Smith agreed to provide services to Bion and subsidiaries, through an extension of

a previously extended employment agreement, through June 30, 2016 at an annual salary

In October 2016, the Company approved a month to month contract extension

with Smith which included the issuance of 25,000 bonus shares which were subsequently

cancelled), the grant of 75,000 options which vested immediately, a monthly deferred

salary of $18,000 effective October 1, 2016 and the right to convert up to $125,000 of

his deferred compensation, at his sole election, at $0.75 per share (which was expanded

on April 27, 2017 to the right to convert up to $300,000) and the right to convert his

deferred compensation in whole or in part, at his sole election, at any time in any amount

Reflects the dollar amount expensed by the Company during the applicable fiscal year for financial statement

reporting purposes pursuant to ASC 718.

Since October 2016, the Company approved a month to month contract extension with Smith which included

a monthly deferred salary of $18,000 and the right to convert up to $300,000 of deferred compensation, at his a monthly deferred salary

of $18,000 and the right to convert up to $300,000 of deferred compensation, at his sole election, at $0.75 per share until December 31,

Smith also has the right to convert his deferred compensation in whole or in part, at this sole election, at any time in an amount

at "market"

or into securities sold in the Company's most current/recent private

offering until December 31, 2019 (subsequently extended to December 31, 2024)..

In September 2014 the

Company entered into an extension agreement with Brightcap for services provided to the

Company by Dominic Bassani at an annual salary of $312,000 for services provided through

April 15, 2015.

or into securities sold in the Company's most current/recent private offering.

During fiscal year 2021 the Company

paid Smith $13,460 for payroll taxes on his deferred compensation conversions which was treated as salary.

On February 10, 2015, Mr.

Bassani agreed to an extension to continue

his employment through December 31, 2017 at an annual salary of $372,000 effective January

Bassani agreed to an extension to continue his employment through December 31,

2017 at an annual salary of $372,000 effective January 1, 2015.

During October 2016, Bassani was granted the right to convert up to $125,000

of his deferred compensation, at his sole election, at $0.75 per share which was expanded

on April 27, 2017 to the right to convert up to $300,000).

During February 2018, the

Company agreed to the material terms of a binding two-year extension agreement, while

a fully executed agreement is still being negotiated.

Bassani's annual salary will remain

at $372,000 and the Company agreed to pay him $2,000 per month to be applied to life

insurance premiums.

The Company granted Bassani 2,000,000 fully vested options at $0.75

per share with an expiry date of December 31, 2022 which contain a 90% execution bonus

and the options may be extended for an additional 5 years at $0.01 per share per extension

Schafer's compensation

is determined periodically based on evaluation by the board of directors.

of his deferred compensation, at his sole election, at $0.75 per share which was expanded on April 27, 2017 to the right to convert up

to $300,000).

During February 2018, the Company agreed to the material terms of a binding two-year extension agreement, while a fully

executed agreement is still being negotiated.

Bassani's annual salary will remain at $372,000 and the Company agreed to pay him $2,000

per month to be applied to life insurance premiums.

The Company granted Bassani 2,000,000 fully vested options at $0.75 per share with

an expiry date of December 31, 2024 which contain a 90% execution bonus and the options may be extended for an additional 5 years at $0.01

per share per extension year.

On August 1, 2018, his agreement was extended to provide services to the Company on a full-time basis through

December 31, 2022 plus two years after that on a part-time basis.

Schafer's compensation is determined periodically based on evaluation by the board of directors.

Employment Agreements:

(“Smith”) has held the positions of Director, President and General Counsel of Company and its subsidiaries under

various agreements and terms since March 2003 (details regard earlier years and periods between 2003 and 2011 may be found in

the Company’s prior Forms 10-K and other SEC filings).

During July 2011, the Company entered into an extension agreement

pursuant to which Smith continued to hold his current positions in the Company through a date no later than December 31, 2012.

Commencing January 1, 2012, Smith’s monthly salary was $20,000, which has been accrued and deferred.

In addition, Smith

has been issued 90,000 shares of the Company’s common stock in two tranches of 45,000 shares on each of January 15, 2013

and 2014, respectively.

Smith (“Smith”) has held the positions

of Director, President and General Counsel of Company and its subsidiaries under various agreements and terms since March 2003 (details

regard earlier years and periods between 2003 and 2011 may be found in the Company’s prior Forms 10-K and other SEC filings).

July 2011, the Company entered into an extension agreement pursuant to which Smith continued to hold his current positions in the Company

through a date no later than December 31, 2012.

Commencing January 1, 2012, Smith’s monthly salary was $20,000, which has been accrued

and deferred.

In addition, Smith has been issued 90,000 shares of the Company’s common stock in two tranches of 45,000 shares on

each of January 15, 2013 and 2014, respectively.

As part of the extension agreement, Mr.

Smith was also granted 200,000 options, which vested immediately,

to purchase common shares of the Company at a price of $3.00 per share and which options expire on December 31, 2019.

July 15, 2012, the Company entered into an extension agreement pursuant to which Smith will continue to hold his current positions

Smith was also granted 200,000 options, which

vested immediately, to purchase common shares of the Company at a price of $3.00 per share and which options expire on December 31, 2019.

Effective July 15, 2012, the Company entered into an extension agreement pursuant to which Smith will continue to hold his current positions

in the Company through a date no later than June 30, 2014.

Effective September 2012, Smith’s monthly salary became $21,000

(which is currently being deferred).

In addition, Smith was issued 150,000 shares of the Company’s common stock in two tranches

of 75,000 shares on each of January 15, 2014 and 2015, which shares vested immediately.

As part of the extension agreement, Smith

was also granted a bonus of $25,000 paid in warrants, which vested immediately, to purchase 250,000 shares of the Company’s

common stock at a price of $2.10 per share and which warrants expire on December 31, 2018 and a contingent stock bonus of 100,000

shares payable on the date on which the Company’s stock price first reaches $10.00 per share (regardless of whether Smith

is still providing services to the Company on such date).

Smith has voluntarily reduced his monthly deferred salary accrual

to $14,000 due to the Company’s financial situation.

During September 2014, Smith agreed to continue his employment agreement

through April 15, 2015 and also agreed to continue to defer his temporarily reduced salary of $14,000 per month.

10, 2015, the Company executed an Extension Agreement with Smith pursuant to which Smith extended his employment with the Company

to December 31, 2015 (with the Company having an option to extend his employment an additional six months).

As part of the

Extension Agreement, the balance of Smith’s existing convertible note payable of $854,316 as of December 31, 2014, adjusted

for conversions subsequent to that date, was replaced with a new convertible note with an initial principal amount of $760,519

with terms that i) materially reduced the interest rate by 50% (from 8% to 4%), ii) increased the conversion price by 11% (from

$0.45 to $0.50), iii) set the conversion price at a fixed price so there can be no further reductions, iv) reduced the number

of warrants received on conversion by 75% (from 1 warrant per unit to 1/4 per unit) and v) extended the maturity date to December

Effective September 2012, Smith’s monthly salary became $21,000 (which

is currently being deferred).

In addition, Smith was issued 150,000 shares of the Company’s common stock in two tranches of 75,000

shares on each of January 15, 2014 and 2015, which shares vested immediately.

As part of the extension agreement, Smith was also granted

a bonus of $25,000 paid in warrants, which vested immediately, to purchase 250,000 shares of the Company’s common stock at a price

of $2.10 per share and which warrants expire on December 31, 2018 and a contingent stock bonus of 100,000 shares payable on the date on

which the Company’s stock price first reaches $10.00 per share (regardless of whether Smith is still providing services to the Company

on such date).

Smith has voluntarily reduced his monthly deferred salary accrual to $14,000 due to the Company’s financial situation.

During September 2014, Smith agreed to continue his employment agreement through April 15, 2015 and also agreed to continue to defer his

temporarily reduced salary of $14,000 per month.

On February 10, 2015, the Company executed an Extension Agreement with Smith pursuant

to which Smith extended his employment with the Company to December 31, 2015 (with the Company having an option to extend his employment

an additional six months).

As part of the Extension Agreement, the balance of Smith’s existing convertible note payable of

$854,316 as of December 31, 2014, adjusted for conversions subsequent to that date, was replaced with a new convertible note with an initial

principal amount of $760,519 with terms that i) materially reduced the interest rate by 50% (from 8% to 4%), ii) increased the conversion

price by 11% (from $0.45 to $0.50), iii) set the conversion price at a fixed price so there can be no further reductions, iv) reduced

the number of warrants received on conversion by 75% (from 1 warrant per unit to 1/4 per unit) and v) extended the maturity date to December

31, 2017 (which maturity date was subsequently extended to July 1, 2019).

Additionally, pursuant to the Extension Agreement,

i) continued to defer his cash compensation ($18,000 per month) until the Board of Directors re-instates cash payments

to all employees and consultants who are deferring their compensation, ii) cancelled 150,000 contingent stock bonuses previously

granted to him by the Company, iii) has been granted 150,000 new options which vested immediately and iv) outstanding options

and warrants owned by Smith (and his donees) have been extended and had the exercise prices reduced to $1.50 (if above that price).

Due to expiration of his most recent extension, Mr.

Additionally, pursuant to the Extension Agreement, Smith:

i) continued to defer his cash compensation ($18,000 per month) until the Board of Directors re-instates cash payments to all employees

and consultants who are deferring their compensation, ii) cancelled 150,000 contingent stock bonuses previously granted to him by

the Company, iii) has been granted 150,000 new options which vested immediately and iv) outstanding options and warrants owned by Smith

(and his donees) have been extended and had the exercise prices reduced to $1.50 (if above that price).

Due to expiration of his most

recent extension, Mr.

Smith is currently serving the Company on a month-to –month basis.

Dominic Bassani

(“Bassani”) has served in senior management positions with the Company (as a full-time consultant) since 2001 (see

prior Forms 10-K for earlier years and other filings with the SEC).

Since March 31, 2005, the Company has had various agreements

with Brightcap, Bassani’s family consulting company, through which the services of Bassani were provided through 2011.

September 30, 2009 the Company entered into an extension agreement with Brightcap pursuant to which Bassani provided services

to the Company through September 30, 2012 for $312,000 annually (currently deferred).

The Board appointed Bassani as the Company's

CEO effective May 13, 2011.

On July 15, 2011, Bassani, Brightcap and the Company agreed to an extension/amendment of the existing

agreement with Brightcap which provided that Bassani serve as CEO through June 30, 2013 and would continue to provide full-time

services to the Company in other capacities through June 30, 2014 at a salary of $26,000 per month.

In addition Bassani was to

be issued 300,000 shares of the Company’s common stock issuable in three tranches of 100,000 shares on each of January 15,

2015, 2016 and 2017, respectively.

Bassani was also granted 725,000 options, which vested immediately, to purchase shares of the

Company’s common stock at $3.00 per share which options expired on December 31, 2019.

Dominic Bassani (“Bassani”) has served

in senior management positions with the Company (as a full-time consultant) since 2001 (see prior Forms 10-K for earlier years and other

filings with the SEC).

Since March 31, 2005, the Company has had various agreements with Brightcap, Bassani’s family consulting

company, through which the services of Bassani were provided through 2011.

On September 30, 2009 the Company entered into an extension

agreement with Brightcap pursuant to which Bassani provided services to the Company through September 30, 2012 for $312,000 annually (currently

The Board appointed Bassani as the Company's CEO effective May 13, 2011.

On July 15, 2011, Bassani, Brightcap and the Company

agreed to an extension/amendment of the existing agreement with Brightcap which provided that Bassani serve as CEO through June 30, 2013

and would continue to provide full-time services to the Company in other capacities through June 30, 2014 at a salary of $26,000 per month.

In addition Bassani was to be issued 300,000 shares of the Company’s common stock issuable in three tranches of 100,000 shares on

each of January 15, 2015, 2016 and 2017, respectively.

Bassani was also granted 725,000 options, which vested immediately, to purchase

shares of the Company’s common stock at $3.00 per share which options expired on December 31, 2019.

Effective July 15, 2012, Bassani,

Brightcap and the Company agreed to a further extension/amendment of the existing agreement with Brightcap which provided that

Bassani would continue to provide the services of CEO through June 30, 2014.

Bassani continued to provide full-time services to

the Company at a cash salary of $26,000 per month (which has been deferred) and Bassani would be issued 300,000 shares of the

Company’s common stock issuable in two tranches of 150,000 shares on each of January 15, 2015 and 2016, respectively, which

shares would be immediately vested upon issuance.

As part of the extension agreement, Bassani was also granted a bonus of $5,000

paid in warrants, which vested immediately, to purchase 50,000 shares of the Company’s common stock at a price of $2.10

per share and which warrants expired on December 31, 2018.

During September 2014, Bassani agreed to extend his employment agreement

until April 15, 2015 and that previously issued and expensed share grants of 100,000 and 150,000 shares that were to be issued

on January 15, 2015, would be deferred until January 15, 2016.

On February 10, 2015, the Company executed an Extension Agreement

with Bassani pursuant to which Bassani extended the term of his service to the Company to December 31, 2017, (with the Company

having an option to extend the term an additional six months.) As part of the agreement, the Company’s existing loan

payable, deferred compensation and convertible note payable to Bassani, were restructured into two promissory notes as follows:

a) The of sum of the cash loaned by Bassani to the Company of $279,000 together with $116,277 of unreimbursed expenses through

December 31, 2014 were placed into a new promissory note with initial principal of $395,277 which was due and payable on December

In connection with these sums and the new promissory note, Bassani was issued warrants to purchase 592,916 shares

of the Company’s common stock at a price of $1.00 until December 31, 2020;

Brightcap and the Company agreed to a further extension/amendment of the existing agreement with Brightcap which provided that Bassani

would continue to provide the services of CEO through June 30, 2014.

Bassani continued to provide full-time services to the Company at

a cash salary of $26,000 per month (which has been deferred) and Bassani would be issued 300,000 shares of the Company’s common

stock issuable in two tranches of 150,000 shares on each of January 15, 2015 and 2016, respectively, which shares would be immediately

vested upon issuance.

As part of the extension agreement, Bassani was also granted a bonus of $5,000 paid in warrants, which vested immediately,

to purchase 50,000 shares of the Company’s common stock at a price of $2.10 per share and which warrants expired on December 31,

During September 2014, Bassani agreed to extend his employment agreement until April 15, 2015 and that previously issued and expensed

share grants of 100,000 and 150,000 shares that were to be issued on January 15, 2015, would be deferred until January 15, 2016.

February 10, 2015, the Company executed an Extension Agreement with Bassani pursuant to which Bassani extended the term of his service

to the Company to December 31, 2017, (with the Company having an option to extend the term an additional six months.) As part of

the agreement, the Company’s existing loan payable, deferred compensation and convertible note payable to Bassani, were restructured

into two promissory notes as follows:

a) The of sum of the cash loaned by Bassani to the Company of $279,000 together with $116,277 of

unreimbursed expenses through December 31, 2014 were placed into a new promissory note with initial principal of $395,277 which was due

and payable on December 31, 2015.

In connection with these sums and the new promissory note, Bassani was issued warrants to purchase

592,916 shares of the Company’s common stock at a price of $1.00 until December 31, 2020;

and b) the remaining balances of the Company’s

accrued obligations to Bassani ($1,464,545) were replaced with a new convertible promissory note with terms that compared with

the largest prior convertible note obligation to Bassani:

i) materially reduced the interest rate by 50% (from 8% to 4%),

ii) increased the conversion price by 11% (from $0.45 to $0.50), iii) set the conversion price at a fixed price so there can be

no further reductions, iv) reduced the number of warrants received on conversion by 75% (from 1 warrant per unit to 1/4 per unit)

and v) extended the maturity date to December 31, 2017 (See Note 6 to Financial Statements) (which maturity date was subsequently

extended to July 1, 2019.

Additionally, pursuant to the Extension Agreement, Bassani i) will continue to defer his

cash compensation ($31,000 per month) until the Board of Directors re-instates cash payments to all employees and consultants

who are deferring their compensation, ii) cancelled 250,000 contingent stock bonuses previously granted to him by the Company,

iii) has been granted 450,000 new options which vested immediately and iv) outstanding options and warrants owned by Bassani (and

his donees) have been extended and had the exercise prices reduced to $1.50(if above that price).

On May 5, 2013, the Board of

Directors approved agreements with Bassani and Smith, with effective date of May 15, 2013, in which Bassani and Smith agreed to

continue to defer their respective cash compensation through April 30, 2014 (unless the Board of Directors elected to re-commence

cash payment on an earlier date) and extended the due dates of their respective deferred cash compensation until January 15, 2015.

accrued obligations to Bassani ($1,464,545) were replaced with a new convertible promissory note with terms that compared with the largest

prior convertible note obligation to Bassani:

i) materially reduced the interest rate by 50% (from 8% to 4%), ii) increased the

conversion price by 11% (from $0.45 to $0.50), iii) set the conversion price at a fixed price so there can be no further reductions, iv)

reduced the number of warrants received on conversion by 75% (from 1 warrant per unit to 1/4 per unit) and v) extended the maturity date

to December 31, 2017 (See Note 6 to Financial Statements) (which maturity date was subsequently extended to July 1, 2019.

Additionally,

pursuant to the Extension Agreement, Bassani i) will continue to defer his cash compensation ($31,000 per month) until the Board

of Directors re-instates cash payments to all employees and consultants who are deferring their compensation, ii) cancelled 250,000 contingent

stock bonuses previously granted to him by the Company, iii) has been granted 450,000 new options which vested immediately and iv) outstanding

options and warrants owned by Bassani (and his donees) have been extended and had the exercise prices reduced to $1.50(if above that price).

On May 5, 2013, the Board of Directors approved agreements with Bassani and Smith, with effective date of May 15, 2013, in which Bassani

and Smith agreed to continue to defer their respective cash compensation through April 30, 2014 (unless the Board of Directors elected

to re-commence cash payment on an earlier date) and extended the due dates of their respective deferred cash compensation until January

The Company provided Bassani and Smith with convertible promissory notes which reflected all the terms of these agreements to

which future accruals were added as additional principal.

These convertible promissory notes were altered as set forth in the

paragraphs below.

As part of the agreements, Bassani and Smith also forgave any possible obligations that Bion may have owed each

of them in relation to unused vacation time for periods (over 10 years) prior to June 30, 2012.

In consideration of these agreements,

Bassani and Smith:

a) have been granted 50% ‘execution/exercise’

bonuses to be effective upon future exercise of outstanding

(or subsequently acquired) options and warrants owned by Bassani and Smith (and their respective donees) and in relation to contingent

stock bonuses;

b) their warrants and options, if due to expire prior to December 31, 2018, were extended to that date (and later

further extended);

and c) other modifications were made.

Effective January

1, 2011, the Company entered into an employment agreement with Edward Schafer (“Schafer”) pursuant to which for a

period of three years, Schafer provided senior management services to the Company on an approximately 75% full time basis, initially

as Executive Vice Chairman and as a director.

Compensation for Schafer’s services were initially set at an annual rate of

$250,000, which was to consist of $150,000 in cash compensation and $100,000 payable in the Company’s common stock.

the month following the first calendar month-end after the Company has completed an equity financing in excess of $3,000,000 (net

of commissions and other offering expenses), Schafer’s compensation was to be at an annual rate of $225,000, all of which

would have been payable in cash.

Effective July 15, 2012, the Company entered into a deferral/employment/ compensation agreement

with Schafer pursuant to which Schafer provided senior management services to the Company on an approximately 75% full time basis,

as Executive Vice Chairman and as a director.

Basic compensation for Schafer’s services remained unchanged and Schafer was

issued 100,000 options to purchase shares of the Company’s common stock at $2.10 per share until December 31, 2018, which

options immediately vested and a contingent stock bonus of 25,000 shares payable on January 1 of the first year after the Company’s

stock price first reaches $10.00 per share (regardless of whether Schafer is still providing services to the Company on such date).

Since May 15, 2012 Schafer has deferred the cash portion of the compensation due him from the Company, in consideration of which

he has been granted a 50% ‘execution/exercise’

These convertible promissory notes were altered as set forth in the paragraphs

As part of the agreements, Bassani and Smith also forgave any possible obligations that Bion may have owed each of them in relation

to unused vacation time for periods (over 10 years) prior to June 30, 2012.

In consideration of these agreements, Bassani and Smith:

have been granted 50% ‘execution/exercise’

bonuses to be effective upon future exercise of outstanding (or subsequently acquired)

options and warrants owned by Bassani and Smith (and their respective donees) and in relation to contingent stock bonuses;

b) their warrants

and options, if due to expire prior to December 31, 2018, were extended to that date (and later further extended);

and c) other modifications

Effective January 1, 2011, the Company entered into

an employment agreement with Edward Schafer (“Schafer”) pursuant to which for a period of three years, Schafer provided senior

management services to the Company on an approximately 75% full time basis, initially as Executive Vice Chairman and as a director.

for Schafer’s services were initially set at an annual rate of $250,000, which was to consist of $150,000 in cash compensation and

$100,000 payable in the Company’s common stock.

Commencing the month following the first calendar month-end after the Company has

completed an equity financing in excess of $3,000,000 (net of commissions and other offering expenses), Schafer’s compensation was

to be at an annual rate of $225,000, all of which would have been payable in cash.

Effective July 15, 2012, the Company entered into a

deferral/employment/ compensation agreement with Schafer pursuant to which Schafer provided senior management services to the Company

on an approximately 75% full time basis, as Executive Vice Chairman and as a director.

Basic compensation for Schafer’s services

remained unchanged and Schafer was issued 100,000 options to purchase shares of the Company’s common stock at $2.10 per share until

December 31, 2018, which options immediately vested and a contingent stock bonus of 25,000 shares payable on January 1 of the first year

after the Company’s stock price first reaches $10.00 per share (regardless of whether Schafer is still providing services to the

Company on such date).

Since May 15, 2012 Schafer has deferred the cash portion of the compensation due him from the Company, in consideration

of which he has been granted a 50% ‘execution/exercise’

bonus to be effective upon future exercise of outstanding (or subsequently

1 unchanged sentence

Effective January 1, 2014,

Schafer agreed to continue his services to the Company as Director and Executive Vice-Chairman without periodic compensation

in light of the Company’s financial situation.

Schafer agreed not to receive any periodic compensation (cash or deferred)

commencing January 1, 2014 and agreed to be compensated with bonuses from time-to-time as determined to be appropriate by the

Board of Directors.

Schafer agreed to continue his services to the Company as Director and Executive Vice-Chairman without periodic compensation in light

of the Company’s financial situation.

Schafer agreed not to receive any periodic compensation (cash or deferred) commencing

January 1, 2014 and agreed to be compensated with bonuses from time-to-time as determined to be appropriate by the Board of Directors.

No such bonuses have been declared to date.

On February 10, 2015, the Company entered into an agreement with

Schafer pursuant to which Schafer continued to provide services to the Company through December 31, 2015.

As part of the

agreement, unreimbursed expenses of $15,956 due to Schafer at December 31, 2014 were replaced with a new promissory note with

initial principal of $15,956 which was due and payable on December 31, 2015 and Schafer was issued warrants to purchase 7,978

shares of the Company’s common stock at a price of $1.00 until December 31, 2020.

Schaefer’s deferred compensation

for 2014 (and prior years) in the amount of $394,246 (including a sum of $120,000 for calendar year 2014) was placed in a convertible

promissory note (See Note 6 to Financial Statements).

Additionally, pursuant to the agreement, i) the exercise period

of outstanding options and warrants owned by Schafer have been extended, ii) certain of Schafer’s outstanding options and

warrants had the exercise prices reduced to $1.50 (if above that price), and iii) 25,000 contingent stock bonuses previously granted

to Schafer have been cancelled by the Company.

Effective June 30, 2016, Schafer and the Company determined that due to other obligations

Schafer’s involvement with the Company during the 2016 fiscal year was less than anticipated and reduced his fiscal year

2016 compensation (all of which had been deferred) by $160,000 and agreed that future compensation will be determined periodically

based on evaluation by the board of directors.

Bassani, Smith and Schafer

each agreed, effective June 30, 2017, to extend the maturity date of the outstanding convertible promissory notes set forth in

the paragraphs above from December 31, 2017 to July 1, 2019 which maturity date was subsequently extended to July 1, 2021.

On February 6, 2020 Bassani,

Smith and Schafer (and a shareholder) each agreed to extend the maturity dates of their 2020 Convertible Obligations (“CVObligations”)(formerly

On February 10, 2015, the Company entered into an agreement with Schafer pursuant to which

Schafer continued to provide services to the Company through December 31, 2015.

As part of the agreement, unreimbursed expenses

of $15,956 due to Schafer at December 31, 2014 were replaced with a new promissory note with initial principal of $15,956 which was due

and payable on December 31, 2015 and Schafer was issued warrants to purchase 7,978 shares of the Company’s common stock at a price

of $1.00 until December 31, 2020.

Schaefer’s deferred compensation for 2014 (and prior years) in the amount of $394,246 (including

a sum of $120,000 for calendar year 2014) was placed in a convertible promissory note (See Note 6 to Financial Statements).

Additionally,

pursuant to the agreement, i) the exercise period of outstanding options and warrants owned by Schafer have been extended, ii) certain

of Schafer’s outstanding options and warrants had the exercise prices reduced to $1.50 (if above that price), and iii) 25,000 contingent

stock bonuses previously granted to Schafer have been cancelled by the Company.

Effective June 30, 2016, Schafer and the Company determined

that due to other obligations Schafer’s involvement with the Company during the 2016 fiscal year was less than anticipated and reduced

his fiscal year 2016 compensation (all of which had been deferred) by $160,000 and agreed that future compensation will be determined

periodically based on evaluation by the board of directors.

Bassani, Smith and Schafer each agreed, effective

June 30, 2017, to extend the maturity date of the outstanding convertible promissory notes set forth in the paragraphs above from December

31, 2017 to July 1, 2019 which maturity date was subsequently extended to July 1, 2021.

On February 6, 2020 Bassani, Smith and Schafer

(and a shareholder) each agreed to extend the maturity dates of their 2020 Convertible Obligations (“CVObligations”)(formerly

convertible promissory notes) to July 1, 2024.

If any of the CVObligations are converted, the warrants in units received will

be exercisable through a date 3 years after conversion date.

Effective May 4, 2020

the Company agreed that all options and warrants owned (or subsequently acquired by conversion of CvObligations) by its officers,

directors and key employees and consultants (including Jon Northrop (director), Bassani, Smith and Schafer) and their donees be

a) lower the exercise price to $0.75 for any options/warrants with higher exercise prices and b) extend the expiration

dates to 12/31/2024.

has declared contingent deferred stock bonuses to its key employees and consultants at various times throughout the years.

stock bonuses were contingent upon the Company’s stock price exceeding a certain target price per share, and the grantees

still being employed by or providing services to the Company at the time the target prices are reached.

During the year ended

June 30, 2017, pursuant to agreement with the employees and a consultant who had been granted the outstanding contingent stock

bonuses, the Company cancelled all 117,500 outstanding contingent stock bonuses.

In consideration for the cancellations, the Company

granted 109,500 fully vested options to these employees and a consultant to purchase common stock of the Company at $1.00 per

share until December 31, 2024 (including recent extensions).

EQUITY AWARDS AT FISCAL YEAR-END

The following

table sets forth the number of shares of common stock covered by outstanding stock option awards that are exercisable and unexercisable,

and the number of shares of common stock covered by unvested restricted stock awards for each of our named executive officers

as of June 30, 2020.

Equity Awards at Fiscal Year-End

Option Awards

Incentive Plan Awards:

Number of Securities

of Stock That

Underlying Unexercised

Unexercised Options (#)

If any of the CVObligations are converted, the warrants in units received will be exercisable

through a date 3 years after conversion date.

Effective May 4, 2020 the Company agreed that all options and warrants

owned (or subsequently acquired by conversion of CvObligations) by its officers, directors and key employees and consultants (including

Jon Northrop (director), Bassani, Smith and Schafer) and their donees be amended to:

a) lower the exercise price to $0.75 for any options/warrants

with higher exercise prices and b) extend the expiration dates to December 31, 2024.

Other Agreements

The Company has declared contingent deferred

stock bonuses to its key employees and consultants at various times throughout the years.

The stock bonuses were contingent upon the Company’s

stock price exceeding a certain target price per share, and the grantees still being employed by or providing services to the Company

at the time the target prices are reached.

During the year ended June 30, 2017, pursuant to agreement with the employees and a consultant

who had been granted the outstanding contingent stock bonuses, the Company cancelled all 117,500 outstanding contingent stock bonuses.

In consideration for the cancellations, the Company granted 109,500 fully vested options to these employees and a consultant to purchase

common stock of the Company at $1.00 per share until December 31, 2024 (including recent extensions).

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

The following table sets forth the number of shares

of common stock covered by outstanding stock option awards that are exercisable and unexercisable, and the number of shares of common

stock covered by unvested restricted stock awards for each of our named executive officers as of June 30, 2021.

Outstanding Equity Awards at Fiscal Year-End

Underlying Unexercised

Exercise Price

Have Not Vested

Rights That Have Not

That Have Not

Unexercisable

Options (#) Exercisable

Options (#)Unexercisable

Incentive Plan

Unearned Shares,

Units or Other

Rights That Have

Incentive Plan

Payout Value of

Unearned Shares,

Units or Other

Rights That Have

Brightcap/ Dominic Bassani (1)

Brightcap/ Dominic Bassani (2)

Brightcap/ Dominic Bassani (1)

Edward Schafer (3)

2 unchanged sentences

Edward Schafer (2)

(1) Options are subject to a 75% execution/exercise

bonus upon notice of intent to exercise.

(2) Options are subject to a 90% execution/exercise

bonus upon notice of intent to exercise.

(3) Options are subject to a 50% execution/exercise

bonus upon notice of intent to exercise.

Members of the

Board of Directors do not currently receive any cash compensation for their services as Directors, but are entitled to be reimbursed

for their reasonable expenses in attending meetings of the Board.

However, it is the Company's intention to begin to pay cash

compensation to Board members at some future date.

Edward Schafer (1)

(1) Options are subject to a 75% execution/exercise bonus upon

notice of intent to exercise.

(2) Options are subject to a 90% execution/exercise bonus upon

notice of intent to exercise.

(3) Options are subject to a 50% execution/exercise bonus upon

notice of intent to exercise.

Director Compensation

The following

table sets forth certain information regarding the compensation paid to directors during the fiscal year ended June 30, 2020:

Compensation Earnings ($)

the dollar amount expensed by the Company during the applicable fiscal year for financial

statement reporting purposes pursuant to ASC 718.

OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

As of August 31, 2020, the Registrant

had 31,525,656 shares of common stock issued and 30,821,347 shares of common stock outstanding.

(the balance of 704,309 shares

are owned by Centerpoint, the Company's majority-owned subsidiary).

The following

table sets forth certain information regarding the beneficial ownership of our common stock as of August 31, 2020 by:

person that is known by us to beneficially own more than 5% of our common stock;

of our directors;

of our executive officers and significant employees;

our executive officers, directors and significant employees as a group.

Under the rules of the Securities

and Exchange Commission, beneficial ownership includes voting or investment power with respect to securities and includes the

shares issuable under stock options, warrants and convertible securities that are exercisable/convertible within sixty (60) days

of August 31, 2020.

Those shares issuable under stock options, warrants and/or convertible securities are deemed outstanding

for computing the percentage of each person holding options, warrants and/or convertible securities but are not deemed outstanding

for computing the percentage of any other person.

The percentage of beneficial ownership schedule is based upon 30,821,347 shares

outstanding as of August 31, 2020.

The address for those individuals for which an address is not otherwise provided is c/o

Bion Environmental Technologies, c/o PO Box 323, Old Bethpage, NY 11804.

To our knowledge, except as indicated in the footnotes

to this table and pursuant to applicable community property laws, the persons named in the table have sole voting power and investment

power with respect to all shares of common stock listed as owned by them.

Corporation (1)

Bethpage, NY 11604

Village Hills Drive

Hills, NY 11746

Blacksmith Advisors, LLC

Park Avenue, 18 th Floor

York, NY 10022

Members of the Board of Directors do not currently

receive any cash compensation for their services as Directors, but are entitled to be reimbursed for their reasonable expenses in attending

meetings of the Board.

However, it is the Company's intention to begin to pay cash compensation to Board members at some future date.

DIRECTOR COMPENSATION

The following table sets forth certain information

regarding the compensation paid to directors during the fiscal year ended June 30, 2021:

Director Compensation

(1) Reflects the dollar amount expensed by the Company during the applicable fiscal year for financial statement reporting purposes pursuant

SECURITY OWNERSHIP OF

CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

As of August 1, 2021, the Registrant had 41,431,986 shares of

common stock issued and 40,727,677 shares of common stock outstanding.

(the balance of 704,309 shares are owned by Centerpoint, the Company's

majority-owned subsidiary).

The following table sets forth certain information

regarding the beneficial ownership of our common stock as of August 1, 2020 by:

● each person that is known by us to beneficially own more than 5% of our common stock;

● each of our directors;

● each of our executive officers and significant employees;

● all our executive officers, directors and significant employees as a group.

Under the rules of the Securities and Exchange Commission, beneficial ownership

includes voting or investment power with respect to securities and includes the shares issuable under stock options, warrants and convertible

securities that are exercisable/convertible within sixty (60) days of August1, 2021.

Those shares issuable under stock options,

warrants and/or convertible securities are deemed outstanding for computing the percentage of each person holding options, warrants and/or

convertible securities but are not deemed outstanding for computing the percentage of any other person.

The percentage of beneficial

ownership schedule is based upon 40,727,677 shares outstanding as of August 1, 2021.

The address for those individuals for

which an address is not otherwise provided is c/o Bion Environmental Technologies, c/o PO Box 323, Old Bethpage, NY 11804.

knowledge, except as indicated in the footnotes to this table and pursuant to applicable community property laws, the persons named in

the table have sole voting power and investment power with respect to all shares of common stock listed as owned by them.

Name and Address

Percent of Class Outstanding

Entitled To Vote

Centerpoint Corporation (1)

c/o PO Box 323

Old Bethpage, NY 11604

Dominic Bassani (2)

64 Village Hills Drive

Hills, NY 11746

Dix Hills, NY 11746

Riverside Drive, Unit 408

Pompano Beach, FL 33062

Christopher B.

23 Longbow Drive

Emery Street, #6

Colorado 80501

executive officers and directors

a group (4 persons)

Commack, NY 11725

Danielle Lominy (5)

c/o Dominic Bassani

64 Village Hill Drive

Dix Hills, NY 11746

Anthony Orphanos (6)

c/o Blacksmith Advisors, LLC

320 Park Avenue 18 th floor

New York, NY 10022

Jon Northrop (8)

All executive officers and directors as a group (4 persons)

___________________________

(1) Centerpoint Corporation is currently

majority owned by the Company.

Centerpoint Corporation is currently majority owned by the Company.

Under Colorado law, Centerpoint Corporation is not entitled

to vote these shares unless otherwise ordered by a court.

These shares of common stock

may be distributed to the shareholders of Centerpoint Corporation at a future date pursuant

to a dividend declared during July 2004.

The shares distributed to Bion, if any, will

be cancelled immediately upon receipt.

(2) Includes 62,201 shares, 3,675,000

shares underlying options and 965,000 shares underlying warrants held directly by Mr.

These shares of common stock may be distributed to the shareholders of Centerpoint

Corporation at a future date pursuant to a dividend declared during July 2004.

The shares distributed to Bion, if any, will be cancelled

immediately upon receipt

Includes 62,201 shares, 2,825,000 shares underlying options and 965,000 shares underlying warrants held directly by Mr.

354,342 shares and 250,000 shares underlying warrants held by Mr.

Bassani’s

Bassani’s wife;

and, 839,933 shares held in IRA accounts of Mr.

Bassani and his wife.

Also included

are the shares set forth below owned (directly and indirectly) by Mr.

Bassani’s

daughter, Danielle Lominy (formerly Danielle Bassani) who resides within his residence

and are included in Mr.

Bassani’s beneficial ownership for purposes of the calculation

Also included are the shares set forth below owned (directly and indirectly) by Mr.

Bassani’s daughter, Danielle

Lominy (formerly Danielle Bassani) who resides within his residence and are included in Mr.

Bassani’s beneficial ownership for purposes

of the calculation including:

a) 570,000 shares directly b) 646,458 shares underlying warrants owned directly;

and c) Danielle Lominy is the 50% beneficiary of the Dominic Bassani 2019 Irrevocable

Trust (“2019Trust”) which owns:

i) 3,000,000 warrants to purchase shares

of the Company’s common stock and, as a result, Danielle Lominy is the beneficial

owner of 1,500,000 shares underlying warrants and ii) $2,424,173 principal amount of

the Company’s 2020 Convertible Obligation (“CVObligation”) which is

convertible into 4,848,346 shares and 2,424,173 warrants and, as a result, Danielle Lominy

is the beneficial owner of 2,424,173 shares underlying conversion of the CVObligation

and 1,212,087 shares underlying the warrants issuable on conversion of the CVObligation.

and c) Danielle Lominy

is the 50% beneficiary of the Dominic Bassani 2019 Irrevocable Trust (“2019Trust”) which owns:

i) 3,000,000 warrants and 1,000,000

options to purchase shares of the Company’s common stock and, as a result, Danielle Lominy is the beneficial owner of 1,500,000

shares underlying warrants and 500,000 shares underlying options and ii) $2,173,729.57 principal amount of the Company’s 2020 Convertible

Obligation (“CVObligation”) which is convertible into 4,347,459 shares and 2,899,756 warrants and, as a result, Danielle Lominy

is the beneficial owner of 2,173,730 shares underlying conversion of the CVObligation and 1,449,878 shares underlying the warrants issuable

on conversion of the CVObligation.

The total also includes:

a) 277,670 shares of common stock that could be issued on the

conversion (at the election of Bassani) by Mr.

Bassani of convertible notes in the amount

of $165,653, and b) 373,275 shares of common stock that could be issued on the conversion

(at the election of Bassani) by Bassani of deferred compensation in the amount of $194,103.

a) 674,043 shares of common stock that could be issued on the conversion (at

the election of Bassani) by Mr.

Bassani of convertible notes in the amount of $337,021.32, (@ $0.50 price) and b) 619,695 shares of common

stock that could be issued on the conversion (at the election of Bassani) by Mr.

Bassani of convertible notes in the amount of $371,817

(@ $0.60 price) and c) 508,375 shares of common stock that could be issued on the conversion (at the election of Bassani) of deferred

compensation in the amount of $441,970.73.

Bassani disclaims ownership of 1,511,477 shares underlying warrants held by the Danielle

Christine Bassani Trust, which is separately itemized herein.

Bassani’s adult

daughter Danielle Lominy (formerly Danielle Bassani), who resides within his residence,

is the beneficiary of the Danielle Christine Bassani Trust and Mr.

Bassani is not one

of the trustees of the trust.

Bassani further disclaims beneficial ownership of shares

and warrants owned by various other family members (including Christopher Parlow who

is itemized separately), none of whom live with him or are his dependents, and such shares

are not included in this calculation.

(3) Includes 570,063 shares held directly

156,750 shares underlying warrants held directly by Mr.

Orphanos;120,263

shares held jointly with his wife;

1,425,374 shares held in IRA accounts;

shares of common stock that could be issued on conversion of $418,041 convertible notes.

Not included are 400,000 shares and 1,511,477 shares underlying warrants held by the

Danielle Christine Bassani Trust, of which Mr.

Orphanos is a co-trustee, and 2,939,917

common shares owned by certain clients of Blacksmith Advisors, over which Mr.

exercises discretionary authority (which shares include:

a) 839,933 shares held in IRA

accounts for Mr.

Bassani and his wife;

b) 354,342 shares held by Mr.

Bassani’s

c) 5,624 shares held by Mr.

Bassani personally;

and d) 68,000 shares owned by Danielle

Lominy (formerly Danielle Bassani).

Orphanos disclaims beneficial ownership of the

shares listed in the preceding sentences because he has no pecuniary interest in the

(4) Includes 176,000 shares held directly

by Danielle Lominy (formerly Danielle Bassani), 1,511,477 shares underlying warrants

held by The Danielle Christine Bassani Trust, Anthony Orphanos and Donald Codignotto,

400,000 shares owned by the Danielle Bassani Trust, 311,458 shares underlying

warrants, 105,000 shares underlying warrants owned jointly with husband and 230,000 shares

underlying warrants owned by Danielle Lominy’s daughter.

In addition, Danielle

is the 50% beneficial owner of the Dominic Bassani 2019 Irrevocable Trust (“2019

Trust”) which owns 3,000,000 warrants to purchase shares of the Company’s

common stock and, as a result Danielle Lominy is the beneficial owner of 1,500,000 shares

underlying exercise of the warrants.

Additionally, the 2019 Trust owns $2,424,173 principal

amount of the Company’s 2020 Convertible Obligation (“CVObligation”)

which is convertible into 4,848,346 shares and 2,424,173 warrants.

As a result, Danielle

Lominy is the beneficial owner of 2,424,173 shares underlying conversion of the CVObligation

and 1,212,087 shares underlying the warrants issuable on conversion of the CVObligation.

(5) Includes 132,511 shares held jointly

Smith with his wife, 62,535 shares held by Mark Smith in an IRA;

Bassani’s adult daughter Danielle Lominy (formerly Danielle Bassani),

who resides within his residence, is the beneficiary of the Danielle Christine Bassani Trust and Mr.

Bassani is not one of the trustees

of the trust.

Bassani further disclaims beneficial ownership of shares and warrants owned by various other family members (including

Christopher Parlow who is itemized separately), none of whom live with him or are his dependents, and such shares are not included in

this calculation.

(3) Includes 331,469 shares held jointly by Mark A.

Smith with his wife, 62,535 shares held by Mark Smith

2,225,000 shares underlying options held directly by Mr.

Smith, 1,377,153 shares underlying warrants

held directly by Mr.

53,756 shares held by his wife in her IRA, 12,681 shares

of common stock held by LoTayLingKyur Foundation and 126,000 shares of common stock held

by LoTayLingKyur LLC which is controlled by Mr.

Smith, 1,536,520 shares underlying warrants held directly by Mr.

53,756 shares held by his wife in her IRA, 12,681 shares of common stock held by LoTayLingKyur Foundation and 153,432 shares of common

stock and 100,001 underlying warrants held by LoTayLingKyur LLC which is controlled by Mr.

Smith and his wife.

Also includes 2,813,686

shares and 1,689,986 warrants underlying units that could be issued on the conversion

(at the election of Mr.

Smith) by Mr.

Smith of his CVObligation in the aggregate amount

of $1,126,657.

Also includes 105,396 shares of common stock that could be issued on the

conversion (at the election of Mr.

shares and 2,813,686 warrants underlying units that could be issued on the conversion (at the election of Mr.

Smith) by Mr.

Smith of deferred compensation in the

amount of $52,698.

Does not include shares and warrants owned by various family members

2020 Convertible Obligations in the aggregate amount of $1,406,843.

Smith has the option to convert this amount into units with each

unit consisting of 1 share of common stock and 1 warrant exercisable at $0.75 per share.

The conversion price will be $0.50 per unit.

Does not include shares and warrants owned by various family members of which Mr.

Smith disclaims beneficial ownership.

Smith is also the President of

Centerpoint, although shares owned by Centerpoint are not entitled to a vote while held

by Centerpoint.

(6) Includes 158,254 shares held directly

Smith is also

the President of Centerpoint, although shares owned by Centerpoint are not entitled to a vote while held by Centerpoint.

Includes 2,005 shares held directly by Christopher Parlow, 65,000 shares held jointly with wife, 250,000 shares owned by the Christopher

Parlow Trust and 50,000 shares owned by Christopher Parlow’s minor daughters.

Also includes 1,614,000 shares underlying warrants

held by the Christopher Parlow Trust, 147,154 shares underlying warrants held jointly with wife, 150,000 warrants held directly by Mr.

Parlow and 459,780 shares underlying warrants held by Mr.

Parlow’s minor daughters.

In addition, Christopher is the 50% beneficial

owner of the Dominic Bassani 2019 Irrevocable Trust (“2019 Trust”) which owns 3,000,000 warrants to purchase shares of the

Company’s common stock and 1,000,000 options and as a result, Christopher Parlow is the beneficial owner of 1,500,000 shares underlying

exercise of the warrants and 500,000 shares underlying exercise of the options.

Additionally, the 2019 Trust owns $2,173,729.57 principal

amount of the Company’s 2020 Convertible Obligation (“CVObligation”) which is convertible @$0.50 into 4,347,459 shares

and 2,899,756 warrants.

As a result, Christopher Parlow is the beneficial owner of 2,173,730 shares underlying conversion of the CVObligation

and 1,449,878 shares underlying the warrants issuable on conversion of the CVObligation.

Includes 170,000 shares held directly by Danielle Lominy (formerly Danielle Bassani), 1,511,477 shares underlying warrants held

by The Danielle Christine Bassani Trust, Anthony Orphanos and Donald Codignotto, trustees;

400,000 shares owned by the Danielle Bassani

Trust, 311,458 shares underlying warrants, 105,000 shares underlying warrants owned jointly with husband and 230,000 shares underlying

warrants owned by Danielle Lominy’s daughter.

In addition, Danielle is the 50% beneficial owner of the Dominic Bassani 2019 Irrevocable

Trust (“2019 Trust”) which owns 3,000,000 warrants to purchase shares of the Company’s common stock and 1,000,000 options

and, as a result Danielle Lominy is the beneficial owner of 1,500,000 shares underlying exercise of the warrants and 500,000 shares underlying

exercise of the options.

Additionally, the 2019 Trust owns $2,173,729.57 principal amount of the Company’s 2020 Convertible Obligation

(“CVObligation”) which is convertible @ $0.50 into 4,347,459 shares and 2,899,756 warrants.

As a result, Danielle Lominy is

the beneficial owner of 2,173,730 shares underlying conversion of the CVObligation and 1,449,878 shares underlying the warrants issuable

on conversion of the CVObligation.

(6) Includes 570,063 shares held directly by Mr.

156,750 shares underlying warrants held directly

Orphanos;120,263 shares held jointly with his wife;

1,425,374 shares held in IRA accounts;

and 719,832 shares of common stock that

could be issued on conversion of $431,898.97 convertible notes (.60 conversion price).

Not included are 400,000 shares and 1,511,477 shares

underlying warrants held by the Danielle Christine Bassani Trust, of which Mr.

Orphanos is a co-trustee, and 2,921,777 common shares owned

by certain clients of Blacksmith Advisors, over which Mr.

Orphanos exercises discretionary authority (which shares include:

shares held in IRA accounts for Mr.

Bassani and his wife;

b) 354,342 shares held by Mr.

Bassani’s wife;

c) 5,624 shares held by

Bassani personally;

and d) 170,000 shares owned by Danielle Lominy (formerly Danielle Bassani).

Orphanos disclaims beneficial

ownership of the shares listed in the preceding sentences because he has no pecuniary interest in the shares.

Includes 158,254 shares held directly by Mr.

Schafer, options to purchase 1,165,000 shares and warrants to purchase 23,934 shares.

Also includes 931,978 shares and 465,989 warrants underlying units that could be issued

on the conversion by Mr.

Schafer of his CVObligation in the amount of $465,989.

includes 32,740 shares of common stock that could be issued on the conversion (at the

election of Mr.

Schafer) by Mr.

Also includes 965,264 shares and 482,632 warrants underlying units that could be issued on the conversion by Mr.

Schafer of a deferred

compensation promissory note in the amount of $482,631.93.

Schafer has the option to convert this amount into units with each unit

consisting of 1 share of common stock and ½

warrant exercisable at $0.75 per share until December 31, 2024.

The conversion price

is $0.50 per unit.

Also includes 33,741 shares of common stock that could be issued on the conversion (at the election of Mr.

Schafer of a convertible note in the amount of $20,244.45.

(7) Includes 127,289 shares held directly

by Jon Northrop and options to purchase 417,500 shares held by Jon Northrop.

include shares or options owned by the adult children of Jon Northrop nor his former

(8) Includes 2,005 shares held directly

by Christopher Parlow;

65,000 shares held jointly with wife;

250,000 shares owned by

the Christopher Parlow Trust and 50,000 shares owned by Christopher Parlow’s minor

Also includes 1,614,000 shares underlying warrants held by the Christopher

Parlow Trust, 147,154 shares underlying warrants held jointly with wife, 150,000 warrants

held directly by Mr.

Parlow and 459,780 shares underlying warrants held by Mr.

Parlow’s

minor daughters.

In addition, Christopher is the 50% beneficial owner of the Dominic

Bassani 2019 Irrevocable Trust (“2019 Trust”) which owns 3,000,000 warrants

to purchase shares of the Company’s common stock and, as a result, Christopher

Parlow is the beneficial owner of 1,500,000 shares underlying exercise of the warrants.

Additionally, the 2019 Trust owns $2,424,173 of CVObligation which is convertible into

4,848,346 shares and 2,424,173 warrants.

As a result, Christopher Parlow is the beneficial

owner of 2,424,173 shares underlying conversion of the CVObligation and 1,212,087 shares

underlying the warrants issuable on conversion of the CVObligation.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

Other than the

employment/consulting agreements, deferred compensation arrangements and conversions of debt described above in Item 1 Business

and Item 11 Executive Compensation, there are no related party transactions except that:

of the Company are considered to be independent directors.

The conversion price will be $0.60 per share.

Includes 120,635 shares held directly by Jon Northrop and options to purchase 442,500 shares held by Jon Northrop.

Does not include

shares or options owned by the adult children of Jon Northrop nor his former wife.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS,

AND DIRECTOR INDEPENDENCE.

Other than the employment/consulting agreements, deferred

compensation arrangements and conversions of debt described above in Item 1 Business and Item 11 Executive Compensation, there are no

related party transactions except that:

No directors of the Company are considered to be independent

PRINCIPAL ACCOUNTING FEES AND SERVICES.

In January 2017

the Company engaged Eide Bailly LLP as its independent registered public accounting firm.

The aggregate fees billed for

the fiscal years ended June 30, 2020 and June 30, 2019 by Eide Bailly LLP for professional services rendered for the audit of

the Company's annual financial statements and reviews of interim financial statements included in the Company's quarterly reports

on Form 10-Q (and related matters) were $55,000 and $47,000, respectively.

There were no

fees billed by Eide Bailly LLP for audit-related fees in each of the last two fiscal years ended June 30, 2020 and June 30, 2019.

The aggregate

fees billed for tax services rendered by Eide Bailly LLP for tax compliance and related services for the two fiscal years ended

June 30, 2020 and June 30, 2019 were $12,300 and nil, respectively.

Committee Pre-Approval Policy

Under provisions

of the Sarbanes-Oxley Act of 2002, the Company's principal accountant may not be engaged to provide non-audit services that are

prohibited by law or regulation to be provided by it, and the Board of Directors (which serves as the Company's audit committee)

must pre-approve the engagement of the Company's principal accountant to provide audit and permissible non-audit services.

Company's Board has not established any policies or procedures other than those required by applicable laws and regulations.

In January 2017 the Company engaged Eide Bailly LLP

as its independent registered public accounting firm.

The aggregate fees billed for the fiscal years ended June 30, 2021 and June

30, 2020 by Eide Bailly LLP for professional services rendered for the audit of the Company's annual financial statements and reviews

of interim financial statements included in the Company's quarterly reports on Form 10-Q (and related matters) were $56,800 and $55,000,

respectively.

Audit Related Fees

There were no fees billed by Eide Bailly LLP for audit-related

fees in each of the last two fiscal years ended June 30, 2021 and June 30, 2020.

The aggregate fees billed for tax services rendered

by Eide Bailly LLP for tax compliance and related services for the two fiscal years ended June 30, 2021 and June 30, 2020 were $3,600

and $12,300, respectively.

All Other Fees

Audit Committee Pre-Approval Policy

Under provisions of the Sarbanes-Oxley Act of 2002,

the Company's principal accountant may not be engaged to provide non-audit services that are prohibited by law or regulation to be provided

by it, and the Board of Directors (which serves as the Company's audit committee) must pre-approve the engagement of the Company's principal

accountant to provide audit and permissible non-audit services.

The Company's Board has not established any policies or procedures other

than those required by applicable laws and regulations.

EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

Number Description

Number Description and Location

of Incorporation.

8 unchanged sentences

dated February 12, 2003 between Bion Environmental Technologies, Inc.

and Centerpoint

Corporation canceling provisions of the Subscription Agreement by and between Bion Environmental

Technologies, Inc.

and Centerpoint Corporation

canceling provisions of the Subscription Agreement by and between Bion Environmental Technologies,

and Centerpoint Corporation.

10.4 Promissory

Note and Security Agreement between Bion Environmental Technologies, Inc.

Capital, LLC.

and Bright Capital,

Amendment to Lease between Bion Environmental Technologies, Inc.

and Pan Am Equities

and Pan Am Equities Corp.

10.6 Agreement

23 unchanged sentences

Note and Conversion Agreement between Bion Environmental Technologies, Inc.

Smith related to deferred compensation.

related to deferred compensation.

10.22 Promissory

Note and Conversion Agreement between Bion Environmental Technologies, Inc.

Capital, Ltd.

and Bright Capital,

related to deferred compensation.

12 unchanged sentences

to Dominic Bassani & Bright Capital, Ltd.

dated October 16, 2006 regarding Change

in Title/Status of DB/Amendment to Brightcap Agreement.

dated October 16, 2006 regarding Change in

Title/Status of DB/Amendment to Brightcap Agreement.

Agreement between Bion Dairy Corporation and Fair Oaks Dairy Farms dated June 19, 2006.

10 unchanged sentences

of Note dated March 31, 2007 in the amount of $379,389.04 in favor of Salvatore Zizza.

of Note dated March 31, 2007 in the amount of $455.486.30 in favor of Bright Capital,

of Note dated March 31, 2007 in the amount of $455.486.30 in favor of Bright Capital, Ltd.

10.40 Stipulation

and Agreement of Compromise and Release dated May 21, 2007 between Centerpoint Corporation,

Bion Environmental Technologies, Richard Anderson and Joseph Foglia, as Plaintiffs, and

Comtech Group, Inc., OAM S.p.A., Invested Ernst & Company and others as Defendants.

Bion Environmental Technologies, Richard Anderson and Joseph Foglia, as Plaintiffs, and Comtech

Group, Inc., OAM S.p.A., Invested Ernst & Company and others as Defendants.

10.41 Stipulation

and Agreement of Compromise, Settlement and Release dated May 15, 2007 between TCMP3

Partners, LLP as Plaintiff and Bion Environmental Technologies, Inc.

and Bion Dairy Corporation,

among others, as Defendants.

and Agreement of Compromise, Settlement and Release dated May 15, 2007 between TCMP3 Partners,

LLP as Plaintiff and Bion Environmental Technologies, Inc.

and Bion Dairy Corporation, among

others, as Defendants.

10.42 Stipulation

and Agreement of Compromise, Settlement and Release as to Certain Defendants dated May 15,

15, 2007 between TCMP3 Partners, LLP as Plaintiff and certain defendants other than Bion

Environmental Technologies, Inc.

2007 between TCMP3 Partners, LLP as Plaintiff and certain defendants other than Bion Environmental

Technologies, Inc.

and Bion Dairy Corporation.

22 unchanged sentences

10.53 Promissory

Note between Anthony Orphanos and Bion dated October 30, 2008, Guaranteed by Dominic

Note between Anthony Orphanos and Bion dated October 30, 2008, Guaranteed by Dominic Bassani.

10.54 Addendum

to Settlement Agreement and Release Stipulation from Bion, Bion Dairy and Mark Smith

dated October 31, 2008.

to Settlement Agreement and Release Stipulation from Bion, Bion Dairy and Mark Smith dated

October 31, 2008.

10.55 Kreider

28 unchanged sentences

10.69 Accepted

Funding Offer (base loan agreement) (without exhibits) with PENNVEST for Kreider Farms

Project Loan -- effective November 3, 2010.

Funding Offer (base loan agreement) (without exhibits) with PENNVEST for Kreider Farms Project

Loan -- effective November 3, 2010.

Form Agreement.

53 unchanged sentences

#9 to 2006 Consolidated Incentive Plan, as amended (36)

10.103 Lease (executed September 23, 2021) (37)

21 Subsidiaries

of the Registrant.

31.1 Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 - Filed herewith electronically.

31.2 Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 - Filed herewith electronically.

32.1 Certification of Chief Executive Officer Pursuant to Section 18 U.S.C.

Section 1350 - Filed herewith electronically.

32.2 Certification of Principal Financial Officer Pursuant to Section 18 U.S.C.

31.1 Certification

of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 - Filed

herewith electronically.

31.2 Certification

of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

- Filed herewith electronically.

32.1 Certification

of Chief Executive Officer Pursuant to Section 18 U.S.C.

Section 1350 - Filed herewith electronically.

32.2 Certification

of Principal Financial Officer Pursuant to Section 18 U.S.C.

Section 1350 - Filed herewith

electronically.

_______________

Filed with Form 10SB12G on November 14, 2006.

with Form 10SB12G on November 14, 2006.

with Form 10SB12G/A on February 1, 2007.

33 unchanged sentences

with June 30, 2019 Form 10-K on September 24, 2019

(b) Financial

Statement Schedules

Our consolidated

financial statements being filed as part of this Form 10-K are filed on Item 8 of this Form 10-K.

All other schedules for

which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under

the related instructions or are inapplicable, and therefore have been omitted.

with Form 8-K on September 29, 2021

(b) Financial Statement Schedules

Our consolidated financial statements being filed

as part of this Form 10-K are filed on Item 8 of this Form 10-K.

All other schedules for which provision is made in the applicable

accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are inapplicable,

and therefore have been omitted.

Report of Independent Registered Public Accounting Firm

6 unchanged sentences

of Independent Registered Public Accounting Firm

Board of Directors and Stockholders

of Directors and Stockholders

Bion Environmental Technologies, Inc.

2 unchanged sentences

have audited the accompanying consolidated balance sheets of Bion Environmental Technologies, Inc.

(the “Company”)

as of June 30, 2020 and 2019, and the related consolidated statements of operations ,

(the “Company”) as of

June 30, 2021 and 2020, and the related consolidated statements of operations ,

changes in stockholders’

equity (deficit), and cash flows, for the years then ended, and the related notes (collectively

referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material

respects, the financial position of Bion Environmental Technologies, Inc.

as of June 30, 2020 and 2019, and the results of its

operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United

States of America.

equity (deficit), and cash flows, for the years then ended, and the related notes (collectively referred

to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the

financial position of Bion Environmental Technologies, Inc.

as of June 30, 2021 and 2020, and the results of its operations and its cash

flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

accompanying financial statements have been prepared assuming that the Company will continue as a going concern.

in Note 1 to the financial statements, the Company has not generated significant revenue and has suffered recurring losses from

These factors raise substantial doubt about its ability to continue as a going concern.

Management’s plans in

regard to these matters are also discussed in Note 1.

The financial statements do not include any adjustments that might result

from the outcome of this uncertainty.

As discussed in Note

1 to the financial statements, the Company has not generated significant revenue and has suffered recurring losses from operations.

factors raise substantial doubt about its ability to continue as a going concern.

Management’s plans in regard to these matters

are also discussed in Note 1.

The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on

these financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting

Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance

with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the

Our responsibility is to express an opinion on these financial

statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United

States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S.

federal securities

laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit

to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial

As part of our audits we are required to obtain an understanding of internal control over financial reporting but not

for the purpose of expressing an opinion on the effectiveness of the entity’s internal control over financial reporting.

Those standards require that we plan and perform the audit to obtain

reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits

we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion

on the effectiveness of the entity’s internal control over financial reporting.

Accordingly, we express no such opinion.

audits included performing procedures to assess the risk of material misstatement of the financial statements, whether due to

error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence

regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles

used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

audits included performing procedures to assess the risk of material misstatement of the financial statements, whether due to error or

fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding

the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant

estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits

provide a reasonable basis for our opinion.

critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated

or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial

statements and (2) involved especially challenging, subjective or complex judgments.

The communication of critical audit matters does

not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters

below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

in Note 7 to the financial statements, the Company has entered into various equity-based compensation agreements.

These agreements include

transactions, including the original issuance and subsequent modifications of warrants and stock options, that are required to be measured

and accounted for at estimated fair value.

These transactions resulted in recording of stock-based compensation expense of $1,107,700,

modification of options of $8,775, warrant issuances of $2,500, and warrant modifications of $212,645 for the year ended June 30, 2021.

Company’s determination of the estimated fair values involves the identification of related financial instruments and a clear understanding

of the terms of the agreements.

Auditing management’s estimates of fair value requires a high degree of auditor judgment and an

increased extent of effort, including the need to carefully examine to understand the true nature of the related agreements.

primary procedures we performed to address this critical audit matter included:

gained an understanding of management's process and methodology to develop the estimates

examined agreements and agreed terms utilized in calculations

evaluated the reasonableness of the inputs and assumptions used by management in developing

the estimates

recalculated the amounts and compared to management’s calculation

evaluated the adequacy of the disclosures related to these fair value measurements.

Eide Bailly LLP

2 unchanged sentences

BION ENVIRONMENTAL TECHNOLOGIES, INC.

AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

31 unchanged sentences

(128,891,893 )

Total Bion’s stockholders’

Total Bion's stockholders’

(11,445,456 )

7 unchanged sentences

BION ENVIRONMENTAL TECHNOLOGIES, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

9 unchanged sentences

Gain on extinguishment of liabilities

Interest expense, net

Forgiveness of debt

Interest expense

Total other expense

9 unchanged sentences

BION ENVIRONMENTAL TECHNOLOGIES, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS'

1 unchanged sentence

YEARS ENDED JUNE 30, 2021 AND 2020

A Preferred Stock

C Preferred Stock

Bion's Shareholders'

Series A Preferred Stock

Series C Preferred Stock

Additional paid-in

Subscription Recivables for

Noncontrolling

equity/(deficit)

(121,691,956 )

(13,694,938 )

of common stock for services

of options for services

on sale of units

of debt and liabilities

June 30, 2019

(124,346,158 )

(14,674,598 )

of common stock for services

of options for services

on sale of units

of debt and liabilities

June 30, 2020

$ 114,266,683

$ (128,891,893 )

$ (15,087,958 )

Balances, July 1, 2019

Issuance of common stock for services

Vesting of options for services

Sale of units

Commissions on sale of units

Modification of options

Modification of warrants

Issuance of warrants

Conversion of debt and liabilities

Balances, June 30, 2020

Sale of units

Commissions on sale of units and warrant exercises

Vesting of options for services

Modification of options

Modification of warrants

Issuance of warrants

Warrants exercised for common shares

Sale of common shares

Issuance of units for services

Conversion of debt and liabilities

Balances, June 30, 2021

See notes to consolidated financial statements

BION ENVIRONMENTAL TECHNOLOGIES, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

5 unchanged sentences

Depreciation expense

Accrued interest on loans payable, deferred

compensation and other

Stock-based compensation

Forgiveness of debt

Gain on extinguishment of liabilities

Decrease (increase) in prepaid expenses

Increase in accounts payable and accrued expenses

Accrued interest on loans payable, deferred compensation and other

Stock-based compensation

(Increase) decrease in prepaid expenses

(Decrease) increase in accounts payable and accrued expenses

Increase in deferred compensation

Net cash used in operating activities

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of property and equipment

Net cash used in investing activities

CASH FLOWS FROM FINANCING ACTIVITIES

1 unchanged sentence

Commissions on sale of units

Proceeds from sale of common shares

Proceeds from exercise of warrants

Commissions on exercise of warrants

Proceeds from Paycheck Protection Program loan

Repayment of loans payable - affiliates

Proceeds from loans payable - affiliates

Repayment of loans payable - affiliates

Net cash provided by financing activities

5 unchanged sentences

Non-cash investing and financing transactions:

Conversion of debt and liabilities into common units

Conversion of deferred compensation into notes payable - related party

Warrants issued for unit commissions

Shares issued for warrant exercise commissions

Purchase of warrants for subscription receivable - affiliates

Shares issued for accounts payable and accrued expenses

Conversion of debt and liabilities

Warrants issued for unit commissions

Conversion of deferred compensation into notes payable - related party

See notes to consolidated financial statements

11 unchanged sentences

or "Our") was incorporated in 1987 in the State of Colorado.

patented and proprietary technology provides comprehensive environmental solutions to one of the greatest water air and water quality

problems in the U.S.

pollution from large-scale livestock production facilities (also known as “Concentrated Animal

Feeding Operations”

and proprietary technology provides comprehensive environmental solutions to one of the greatest water air and water quality problems

pollution from large-scale livestock production facilities (also known as “Concentrated Animal Feeding Operations”

or “CAFOs").

Application of our technology and technology platform can simultaneously

remediate environmental problems and improve operational/resource efficiencies by recovering value high-value co-products from

the CAFOs’

waste stream that has traditionally been wasted or underutilized, including renewable energy, nutrients (including

ammonia nitrogen and phosphorus) and water.

From 2016 to present, the Company has focused a large portion of its activities on

developing, testing and demonstrating the 3rd generation of its technology and technology platform (“3G Tech”) with

emphasis on increasing the efficiency of production of valuable by-products of its waste treatment including ammonia nitrogen in

the form of organic ammonium bicarbonate products.

The Company’s initial ammonium bicarbonate liquid product completed its

Organic Materials Review Institute (“OMRI”) application and review process with approval during May 2020.

The Company believes that, in addition to providing

superior environmental remediation, its 3G Tech will create the opportunity for large scale production of sustainable and/or organic

branded livestock products that will command premium pricing (in part due to ongoing monitoring and third party verification of

environmental performance to provide meaningful assurances to both consumers and regulators).

As co-products, our 3G Tech will

produce valuable organic fertilizer products which can be:

a) utilized in the production of organic grains for use as feed in support

of joint venture Projects (“JVs”) raising organic livestock, and/or b) marketed to the growing organic fertilizer market.

Our 3G Tech patented technology was developed to be part of a comprehensive technology platform that could generate multiple present

and projected future revenue streams to offset the costs of technology adoption.

Bion’s technology platform includes onsite

monitoring and data collection as well as independent 3 rd party verified lab data confirming the environmental reduction

The third party verified data regarding the environmental impact reductions will also be used to qualify the final consumer

products (livestock protein—including meat, eggs and dairy products) for a US Department of Agriculture (“USDA”)

“Environmentally Sustainable”

From 2014 through the current 2020 fiscal year,

the Company has focused its research and development on augmenting the basic ‘separate and aggregate’

approach of its

technology platform to provide additional flexibility and to increase recovery of marketable nutrient by-products (in organic and

non-organic forms) and renewable energy production (either/both biogas and/or renewable electricity), thereby increasing potential

related revenue streams and reducing dependence of its future projects on the monetization of nutrient reductions (which still

remain an important part of project revenue streams).

Bion has worked on development of its 3G Tech which is designed to:

a) generate significantly greater value from the nutrients and renewable energy recovered from the waste stream, b) treat dry (poultry)

waste streams as well as wet waste streams (dairy/beef cattle/swine) while c) maintaining or improving environmental performance.

This research and development effort also involves ongoing review of potential “add-ons”

and applications to our technology

platform for use in different regulatory and/or climate environments.

These research and development activities have targeted completion

of development of the next generation of Bion’s technology and technology platform.

We believe such activities will continue

at least through the 2021 fiscal year (and likely longer), subject to availability of adequate financing for the Company’s

operations, of which there is no assurance.

Such activities may include design and construction of an initial, commercial-scale

module utilizing our 3G Tech to assist in optimization efforts before construction of the full Kreider 2 project (see below), Midwest

beef JV Projects and/or other Projects.

Application of our technology and technology platform can simultaneously remediate environmental problems

and improve operational/resource efficiencies by recovering value high-value co-products from the CAFOs’

waste stream that have

traditionally been wasted or underutilized, including renewable energy, nutrients (including ammonia nitrogen) and water.

From 2016 to 2021 fiscal years, the Company has focused

a large portion of its activities on developing, testing and demonstrating the 3rd generation of its technology and technology platform

(“3G Tech”) with emphasis on increasing the efficiency of production of valuable co-products from the waste treatment process,

including ammonia nitrogen in the form of organic ammonium bicarbonate products.

The Company’s initial ammonium bicarbonate liquid

product completed its Organic Materials Review Institute (“OMRI”) application and review process with approval during May

An application for our first solid ammonium bicarbonate product –

AD Nitrogen –

has been filed and is in the review

Bion is now focused primarily on:

i) development/construction

of its initial commercial-scale 3G Tech installation, ii) developing applications and markets for its organic fertilizer products and

its sustainable (conventional and organic) animal protein products, and iii) initiation and development of joint ventures (“JVs”

as discussed below) (and related projects) based on the augmented capabilities of our 3G Tech, while (iv) continuing to pursue development

opportunities related to large retrofit projects (such as the Kreider poultry project JV described below) and ongoing R&D activities.

The $175 billion U.S.

livestock industry is

under intense scrutiny for its environmental and public health impacts –

its ‘environmental sustainability’--

at the same time it is struggling with declining revenues and margins (derived in part from clinging to its historic practices

and resulting impacts).

Its failure to respond to consumer concerns ranging from food safety to its ‘socialized’

environmental

impacts have provided impetus for plant-based alternatives such as Beyond Meat and Impossible Burger providing “sustainable”

alternatives to this growing consumer segment of the market.

The plant-based threat to the livestock industry market (primarily

beef and pork) has succeeded in focusing the large scale livestock production facilities (also known as “Concentrated Animal

Feeding Operations”

or “CAFOs") on how to meet the plant-based market challenge by addressing the consumer sustainability

The adoption of livestock waste treatment technology by industry segments is largely dependent upon adoption generating

sufficient revenues to offset the capital and operating costs associated with technology adoption.

We believe that Bion’s 3G Tech platform,

coupled with common-sense policy changes to U.S.

clean water strategy that are already underway, will combine to provide a pathway

to true economic and environmental sustainability with ‘win-win’

benefits for at least a premium sector of the livestock

industry, the environment, and the consumer.

Bion’s business model and technology

can open up the opportunity for JVs (in various contractual forms) between the Company and large livestock/food/fertilizer industry

participants, based upon the supplemental cash flow generated by implementation our 3G Tech business model (described and discussed

below) which will support the costs of technology implementation (including related debt).

We anticipate this will result in long

term value for Bion.

Long term, Bion anticipates that the sustainable branding opportunity may expand to represent the single largest

contributor to the economic opportunity provided by Bion.

During 2018, the Company had its first patent

issued on its 3G Tech and has continued its work to expand its patent coverage for our 3G Tech.

In August 2020, the Company received

a Notice of Allowance on its third patent which significantly expands the breadth and depth of the Company’s 3G Tech coverage.

The 3G Tech platform has been designed to maximize the value of co-products produced during the waste treatment/recovery processes,

including pipeline-quality renewable natural gas and organic commercial fertilizer products.

All processes will be verifiable by

third-parties (including regulatory authorities, certifying boards and consumers) to comply with environmental regulations and

trading programs and meet the requirements for:

a) renewable energy credits, b) organic certification of the fertilizer coproducts

and c) the USDA PVP ‘Environmentally Sustainable’

branding program.

Bion anticipates moving forward with the development

process of its initial commercial installations of its 3G technology during the 2021 (current) and 2022 fiscal years.

In parallel, Bion has worked (which work continues)

to advance public policy initiatives that will potentially create markets (in Pennsylvania and other states) that will utilize

taxpayer funding for the purchase of verified pollution reductions from agriculture (“credits”) by the state (or others)

through a competitively-bid procurement programs.

livestock industry is under

intense scrutiny for its environmental and public health impacts –

its ‘environmental sustainability’-- at the same

time it is struggling with declining revenues and margins (derived in part from clinging to its historic practices and resulting limitations

and impacts) which threaten its ‘economic sustainability’.

Its failure to adequately respond to consumer concerns ranging

including food safety, environmental impacts, and humane treatment of animals have provided impetus for plant-based alternatives such

as Beyond Meat and Impossible Burger (and many others) being marketed as “sustainable”

alternatives for this growing consumer

segment of the market.

The Company believes that its 3G Tech, in addition

to providing superior environmental remediation, creates opportunities for large scale production of i) verifiably sustainable-branded

livestock products and ii) verifiably sustainable organic-branded livestock products that will command premium pricing (in part due to

ongoing monitoring and third-party verification of environmental performance which will provide meaningful assurances to both consumers

and regulatory agencies).

Each of these two distinct market segments (which the Company intends to pursue in parallel) presents a large

production/marketing opportunity for Bion.

Our 3G Tech will also produce (as co-products) biogas and valuable organic fertilizer products,

which can be utilized in the production of organic grains for use as feed for raising organic livestock (some of which may be utilized

in the Company’s JV projects) and/or marketed to the growing organic fertilizer market.

During late September 2021, Bion entered into a lease

for the development site of its initial commercial scale 3G Tech project in September 2021(“Initial Project”), which Initial

Project will be located on approximately four (4) acres of leased land near Fair Oaks, Indiana (see Note 14 below).

Terms for an additional

related agreement regarding disposal of certain manure effluent have been agreed upon with the Curtis Creek Dairy unit of Fair Oaks Farms

(“FOF”) and the Company expects the agreement to be finalized by the end of the first full week of October 2021.

pre-development work commenced during August 2021 and preparation for active surveying, site engineering and other work is now underway.

The Initial Project will be an environmentally sustainable beef cattle feeding facility, equipped with state-of-the-art housing and Bion’s

3G-Tech platform to provide waste treatment and resource recovery.

Bion has designed the project to house and feed approximately 300 head

of beef cattle.

The facility will include Bion’s 3G Tech platform including:

i) covered barns with solar photovoltaic generation,

ii) anaerobic digestion for renewable energy recovery;

iii) livestock waste treatment and resource recovery technology;

iv) Bion’s

ammonium bicarbonate recovery and crystallization technology and iv) data collection software to document system efficiencies and environmental

benefits (with the Bion 3G Tech facilities capable of treating the waste from approximately 1,500 head).

The facility will be large enough

to demonstrate engineering capabilities of Bion’s 3G Tech at commercial scale, but small enough that it can be constructed and commissioned

quickly, with operations targeted to commence sometime during the Spring of 2022.

This project is not being developed at economic commercial

scale or with an expectation of profitability due to its limited scale.

However, successful installation, commissioning, and operations

will demonstrate scalability, determine operating parameters at scale, and provide ongoing production and engineering capabilities, all

being critical steps that must be accomplished before developing large projects with JV partners.

Specifically, the Initial Project is being developed

to provide and/or accomplish the following:

Proof of 3G Tech platform scalability

- Document system efficiency and environmental

benefits and enable final engineering modifications to optimize each unit process within the Bion 3G technology platform.

- Environmental benefits will include (without

limitation) renewable energy production (natural gas recovery from AD and solar electric from integrated roof top photovoltaic generation);

nutrient recovery and conversion to stable organic fertilizer;

pathogen destruction;

water recovery and reuse;

air emission reductions.

Use Bion’s data collection system to support 3 rd party verified system efficiency requirement to qualify for USDA

Process-Verified-Program (PVP):

certification of sustainable branded beef (and potentially pork) product metrics.

Produce sufficient ammonium bicarbonate nitrogen fertilizer (“AD Nitrogen”) for commercial testing by potential joint

venture partners and/or purchasers and for university growth trials.

Produce sustainable beef products for initial test marketing efforts.

Upon achieving optimized and steady-state operations

at the Initial Project during 2022, coupled with obtaining an OMRI listing for its AD Nitrogen product, Bion expects to be ready to move

forward with its plans for development of much larger facilities.

The Company anticipates that discussions and negotiations regarding

potential JVs with strategic partners in the financial and livestock industries to develop large scale projects will commence during the

construction of the Initial Project.

Additionally, the Company believes there will also be opportunities to proceed with selected ‘retrofit

projects’

of existing facilities (see ‘Retrofit 3G Tech Project:

Kreider Poultry JV below as an example).

Bion intends to move forward on its one of its primary

commercial goals:

establishing JV’s for large scale projects that will produce both sustainable and sustainable-organic corn-fed

The products will be supported by a USDA PVP-certified sustainable brand that will, initially, highlight reductions in carbon and

nutrient footprint, as well as pathogen reductions associated with foodborne illness and antibiotic resistance, along with the organic

designation where appropriate.

Bion has successfully navigated the USDA PVP application process previously, having received conditional

approval of its 2G Tech platform, pending resubmission and final site audits, and is confident it will be successful in qualifying its

3G Tech platform.

Bion believes that substantial unmet demand currently

exists–

potentially very large –

for ‘real’

meat/ dairy/ egg products that offer the verifiable/believable sustainability

consumers seek, but with the taste and texture they have come to expect from American beef and pork, dairy and poultry.

Numerous studies

demonstrate the U.S.

consumers’

preferences for sustainability.

For example, 2019 NYU Stern’s Center for Sustainable Business

study found that ‘products marketed as sustainable grew 5.6 times faster than those that were not…’

and that ‘…in

more than 90 percent of consumer-packaged-goods (CPG) categories, sustainability-marketed products grew faster than their conventional

counterparts.’

Sales growth of plant-based alternatives, including both dairy and more recently ground meat (Beyond Meat, Impossible

Foods, etc.) have shown that a certain segment of consumers are choosing seemingly sustainable offering, and are also willing to pay a

premium for it.

Numerous studies also support the consumers’

‘willingness-to-pay’

(WTP) for sustainable choices, including

a recent meta-analysis of 80 worldwide studies with results that calculate the overall WTP premium for sustainability is 29.5 percent

As one of the largest contributors to some of the

greatest air and water quality problems in America, it is clear that livestock waste cleanup, at scale, represents one of the greatest

opportunities we have to reduce negative environmental impacts of the food supply chain on air and water quality.

Bion’s 3G Tech

platform, along with its business model, enables the cleanup of the ‘dirtiest’

part of the food supply chain:

animal protein

production and creates the opportunity to produce and market verifiably sustainable organic and conventional ‘real meat’

that can participate in the growth and premium pricing that appears to be readily available for the ‘right’

Bion believes the at least a premium segment of the

US beef industry (and potentially other livestock industry groups) is at the doorstep of a transformative opportunity to address the growing

demand for sustainable food product offerings, while pushing back against today’s anti-meat messaging.

At $66 billion/year (2021

retail value), the beef industry is a fragmented, commodity industry whose practices date back decades.

In 1935 inflation-adjusted terms,

beef is 63% more expensive today, while pork and chicken, which are now primarily raised in covered barns, at CAFOs with highly integrated

supply chains, are 12% and 62% cheaper, respectively.

In recent years, the beef industry has come under increasing fire from advocacy

groups, regulatory agencies, institutional investors, and ultimately, their own consumers, over concerns that include climate change,

water pollution, food safety, and the treatment of animals and workers.

Advocacy groups targeting livestock and the beef industry

have recently been joined by competitors that produce animal protein alternatives in seeking to exploit the industry’s environmental

and economic weaknesses.

Their global anti-meat messaging has had a substantial chilling effect on the relationships the beef industry

has with its institutional investors;

retail distributors, such as fast-food restaurants;

and mostly, its consumers.

Led by the United

Nations Food and Agriculture Organization, a coordinated anti-meat messaging campaign has targeted consumers worldwide, primarily focused

on the industry’s impacts on climate change.

Meat alternatives, especially plant-based protein producers like Beyond Meat and Impossible

Foods, are being heavily promoted by themselves and the media, and have enjoyed steady sales growth.

A 2018 NielsenIQ Homescan survey

last year found that 39% of Americans are actively trying to eat more plant-based foods.

Some of the recent growth in plant-based proteins

results from increasing lactose intolerance and other health concerns;

however, most of that growth is attributed to consumers’

growing concerns for the environmental impacts of real meat and dairy.

Several large US companies that have traditionally focused on livestock

production, including Cargill, ADM, Perdue Foods, and Tyson, have recently entered the plant protein space.

In terms of changing customer

preferences, ‘saving the planet’

has proven to be a more compelling argument than the traditional animal activism/ welfare

To date, the only ‘industry response’

to this has been grass-fed beef, which is regarded as a generally more sustainable

offering than grain-fed.

However grass-fed beef has had only limited acceptance in U.S.

markets, because it is less flavorful and tougher

than the traditional corn-fed beef consumers have grown to enjoy.

It should be noted that these plant-based protein

producers are primarily expected to be able to serve the ground/ processed meat market, which represents only about 10 percent of the

overall animal protein market.

Further, there has recently been pushback to these plant-based products, focusing on their highly processed

nature and unproven health benefits, scalability/ pricing, and their uncertain carbon footprint.

There have also been several companies

recently enter the cellular and 3D-printed meat arena.

While facing myriad challenges and further out on the development timeline, some

people believe cellular agriculture (aka cultured, clean, lab-grown, cultivated) meat may have the potential to service a much larger

percentage of the market than plant-based protein, including cuts like steaks, chops and roasts, but the likely cost remains very uncertain

at this point.

Each of these items supports Bion’s belief that

there is a potentially very large opportunity to supply premium sustainable beef products that satisfy these concerns.

We believe that

the real meat/beef products that can be cost-effectively produced today using our 3G Tech platform, both sustainable and/or organic, can

provide an affordable product that satisfies the consumer’s desire for sustainability, but with the superior taste and texture those

consumers have grown to prefer.

Sustainable Beef

Bion’s goal is to be first to market with meaningfully

sustainable, and verified, beef products that can be produced at sufficient scale to service national market demand.

The cattle produced

at a Bion facility will enjoy a substantially lower carbon footprint, dramatically reduced nutrient impacts to water, and an almost total

pathogen kill in the waste stream.

A Bion sustainable beef facility will be comprised of covered barns with slotted floors, which allow

the waste to pass through and be collected quickly and frequently to reduce ammonia volatilization and loss, as well as odors.

barns will reduce weather impacts on the livestock and have been demonstrated to promote improved general health and weight gain in the

cattle housed in them.

The barns represent a very large roof surface area, which will be utilized in appropriate geographical locations

for the installation of photovoltaic solar generation systems to produce electricity for the facility, as well as export to the grid.

Waste treatment and resource recovery will be provided by Bion’s advanced 3G Tech platform, which Bion believes offers the most

comprehensive solution for livestock waste available today.

In addition to direct environmental benefits every pound of nitrogen that

is captured, upcycled, and returned to the agricultural nitrogen cycle as high-quality fertilizer (vs lost to contaminate downstream waters),

is also a pound of nitrogen that will not have to be produced as synthetic urea or anhydrous ammonia, with their tremendous carbon cost.

System performance and environmental benefits will be monitored and verified through third parties, with USDA PVP certification of the

sustainable brand that Bion also believes will be the most comprehensive available in the market.

Sustainable Organic Beef

Bion believes it has a unique opportunity to produce,

at scale, affordable corn-fed organic beef that is certified as sustainable.

In addition to the sustainable practices described above,

organic-sourced beef cows would be finished on organic corn, which would be produced using the ammonium bicarbonate fertilizer captured

by the 3G Tech platform.

Bion believes its meat products will meet consumer demands with respect to sustainability and safety (organic)

and provide the tenderness and taste American consumers have come to expect from premium conventional American beef.

Such products are

largely unavailable in the market today.

We believe Bion’s unique ability to produce the fertilizer needed to grow a supply of low-cost

organic corn, and the resulting opportunity to produce organic beef, will dramatically differentiate us from potential competitors.

organic opportunity is dependent on successfully establishing Bion’s fertilizer products as acceptable for use in organic grain

Today, organic beef demand is limited and mostly supplied

with grass-fed cattle.

While organic ground/ chopped meat has enjoyed success in U.S.

markets, grass-fed steaks have seen limited acceptance,

mostly resulting from consumer issues with taste and texture.

In other words, it’s tough.

Regardless, such steaks sell for a significant

premium over conventional beef.

A grain-finished organic beef product is largely unavailable in the marketplace today due to the higher

costs of producing organic corn and grain.

The exception is offerings that are very expensive from small ‘boutique’

beef producers.

Like all plants, corn requires nitrogen to grow.

Corn is especially sensitive to a late-season application of readily available nitrogen

the key to maximizing yields.

With non-organic field corn, this nitrogen is supplied by an application of a low-cost synthetic

fertilizer, such as urea or anhydrous ammonia.

However, the cost for suitable nitrogen fertilizer that can be applied late-season in organic

corn production is so high that the late-season application becomes uneconomical, resulting in substantially lower yields –

recognized phenomena known as the ‘yield gap’

in organic production.

The yield gap results in higher costs for organic corn

that, in turn, make it uneconomical to feed that corn to livestock.

As is the case for sustainable but not organic beef, Bion believes

there is a potentially large unmet demand for affordable beef products that are both sustainable AND organic, but with the taste and texture

consumers have come to expect from American beef.

Bion’s ability to produce the low-cost nitrogen fertilizer that can close the

organic yield (and affordability) gap puts the company in a unique, if not exclusive at this time, position to participate in JV’s

that will benefit from this opportunity starting next year.

The demonstrated willingness of consumers to purchase

sustainable products (along with numerous research and marketing studies confirming consumers are seeking, and are willing to pay a premium

for, sustainable products)---in combination with the threat to the livestock industry market (primarily beef and pork) posed by plant-based

alternatives (heightened by pandemic conditions)--- has succeeded in focusing the large scale livestock industry on how to meet the plant-based

market challenge by addressing the consumer sustainability issues.

The consumer demand for sustainability appears to be a real and lasting

trend, but consumers remain skeptical of generalized claims of ‘sustainability’.

To date, a large portion of the industry

responses have been at a superficial level or consist of ‘green washing’, a deceptive marketing practice where companies promote

non-substantive initiatives.

Real sustainability for the livestock industry will require implementation of advanced waste treatment technology

at or near the livestock production facilities (“Concentrated Animal Feeding Operations”

or “CAFOs”) –

most of the negative environmental impacts take place.

Technology Deployment:

Widespread deployment of waste treatment technology,

and the sustainability it enables, is largely dependent upon generating sufficient additional revenues to offset the capital and operating

costs associated with technology adoption.

Bion’s 3G Tech has been developed to create opportunities for such augmented revenue

streams, while providing third party verification of sustainability claims.

The 3G Tech platform has been designed to maximize the value

of co-products produced during the waste treatment/recovery processes, including pipeline-quality renewable natural gas (biogas) and commercial

fertilizer products approved for organic production.

All processes will be verifiable by third parties (including regulatory authorities

and certifying boards) to comply with environmental regulations and trading programs and meet the requirements for:

a) renewable energy

and carbon credits, b) organic certification of the fertilizer coproducts and c) USDA PVP certification of an ‘Environmentally Sustainable’

brand (see discussion below), and d) payment for verified ecosystem services.

The Company’s first patent on its 3G Tech was issued

In August 2020, the Company received a Notice of Allowance on its third patent which significantly expands the breadth and

depth of the Company’s 3G Tech coverage, and the Company has additional applications pending and/or planned.

Bion’s business model and technology platform

can create the opportunity for JVs (in various contractual forms) between the Company and large livestock/food/fertilizer industry participants,

based upon the supplemental cash flow generated by implementation of our 3G Tech business model, which will support the costs of technology

implementation (including related debt).

We anticipate this will result in long term value for Bion.

In the context of such JVs, we believe

that the verifiable sustainable branding opportunities (conventional and organic) may expand to represent the single largest enhanced

revenue contributor provided by Bion to the JVs (and Bion licensees).

The Company believes that the largest portion of its business with

be conducted through such JVs, but a material portion may involve licensing and or other approaches.

In parallel with technology development, Bion has

worked (which work continues) to implement market-driven strategies designed to stimulate private-sector participation in the overall

nutrient and carbon reduction strategy.

These market-driven strategies can generate “payment for ecosystem services”,

in which farmers or landowners are rewarded for managing their land and operations to provide environmental benefits, that will generate

additional revenues.

Existing renewable energy credits for the production and use of biogas are an example of payment for ecosystem services.

Another such strategy is nutrient trading (or water quality trading), which will potentially create markets (in Pennsylvania and other

states) that will utilize taxpayer funding for the purchase of verified pollution reductions from agriculture (“nutrient credits”)

by the state (or others) through competitively-bid procurement programs.

Such credits can then be used as a ‘qualified offset’

by an individual

state (or municipality) to meet its federal clean water mandates at significantly lower cost to the taxpayer.

Competitive procurement

of verified credits is now supported by US EPA, the Chesapeake Bay Commission, national livestock interests, and other key stakeholders.

Legislation in Pennsylvania to establish the first such state competitive procurement program passed the Pennsylvania Senate by

a bi-partisan majority during March 2019.

However, the Covid-19 pandemic and related financial/budgetary crises have subsequently

slowed progress for this and other policy initiatives and, as a result, it is not currently possible to project the timeline for

this and other similar initiatives.

The livestock industry is under tremendous

pressure ( from regulatory agencies, a wide range of advocacy groups, institutional investors and the industry’s own consumers)

to adopt sustainable practices.

Environmental cleanup is inevitable - policies are already changing.

Bion’s 3G technology

was developed for implementation on large scale livestock production facilities, where scale drives lower treatment costs and efficient

production of co-products.

We believe that scale, coupled with Bion’s verifiable treatment technology platform, will create

a transformational opportunity to integrate clean production practices at (or close to) the point of production—the source

from which most of the industry’s environmental impacts are initiated.

Bion intends to assist the forward-looking segment

of the livestock industry in actually bringing animal protein production in line with Twenty-first Century consumer demands for

sustainability.

The 3G Tech platform is the basis for the

Company’s JV business model with four distinct revenue streams:

1) pipeline quality renewable natural gas and related

carbon credits, 2) premium organic fertilizer products, 3) nutrient credits, and 4) premium pricing from USDA-certified ‘Environmentally

Sustainable’

branding at the retail level.

Carbon and nutrient credit revenues will be generated by third-party verification

of the waste treatment processes that produce renewable energy and fertilizer products - with relatively limited incremental cost

The same verified data will provide the backbone for the USDA-certified sustainable brand, again with limited incremental

1) Renewable energy and related carbon credits:

Bion’s 3G Tech platform

utilizes customized anaerobic digestion (“AD”) to recover methane from the waste stream.

At sufficient scale, methane

produced from AD can be cost-effectively conditioned, compressed and injected into a pipeline.

The US Renewable Fuel Standard (“RFS”)

program and state programs in California and elsewhere provide ongoing renewable energy credits for the production and use of renewable

transportation fuels.

2) Organic Fertilizer products:

The 3G Tech platform has been designed

to produce multiple fertilizer products including:

i) ammonia bicarbonate liquid, ii) ammonium bicarbonate in solid crystal form

and iii) a soil amendment products that will contain the remaining nitrogen, phosphorus and other micronutrients captured from

the livestock waste stream.

Bion believes each product will qualify for organic certification and intends to file multiple applications

for varying concentrations of crystal product going forward.

Ammonium bicarbonate manufactured

using chemical processes has a long history of use as a fertilizer.

Bion’s intends to develop ammonium bicarbonate crystal

products which will contain 14-16 percent nitrogen in a crystalline form that will be easily transported, water soluble and provide

readily-available nitrogen.

The products will contain virtually none of the other salt, iron and mineral constituents of the livestock

waste stream that often accompany other organic fertilizers.

This product is being developed to fertilizer industry standards so

that it that can be precision-applied to crops using existing equipment.

Bion believes that this product will potentially have

broad applications in the production of organic grains for livestock feed, row crops, horticulture, greenhouse and hydroponic production,

and potentially retail lawn and garden products.

The Company’s initial low concentration

ammonium bicarbonate liquid product completed its OMRI application and review process with approval during May 2020.

The Company believes that organic

approvals for its products:

a) will provide access to substantially higher value markets compared to synthetic nitrogen products,

and/or b) allow its products to be utilized in growing of organic feed grains to be consumed by livestock raised in JVs which will

thereafter receive organic approvals.

Based on preliminary market surveys to date:

a) we believe that existing competing organic

fertilizer products in both liquid and granular form are being sold presently at price points significantly greater than Bion’s

projected cost and projected pricing, and b) that livestock products (beef and pork) raised with feed grains grown using Bion organic

ammonium carbonate fertilizer products (during the ‘finishing’

stage) will qualify for organic approvals.

It is anticipated

that the Company will seek approvals for such products during the balance of the 2021 fiscal year and will commence JVs that undertake

initial production and marketing of such products during the 2021 calendar year.

3) Nutrient credits:

Bion had believed that passage in

Pennsylvania of legislation earlier this year that would establish a competitively-bid market for nutrient reduction Credits in

Pennsylvania but the Covid-19 pandemic intervened.

The bill will most likely need to be re-introduced in the Senate 2021—2022

session commencing in January 2021.

Bion anticipates that passage of SB575 (or re-introduced bill) in Pennsylvania will establish

a competitively-bid market for nutrient reduction credits in Pennsylvania within twelve months after passage and being signed into

law by the Governor.

Note, however, that the current

Covid-19 pandemic and resultant economic crises and budgetary constraints have delayed policy initiatives related to these matters

at both the state and federal levels.

As a result, it is not currently possible to reasonably project a timetable for adoption

of the policy changes discussed herein.

Bion’s Kreider Farms poultry

project (“Kreider 2”) is projected to generate between 1.5-3M lbs of Chesapeake Bay (“CB”

or “Bay”)

verified nitrogen reduction Credits (the range depends on the specific calculation methodology agreed to between the EPA and the

Pennsylvania DEP).

Bion anticipates the market value for these verified credits will be in the range of $8 to $12 per pound annually.

The focus of the latest PA regulatory watershed improvement plan (“WIP”) has shifted the reduction mandates to individual

Lancaster County, PA is being asked to reduce 21% of the mandate (approximately 11M lbs of nitrogen) to the Bay.

result, the Kreider 2 project in Lancaster County may expand to include a regional processing opportunity in addition to the Kreider

2 base project.

Bion believes that initial funding of such competitive bidding program will allow Bion and others to demonstrate

the technological effectiveness and cost savings of manure control technologies, which should result in the re-allocation of a

portion of the existing approximately $110B in taxpayer clean water funding to be re-directed to nutrient procurement programs

4) Sustainable Branding:

Consumers have demonstrated a willingness

to pay a premium for their safe and sustainable food choices.

in 2015, Bion has worked with the USDA’s Process Verified Program (“PVP”) –

the gold standard in food verification

and branding –

to establish a USDA-certified sustainable brand.

Bion received conditional approval from the PVP related

to its Kreider 1 project (utilizing 2G Tech).

It is our intention to amend and resubmit its application for the 3G Tech platform

when the initial 3G Tech Project is operational and seek an approval for certification based on third-party-verified reductions

in nutrient impacts, greenhouse gases and pathogens in the waste stream based on our 3G Tech.

PVP certification incorporated as

part of a recognizable brand will provide consumers with products and brands that can be trusted.

Bion projects that such a brand

and livestock product line will command a pricing premium for Bion livestock JVs and their customers.

Food safety and sustainability

are issues of growing importance in the U.S.

and worldwide.

Bion’s branding initiative reflects trends already underway in

the livestock industry.

Over the last few years, most large meat and dairy product retailers have announced ‘sustainability’

initiatives, although the definition of sustainability is unclear.

Bion believes that as these initiatives move forward, true sustainability

on the production side will look a lot like what Bion can provide today with its 3G Tech.

We believe our 3G Tech platform

can deliver verifiable metrics that demonstrate meaningful improvements in sustainability for livestock production including:

reduced carbon and nutrient footprint;

b) lower negative impacts to water, soil and air;

c) increased pathogen destruction and

other environmental and public health impacts that are unmatched in the industry today.

The Covid-19 pandemic has further heightened consumer awareness

and concerns related to:

a) environmental sustainability, b) food safety, c) sourcing and traceability and d) humane treatment

of both animals and workers.

The more the livestock industry’s supply chain practices are transparent and known by consumers,

the more consumers are seeking alternatives.

Bion’s ‘Environmental/Sustainable’

program is designed to address a wide array of consumer concerns ranging from:

a) ‘where does your food come from?’,

b) animal heritage information;

c) anti-biotic use standards;

d) humane animal treatment;

d) its labor/human conditions (including

hours, wages and working condition standards).

It will include block chain traceability thereby enabling any quality issues to

be quickly identified by lot and location thereby minimizing risk to its consumers.

In essence, Bion’s comprehensive technology platform

will enable its livestock producer adopters to not only be the provider of the ‘product the consumer wants’

the company that ‘shares the consumer’s values’.

Kreider Dairy Project

During 2008 the Company commenced actively

pursuing the opportunity presented by environmental retrofit and remediation of the waste streams of existing CAFOs which effort

has met with very limited success to date.

The Company’s first commercial activity in the retrofit segment was represented

by our agreement with Kreider Farms (“KF”), pursuant to which the Kreider 1 system (based on an early version of our

2 nd generation technology (“2G Tech”)) to treat KF's dairy waste streams to reduce nutrient releases to

the environment while generating marketable nutrient credits was designed, constructed and entered full-scale operation during

On January 26, 2009 the Board of the Pennsylvania Infrastructure Investment Authority (“Pennvest”) approved a

$7.75 million loan to Bion PA 1, LLC (“PA1”), a wholly-owned subsidiary of the Company, for the initial Kreider Farms

project (“Kreider 1 System”).

PA1 has had sporadic discussions/negotiations with Pennvest related to forbearance and/or

re-structuring its obligations pursuant to the Pennvest Loan for more than five years.

In the context of such discussions/negotiations,

PA1 elected not to make interest payments to Pennvest on the Pennvest Loan since January 2013.

Additionally, PA1 has not made any

principal payments, which were to begin in fiscal 2013, and, therefore, the Company has classified the Pennvest Loan as a current

liability as of June 30, 2020.

Due to the failure of the Pennsylvania nutrient reduction credit market to develop, the Company

determined (on three separate occasions) that the carrying amount of the property and equipment related to the Kreider 1 System

exceeded its estimated future undiscounted cash flows based on certain assumptions regarding timing, level and probability of revenues

from sales of nutrient reduction credits.

Therefore, PA1 and the Company recorded impairments related to the value of the Kreider

1 assets totaling $3,750,000 through June 30, 2015.

During the 2016 fiscal year, PA1 and the Company recorded an additional impairment

of $1,684,562 to the value of the Kreider 1 assets which reduced the value on the Company’s books to zero.

This impairment

reflects management’s judgment that the salvage value of the Kreider 1 assets roughly equals PA1’s contractual obligations

related to the Kreider 1 System, including expenses related to decommissioning of the Kreider 1 System, costs associated with needed

capital upgrade expenses, and re-certification/ permitting amendments.

On September 25, 2014, Pennvest exercised its

right to declare the Pennvest Loan in default and accelerated the Pennvest Loan and demanded that PA1 pay $8,137,117 (principal,

interest plus late charges) on or before October 24, 2014.

PA1 did not make the payment and does not have the resources to make

the payments demanded by Pennvest.

PA1 commenced discussions and negotiations with Pennvest concerning this matter but Pennvest

rejected PA1’s proposal made during the fall of 2014.

No formal proposals are presently under consideration and only sporadic

communication has taken place regarding the matters involved over the last 6 years.

It is not possible at this date to predict

the outcome of such this matter, but the Company believes that a loan modification agreement (coupled with an agreement regarding

an update and re-start of full operations of the Kreider 1 System) may be reached in the future in the context of the development

of the Kreider 2 poultry Project if/when a more robust market for nutrient reductions develops in Pennsylvania, of which there

is no assurance.

The Kreider 1 System has been inactive for

several years with some equipment maintenance work being undertaken.

PA1 and Bion will continue to evaluate various options with

regard to Kreider 1 over the next six to 12 months.

During August 2012, the Company provided Pennvest

(and the PADEP) with data demonstrating that the Kreider 1 System met the ‘technology guaranty’

standards which

were incorporated in the Pennvest financing documents and, as a result, the Pennvest Loan has been (and is now) solely an obligation

of PA1 since that date.

Kreider Farms (Poultry) –

3G Tech Project

Bion is completing an envelope of policy change

and technology pilots that will allow it to move forward with a commercial large scale 3G Tech project at Kreider Farms.

recently received two 3G Tech patents and a Notice of Allowance for the third 3G Tech patent ( filings and approvals of related

additional patent applications/continuations remaining pending), Bion is undertaking two key tasks that will ‘complete the

envelope’

and allow Bion to launch active development of the Kreider 2 poultry project and/or other Projects) lduring the

2021 fiscal year (and thereafter):

Support for adoption of PA SB 575 (or a successor

This will create a competitively-bid market for nutrient reductions/Credits that we believe will provide support for project

financing for Kreider 2 prior to development of markets for the co-products from Kreider 2 are established.

Installation of a 3G Tech ammonia recovery system

to produce ammonium bicarbonate to be used to make application to OMRI for organic certification (and possibly for grower trials).

The 3G Tech Kreider 2 Project is planned for

two (or more) locations.

It is intended to treat the waste from Kreider’s 1,800 dairy cows and approximately six million

egg layer chickens (with capacity for an additional three million layers).

The Kreider 2 Project will be designed with modules

with and initial capacity of 450 tons (or more) per day of waste and will remove nitrogen and phosphorus from the waste stream

that will be converted into high-value coproducts instead of polluting local and downstream waters.

The Kreider 2 Project is planned

to be built in three phases and may be expanded to include a ‘central processing facility’

with modules that will accept

transported waste from the region on fee basis.

Bion has a long-standing relationship with

Kreider Farms including a 2016 joint venture agreement related to this facility.

Kreider has already made a significant investment

in upgrading its poultry facilities to maximize the treatment and recovery efficiencies that can be achieved with Bion’s

We are cautiously optimistic that once PA SB575 (or a successor bill)) is passed, a market will be put in place for

long-term commercial sale of the nutrient reduction credits produced at Kreider 2.

Bion anticipates that it may require up to 6-12

months after such a bill becomes law to develop the rules/regulations related to the competitive bidding program.

If the competitive

bidding program is implemented, we intend to arrange project financing for the Kreider 2 Project during 2021.

Sustainable/ Organic Grain-Finished Beef JV Opportunity

Bion believes there is a potentially large opportunity

for JVs to produce sustainable/organic grain-finished beef and is actively involved in early pre-development work and discussions

regarding pursuit of this opportunity.

Beef production is the most challenged sector of the

livestock industry, due to its size and inability, as currently structured, to respond to growing consumer concerns related to

sustainability and food safety.

The industry is structured to produce multiple levels of a commodity products (without any significant

pricing premiums) graded based upon taste and tenderness.

Today, however, consumer demand is shifting to products that are more

sustainable, regarding carbon footprint, impacts to air and water and other metrics.

The Company doesn’t think the consumer

wants to ‘blow up’

the beef industry which is responsible for the best and safest beef available in the world today

(as well as the livelihoods of almost 800,000 farming, ranching and other families supported by the beef industry in the U.S).

Rather, consumers want it to be more sustainable---and still taste good.

Bion believes that strong demand exists for a verified

sustainable beef product, with the taste and texture of traditional corn-fed beef which addresses the consumers’

Bion’s technology platform is designed to enable livestock producers to produce an environmentally sustainable beef product.

We are moving forward with preliminary pre-development

work on a JV to build a state of the art beef cattle operation in the Midwest U.S.

The project would produce corn-fed USDA-certified

organic- and/or sustainable-branded beef.

Organic beef would be finished on organic corn (vs grass fed), produced using the ammonium

bicarbonate fertilizer captured from the cattle’s waste.

We believe Bion’s unique ability to produce fertilizer for

growing of a supply of low-cost organic corn, and the resulting opportunity to produce organic beef, will dramatically differentiate

us from potential competitors.

This organic opportunity is dependent on successfully establishing Bion’s fertilizer products

as acceptable for use in organic grain production.

In addition, as described above, we intend to develop

JVs which use Bion’s organic ammonium bicarbonate fertilizers to support organic grain production.

This grain can be fed

(in the finishing stage) to livestock and raise organic beef (and beef products) that will meet consumer demand with respect to

sustainability and safety and provide the tenderness and taste American consumers have come to expect from premium American beef.

Such a product is largely unavailable in the market today.

Bion’s current long-term goal is to acquire or develop, or

have in a development pipeline, 2-5 Projects over the next 24 to 48 months.

A significant portion of Bion’s activities

concern efforts with private and public stakeholders (at local and state level) in Pennsylvania (and other Chesapeake Bay and Midwest

and Great Lakes states) and at the federal level EPA and the Department of Agriculture (“USDA”) (and other executive

departments) and Congress) to establish appropriate public policies which will create regulations and funding mechanisms that foster

installation of the low cost environmental solutions that Bion (and others) can provide through clean-up of agricultural waste

The Company anticipates that such efforts will continue in Pennsylvania and other Chesapeake Bay watershed states throughout

the next 12 months and in various additional states thereafter.

by an individual state (or municipality) to meet its federal clean water mandates at significantly lower cost to the taxpayer.

Market-driven

strategies, including competitive procurement of verified credits, is supported by US EPA, the Chesapeake Bay Commission, national livestock

interests, and other key stakeholders.

Legislation in PA to establish the first such state competitive procurement program passed the

Pennsylvania Senate by a bi-partisan majority during March 2019.

However, the Covid-19 pandemic and related financial/budgetary crises

have slowed progress for this and other policy initiatives and, as a result, it is not currently possible to project the timeline for

completion (or meaningful progress) of this and other similar initiatives (see discussion below).

The livestock industry and its markets are already

with a commercial-ready technology and business model, Bion believes it has a ‘first-mover advantage’

that will seek to exploit the opportunities that will arise from the industry’s inevitable transformation.

Bion anticipates moving

forward with the development process of its initial commercial installations utilizing its 3G Tech, during the current 2022 fiscal year.

We believe that Bion’s 3G Tech platform and business model can provide a pathway to true economic and environmental sustainability

with ‘win-win’

benefits for at least a premium sector of the livestock industry, the environment, and the consumer, an opportunity

which the Company intends to pursue.

The Livestock Problem

The livestock industry is under tremendous pressure

from regulatory agencies, a wide range of advocacy groups, institutional investors and the industry’s own consumers, to adopt sustainable

Environmental cleanup is inevitable and has already begun - and policies have already begun to change, as well.

3G Tech was developed for implementation on large scale livestock production facilities, where scale drives both lower treatment costs

and efficient co-products production, as well as dramatic environmental improvements.

We believe that scale, coupled with Bion’s

verifiable treatment technology platform, will create a transformational opportunity to integrate clean production practices at (or close

to) the point of production—the primary source of the industry’s environmental impacts.

Bion intends to assist the forward-looking

segment of the livestock industry to bring animal protein production in line with 21st Century consumer demands for meaningful sustainability.

(according to the USDA’s 2017 agricultural

census) there are over 9M dairy cows, 90M beef cattle, 60M swine and more than 2 billion poultry which provides an indication of both

the scope of the problem addressed by Bion’s technology, as well as the size of Bion’s opportunity.

Environmental impacts

from livestock production include surface and groundwater pollution, greenhouse gas emissions, ammonia, and other air pollution, excess

water use, and pathogens related to foodborne illnesses and antibiotic resistance.

While the most visible and immediate problems are related

to nutrient runoff and its effects on water quality, the industry has recently been targeted by various stakeholder groups for its impacts

on climate change.

Estimates of total annual U.S.

livestock manure waste

vary widely, but start around a billion tons, between 100 and 130 times greater than human waste.

However, while human waste is generally

treated by septic or municipal wastewater plants, livestock waste –

raw manure –

is spread on our nation’s croplands

for its fertilizer value.

Large portions of U.S.

feed crop production (and most organic crop production) are fertilized, in part, in this

Under current manure management practices, 80% or more of total nitrogen from manure, much of it in the form of ammonia, escapes

during storage, transportation, and during and after soil application, representing both substantial lost value and environmental costs.

More than half of the nitrogen impacts from livestock

waste come from airborne ammonia emissions, which are extremely volatile, reactive and mobile.

Airborne ammonia nitrogen eventually settles

back to the ground through atmospheric deposition - it ‘rains’

While some of this nitrogen is captured and used

by plants, most of it runs off and enters surface waters or percolates down to groundwater.

It is now well-established that most of the

voluntary conservation practices, such as vegetated buffers that ‘filter’

runoff (often referred to as “BMPs”

or “Best Management Practices”

that have traditionally been implemented to attempt to mitigate nutrient runoff), are considerably

less effective than was previously believed to be the case.

This is especially true with regard to addressing the volatile and mobile

nitrogen from ammonia emissions, because BMPs are primarily focused on surface water runoff, directly from farm fields in current production,

versus the re-deposition that takes place everywhere or groundwater flow.

Runoff from livestock waste has been identified in

most of our major watersheds as a primary source of excess nutrients that fuel algae blooms in both fresh and saltwater.

Over the last

several years, algae blooms have become increasingly toxic to both humans and animals, such as the Red Tides on the Florida and California

coasts, and the Lake Erie algae bloom that cut off the water supply to Toledo, Ohio, residents in 2014.

When the nutrient runoff subsides,

it leaves the algae blooms with no more ‘food’

and the blooms die.

The algae’s decomposition takes oxygen from the water,

leading to ‘dead zones’

in local ponds, lakes, and ultimately, the Great Lakes, as well as the Chesapeake Bay, Gulf of Mexico,

and other estuary waters.

Both the toxic algae blooms and the low/no-oxygen dead zones devastate marine life, from shrimp and fish to

higher mammals, including dolphins and manatees.

US EPA already considers excess nutrients “one of America’s most widespread,

costly and challenging environmental problems”.

Nutrient runoff is expected to worsen dramatically in the coming decades due to

rising temperatures and increasing rainstorm intensity as a result of climate change.

Nitrate-contaminated groundwater is of growing concern

in agricultural regions nationwide, where it has been directly correlated with nutrient runoff from upstream agricultural operations using

raw manure as fertilizer.

Pennsylvania, Wisconsin, California and Washington, and others, now have regions where groundwater nitrate levels

exceed EPA standards for safe drinking water.

High levels of nitrate can cause blue baby syndrome (methemoglobinemia) in infants and affect

women who are or may become pregnant, and it has been linked to thyroid disease and colon cancer.

EPA has set an enforceable standard

called a maximum contaminant level (MCL) in water for nitrates at 10 parts per million (ppm) (10 mg/L) and for nitrites at 1 ppm (1 mg/L).

Federal regulations require expensive pretreatment for community water sources that exceed the MCL;

however, private drinking water

wells are not regulated, and it is the owners’

responsibility to test and treat their wells.

Additionally, groundwater flows also

transport this volatile nitrogen downstream where, along its way, it intermixes with surface water, further exacerbating the runoff problem.

Like atmospheric deposition, the current conservation practices we rely on to reduce agricultural runoff are largely bypassed by this

subsurface flow.

Additionally, in arid climates, such as California,

airborne ammonia emissions from livestock manure contribute to air pollution as a precursor to PM2.5 formation, small inhalable particulate

matter that is a regulated air pollutant with significant public health risks.

Whether airborne or dissolved in water, ammonia can only

be cost-effectively controlled and treated at the source-- before it has a chance to escape into the environment where it becomes extremely

expensive to ‘chase’, capture and treat.

High phosphorus concentrations in soils fertilized

with raw manure are another growing problem.

The ratio of nitrogen to phosphorus in livestock waste is fixed, and because manure application

rates are calculated based on nitrogen requirements, often phosphorus is overapplied as an unintended consequence.

Phosphorus accumulation

in agricultural soils reduces its productivity, increases the risk of phosphorus runoff, and represents a waste of a finite resource.

Decoupling the nitrogen from the phosphorus would allow them to be precision-applied, independently of each other, when and where needed.

The livestock industry has recently come under heavy

fire for its impacts on climate change, which has become a rallying cry for the anti-meat campaign discussed above.

Estimates of the magnitude

of those impacts vary widely, but the general consensus is that globally, livestock account for 14.5 percent of greenhouse emissions.

however, that number drops to 4.2 percent, due to the increased efficiencies of American beef production.

The greatest impacts

come from direct emissions of methane from enteric fermentation (belches), methane and nitrous oxide emissions from the manure, with arguably

the largest being the massive carbon footprint of the synthetic nitrogen fertilizers used to grow the grains to feed the livestock.

For decades the livestock industry has overlooked

and/or socialized its environmental problems and costs.

Today, the impacts of livestock production on public health and the environment

can no longer be ignored and are coming under increasing scrutiny from environmental groups and health organizations, regulatory agencies

and the courts, the media, consumers, and activist institutional investors.

The result has been a significant and alarming loss of market

share to plant-based protein and other alternative products.

Bion’s 3G Tech platform was designed to resolve these environmental

issues and bring the industry in line with twenty-first century consumer expectations.

Going concern and management’s plans:

The consolidated financial statements have

been prepared assuming the Company will continue as a going concern.

The Company has not generated significant revenues and has

incurred net losses (including significant non-cash expenses) of approximately $4,553,000 and $2,659,000 during the years ended

June 30, 2020 and 2019, respectively.

The consolidated financial statements have been prepared

assuming the Company will continue as a going concern.

The Company has not generated significant revenues and has incurred net losses

(including significant non-cash expenses) of approximately $3,451,000 and $4,553,000 during the years ended June 30, 2021 and 2020, respectively.

At June 30, 2021, the Company has a working capital deficit and a stockholders’

of approximately $10,474,000 and $15,130,000, respectively.

These factors raise substantial doubt about the Company’s ability

to continue as a going concern.

The accompanying consolidated financial statements do not include any adjustments relating to the

recoverability or classification of assets or the amounts and classification of liabilities that may result should the Company

be unable to continue as a going concern.

The following paragraphs describe management’s plans with regard to these conditions.

The Company continues to explore sources of

additional financing (including potential agreements with strategic partners –

both financial and ag-industry) to satisfy

its current and future operating and capital expenditure requirements as it is not currently generating any significant revenues.

During the years ended June 30, 2020 and 2019,

the Company received total proceeds of approximately $1,584,000 and $897,000, respectively, from the sale of its debt and equity

Proceeds during the 2020 and 2019 fiscal years have been lower than in earlier years which reduction has negatively

impacted the Company’s business development efforts.

During fiscal years 2020 and 2019, the Company

continued to experience difficulty in raising equity funding.

As a result, the Company faced, and continues to face, significant

cash flow management challenges due to working capital constraints.

To partially mitigate these working capital constraints, the

Company’s core senior management and several key employees and consultants have been deferring (and continue to defer) all

or part of their cash compensation and/or are accepting compensation in the form of securities of the Company (Notes 5 and 7) and

members of the Company’s senior management have made loans to the Company (Note 4).

During the year ended June 30, 2018,

senior management and certain core employees and consultants agreed to a one-time extinguishment of liabilities owed by the Company

which in aggregate totaled $2,404,000.

Additionally, the Company made reductions in its personnel during the years ended June 30,

2014 and 2015 and again during the year ended June 30, 2018.

The constraint on available resources has had, and continues to have,

negative effects on the pace and scope of the Company’s efforts to 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 does not

have greater success in its efforts to raise needed funds during the remainder of the current fiscal year (and subsequent periods),

management will need to consider deeper cuts (including additional personnel cuts) and curtailment of ongoing activities including

research and development activities.

The Company will need to obtain additional

capital to fund its operations and technology development, to satisfy existing creditors, to develop Projects (including Integrated

deficit of approximately $6,614,000 and $11,445,000,

respectively.

These factors raise substantial doubt about the Company’s ability to continue as a going concern.

The accompanying

consolidated financial statements do not include any adjustments relating to the recoverability or classification of assets or the amounts

and classification of liabilities that may result should the Company be unable to continue as a going concern.

The following paragraphs

describe management’s plans with regard to these conditions.

The Company continues to explore sources of additional

financing (including potential agreements with strategic partners –

both financial and ag-industry) to satisfy its current and future

operating and capital expenditure requirements as it is not currently generating any significant revenues.

During the years ended June 30, 2021 and 2020, the

Company received gross proceeds of approximately $5,209,000 and $1,584,000, respectively, from the sale of its debt and equity securities.

During fiscal years 2021 and 2020, the Company has

faced progressively less difficulty in raising equity funding (but substantial equity dilution has gone along with the larger amounts

of equity financing during the periods).

However, the Company anticipates substantial increases in demands for capital and operating expenditures

as it moves toward commercial implementation of its 3G Tech and development of JVs and, therefore, is likely to continue to face, significant

cash flow management challenges due to limited capital resources and working capital constraints which have only recently begun to be

To partially mitigate these working capital constraints, the Company’s core senior management and several key employees

and consultants have been deferring (and continue to defer) all or part of their cash compensation and/or are accepting compensation in

the form of securities of the Company (Notes 4 and 6) and members of the Company’s senior management have made loans to the Company

from time to time.

During the year ended June 30, 2018, senior management and certain core employees and consultants agreed to a one-time

extinguishment of liabilities owed by the Company which in aggregate totaled $2,404,000.

Additionally, the Company made reductions in

its personnel during the years ended June 30, 2014 and 2015 and again during the year ended June 30, 2018.

The constraint on available

resources has had, and continues to have, negative effects on the pace and scope of the Company’s efforts to 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 continue its recent increased success in its efforts 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 curtailment of ongoing activities including research and development activities.

The Company will need to obtain additional capital

to fund its operations and technology development, to satisfy existing creditors, to develop Projects (including JV Projects, Integrated

Projects and the Kreider 2 facility) and CAFO Retrofit waste remediation systems.

The Company anticipates that it will seek to

raise from $2,500,000 to $50,000,000 or more debt and/or equity through joint ventures, strategic partnerships and/or sale of its

equity securities (common, preferred and/or hybrid) and/or debt (including convertible) securities, and/or through use of ‘rights’

and/or warrants (new and/or existing) during the next twelve months.

However, as discussed above, there is no assurance, especially

in light of the difficulties the Company has experienced in recent periods and the extremely unsettled capital markets that presently

exist (especially for companies like us), that the Company will be able to obtain the funds that it needs to stay in business,

complete its technology development or to successfully develop its business and Projects.

There is no realistic likelihood that funds

required during the next twelve months (or in the periods immediately thereafter) for the Company’s basic operations and/or

proposed Projects will be generated from operations.

Therefore, the Company will need to raise sufficient funds from external sources

such as debt or equity financings or other potential sources.

The lack of sufficient additional capital resulting from the inability

to generate cash flow from operations and/or to raise capital from external sources would force the Company to substantially curtail

or cease operations and would, therefore, have a material adverse effect on its business.

Further, there can be no assurance that

any such required funds, if available, will be available on attractive terms or that they will not have a significantly dilutive

effect on the Company’s existing shareholders.

All of these factors have been exacerbated by the extremely limited and unsettled

credit and capital markets presently existing for small companies like Bion.

The Company anticipates that it will seek to raise from

$5,000,000 to $50,000,000 or more debt and/or equity through joint ventures, strategic partnerships and/or sale of its equity securities

(common, preferred and/or hybrid) and/or debt (including convertible) securities, and/or through use of ‘rights’

and/or warrants

(new and/or existing) during the next twelve months.

However, as discussed above, there is no assurance, especially in light of the difficulties

the Company has experienced in many recent years and the extremely unsettled capital markets that presently exist for small companies

like us), that the Company will be able to obtain the funds that it needs to stay in business, complete its technology development or

to successfully develop its business and Projects.

There is no realistic likelihood that funds required

during the next twelve months (or in the periods immediately thereafter) for the Company’s basic operations and/or proposed JVs

and/or Projects will be generated from operations.

Therefore, the Company will need to raise sufficient funds from external sources such

as debt or equity financings or other potential sources.

The lack of sufficient additional capital resulting from the inability to generate

cash flow from operations and/or to raise capital from external sources would force the Company to substantially curtail or cease operations

and would, therefore, have a material adverse effect on its business.

Further, there can be no assurance that any such required funds,

if available, will be available on attractive terms or that they will not have a significantly dilutive effect on the Company’s

existing shareholders.

All of these factors have been exacerbated by the extremely limited and unsettled credit and capital markets presently

existing for small companies like Bion.

Covid-19 pandemic related matters:

The Company faces risks and uncertainties and

factors beyond our control that are magnified during the current Covid-19 pandemic and the unique economic, financial, governmental

and health-related conditions in which the Company, the country and the entire world now reside.

To date the Company has experienced

direct impacts in various areas including but without limitation:

i) government ordered shutdowns which have slowed the Company’s

research and development projects and other initiatives, ii) shifted focus of state and federal governments which is likely to

negatively impact the Company’s legislative initiatives in Pennsylvania and Washington D.

C., iii) strains and uncertainties

in both the equity and debt markets which have made discussion and planning of funding of the Company and its initiatives and projects

with investment bankers, banks and potential strategic partners more tenuous, iv) strains and uncertainties in the agricultural

sector and markets have made discussion and planning more difficult as future industry conditions are now more difficult to assess

and predict, v) due to the age and health of our core management team, all of whom are age 70 or older and have had one or more

existing health issues, the Covid-19 pandemic places the Company at greater risk than was previously the case (to a higher degree

than would be the case if the Company had a larger, deeper and/or younger core management team), and vi) there almost certainly

will be other unanticipated consequences for the Company as a result of the current pandemic emergency and its aftermath.

The Company faces risks and uncertainties and factors

beyond our control that are magnified during the current Covid-19 pandemic and the unique economic, financial, governmental and health-related

conditions in which the Company, the country and the entire world now reside.

To date the Company has experienced direct impacts in various

areas including but without limitation:

i) government ordered shutdowns which have slowed the Company’s research and development

projects and other initiatives, ii) shifted focus of state and federal governments which is likely to negatively impact the Company’s

legislative initiatives in Pennsylvania and Washington D.

C., iii) strains and uncertainties in both the equity and debt markets which

have made discussion and planning of funding of the Company and its initiatives and projects with investment bankers, banks and potential

strategic partners more tenuous, iv) strains and uncertainties in the agricultural sector and markets have made discussion and planning

more difficult as future industry conditions are now more difficult to assess and predict, v) constraints due to problems experienced

in the global industrial supply chain which have delayed certain research and development testing and may delay construction of the initial

3G Tech installation if equipment remains difficult to acquire in a timely manner, vi) due to the age and health of our core management

team, all of whom are age 70 or older and have had one or more existing health issues, the Covid-19 pandemic places the Company at greater

risk than was previously the case (to a higher degree than would be the case if the Company had a larger, deeper and/or younger core management

team), and vii) there almost certainly will be other unanticipated consequences for the Company as a result of the current pandemic emergency

and its aftermath.

ACCOUNTING POLICIES

Principles of consolidation:

The consolidated financial statements include

the accounts of the Company and its wholly-owned subsidiaries, Bion Integrated Projects Group, Inc.

(“Projects Group”),

Bion Technologies, Inc., BionSoil, Inc., Bion Services, PA1, and PA2;

The consolidated financial statements include the

accounts of the Company and its wholly-owned subsidiaries, Bion Integrated Projects Group, Inc.

(“Projects Group”), Bion Technologies,

Inc., BionSoil, Inc., Bion Services, PA1, and PA2;

and its 58.9% owned subsidiary, Centerpoint Corporation (“Centerpoint”).

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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.

The Company considers all highly liquid investments purchased with an original

maturity of three months or less to be cash and cash equivalents.

Property and equipment:

Property and equipment are stated at cost and

are depreciated, when placed into service, using the straight-line method over the estimated useful lives of the related assets,

generally three to twenty years.

The Company capitalizes all direct costs and all indirect incrementally identifiable costs related

to the design and construction of its Integrated Projects.

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.

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.

Property and equipment are stated at cost and are

depreciated, when placed into service, using the straight-line method over the estimated useful lives of the related assets, generally

three to twenty years.

The Company capitalizes all direct costs and all indirect incrementally identifiable costs related to the design

and construction of its Integrated Projects.

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

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.

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.

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.

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

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.

The Company has issued warrants to purchase common

shares of the Company.

Warrants are valued using a fair value based method, whereby the fair value of the warrant is determined at the

warrant issue date using a market-based option valuation model based on factors including an evaluation of the Company’s value as

of the date of the issuance, consideration of the Company’s limited liquid resources and business prospects, the market price of

the Company’s stock in its mostly inactive public market and the historical valuations and purchases of the Company’s warrants.

When warrants are issued in combination with debt or equity securities, the warrants are valued and accounted for based on the relative

fair value of the warrants in relation to the total value assigned to the debt or equity securities and warrants combined.

Concentrations of credit risk:

The Company's financial instruments that are

exposed to concentrations of credit risk consist of cash.

The Company's cash is in demand deposit accounts placed with federally

insured financial institutions and selected brokerage accounts.

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.

The Company has not

experienced any losses on such accounts.

Noncontrolling interests:

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“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.

balance sheets and separately reports the amounts attributable to controlling and noncontrolling interests in the consolidated statements

of operations.

In addition, the noncontrolling interest continues to be attributed its share of losses even if that attribution results

in a deficit noncontrolling interest balance.

Fair value measurements:

Fair value is defined as the price that would

be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement

date in the principal or most advantageous market.

The Company uses a fair value hierarchy that has three levels of inputs, both

observable and unobservable, with use of the lowest possible level of input to determine fair value.

Fair value is defined as the price that would be received

to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the

principal or most advantageous market.

The Company uses a fair value hierarchy that has three levels of inputs, both observable and unobservable,

with use of the lowest possible level of input to determine fair value.

Level 1 –

quoted prices (unadjusted)

in active markets for identical assets or liabilities;

quoted prices (unadjusted) in active

markets for identical assets or liabilities;

Level 2 –

observable inputs other than

Level 1, quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities

in markets that are not active, and model-derived prices whose inputs are observable or whose significant value drivers are observable;

observable inputs other than Level

1, quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in

markets that are not active, and model-derived prices whose inputs are observable or whose significant value drivers are observable;

Level 3 –

assets and liabilities whose

significant value drivers are unobservable.

Observable inputs are based on market data

obtained from independent sources, while unobservable inputs are based on the Company’s market assumptions.

inputs require significant management judgment or estimation.

In some cases, the inputs used to measure an asset or liability may

fall into different levels of the fair value hierarchy.

In those instances, the fair value measurement is required to be classified

using the lowest level of input that is significant to the fair value measurement.

Such determination requires significant management

The fair value of cash and accounts payable

approximates their carrying amounts due to their short-term maturities.

The fair value of the loan payable is indeterminable at

this time due to the nature of the arrangement with a state agency and the fact that it is in default.

The fair value of the redeemable

preferred stock approximates its carrying value due to the dividends accrued on the preferred stock which are reflected as part

of the redemption value.

The fair value of the deferred compensation and convertible notes payable - affiliates are not practicable

to estimate due to the related party nature of the underlying transactions.

assets and liabilities whose significant

value drivers are unobservable.

Observable inputs are based on market data obtained

from independent sources, while unobservable inputs are based on the Company’s market assumptions.

Unobservable inputs require significant

management judgment or estimation.

In some cases, the inputs used to measure an asset or liability may fall into different levels of the

fair value hierarchy.

In those instances, the fair value measurement is required to be classified using the lowest level of input that

is significant to the fair value measurement.

Such determination requires significant management judgment.

The fair value of cash and accounts payable approximates

their carrying amounts due to their short-term maturities.

The fair value of the loan payable is indeterminable at this time due to the

nature of the arrangement with a state agency and the fact that it is in default.

The fair value of the redeemable preferred stock approximates

its carrying value due to the dividends accrued on the preferred stock which are reflected as part of the redemption value.

The fair value

of the deferred compensation and convertible notes payable - affiliates are not practicable to estimate due to the related party nature

of the underlying transactions.

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”.

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 taxes:

The Company recognizes

deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement

carrying amounts of existing assets and liabilities and their tax bases, as well as net operating losses.

Deferred tax assets and

liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences

are expected to be recovered or settled.

The effect on deferred tax assets or liabilities of a change in tax rates is recognized

in the period in which the tax change occurs.

A valuation allowance is provided to reduce the deferred tax assets by 100%, since

the Company believes that at this time it is more likely than not that the deferred tax asset will not be realized.

The Company recognizes deferred

tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts

of existing assets and liabilities and their tax bases, as well as net operating losses.

Deferred tax assets and liabilities

are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected

to be recovered or settled.

The effect on deferred tax assets or liabilities of a change in tax rates is recognized in the period in which

the tax change occurs.

A valuation allowance is provided to reduce the deferred tax assets by 100%, since the Company believes that at

this time it is more likely than not that the deferred tax asset will not be realized.

The Company is no longer subject to U.S.

federal and state tax examinations for fiscal years before 2009.

Management does not believe there will be any material changes

in the Company’s unrecognized tax positions over the next 12 months.

and state tax examinations for fiscal years before 2009.

Management does not believe there will be any material changes in the Company’s

unrecognized tax positions over the next 12 months.

The Company's policy is to recognize interest

and penalties accrued on any unrecognized tax benefits as a component of income tax expense.

As of June 30, 2020, there were no

penalties or accrued interest amounts associated with any unrecognized tax benefits, nor was any interest expense recognized during

the years ended June 30, 2020 and 2019.

As of June 30, 2021, there were no penalties

or accrued interest amounts associated with any unrecognized tax benefits, nor was any interest expense recognized during the years ended

June 30, 2021 and 2020.

Loss per share:

Basic loss per share amounts are calculated

using the weighted average number of shares of common stock outstanding during the period.

Diluted 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

loss per share or increase the earnings per share.

During the years ended June 30, 2020 and 2019, the basic and diluted loss per

share was the same, as the impact of potential dilutive common shares was anti-dilutive.

The following table represents the warrants,

options and convertible securities excluded from the calculation of basic loss per share:

Basic loss per share amounts are calculated using

the weighted average number of shares of common stock outstanding during the period.

Diluted 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 loss per share

or increase the earnings per share.

During the years ended June 30, 2021 and 2020, the basic and diluted loss per share was the same,

as the impact of potential dilutive common shares was anti-dilutive.

The following table represents the warrants, options

and convertible securities excluded from the calculation of basic loss per share:

Convertible debt

5 unchanged sentences

held by subsidiaries (Note 7)

outstanding –

Shares outstanding

beginning of period

4 unchanged sentences

Use of estimates:

In preparing the Company’s 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

Actual results could differ from those estimates.

In preparing the Company’s 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:

2 unchanged sentences

When it is determined that a new accounting pronouncement affects the Company’s

financial reporting, the Company undertakes a study to determine the consequences of the change to its financial statements and

assures that there are proper controls in place to ascertain that the Company’s financial statements properly reflect the

financial reporting, the Company undertakes a study to determine the consequences of the change to its financial statements and assures

that there are proper controls in place to ascertain that the Company’s financial statements properly reflect the change.

In June 2018, the FASB issued ASU No.

“Compensation –

2018-07 “Compensation

Stock Compensation –

Improvements to Nonemployee Share-Based Payment Accounting”

the accounting for share based payments granted to nonemployees and was adopted by the Company effective July 1, 2019.

guidance, payments to nonemployees is aligned with the requirements for share based payments granted to employees.

of this guidance did not have a material impact on the Company’s financial statements as previously issued share-based payments

to nonemployees had already reached a measurement date.

to simplify the accounting for share

based payments granted to nonemployees and was adopted by the Company effective July 1, 2019.

Under this guidance, payments to nonemployees

are aligned with the requirements for share based payments granted to employees.

The adoption of this guidance did not have a material

impact on the Company’s financial statements as previously issued share-based payments to nonemployees had already reached a measurement

PROPERTY AND EQUIPMENT:

Property and equipment consists of the following:

Property and equipment consist of the following:

Machinery and equipment

2 unchanged sentences

Less accumulated depreciation

As of June 30, 2020, the net book value of

Kreider 1 was zero.

Management has reviewed the remaining property and equipment for impairment as of June 30, 2020 and believes

that no impairment exists.

Depreciation expense was $1,248 and $1,314

for the years ended June 30, 2020 and 2019, respectively.

PAYABLE - AFFILIATES:

During the year ended June 30, 2020, Dominic

Bassani (“Bassani”), the Company’s Chief Executive Officer, and Mark A.

Smith (“Smith”), the Company’s

President, loaned the Company $20,000 and $15,000, respectively, for working capital needs.

The loans were non-interest bearing

and Bassani’s loan was repaid in cash, while Smith’s loan was converted into units of the Company at $0.50 per unit,

with each unit consisting of one share of the Company’s restricted common stock and one warrant to purchase one share of

the Company’s restricted common stock for $0.75 per share until December 31, 2022.

As of June 30, 2021, the net book value of Kreider

Management has reviewed the remaining property and equipment for impairment as of June 30, 2021 and believes that no impairment

Depreciation expense was $827 and $1,248 for the years

ended June 30, 2021 and 2020, respectively.

COMPENSATION:

The Company owes deferred compensation

to various employees, former employees and consultants totaling $778,217 and $874,162 as of June 30, 2020 and 2019, respectively.

Included in the deferred compensation balances as of June 30, 2020, are $172,103 and $54,659 owed Bassani and Smith, respectively,

pursuant to extension agreements effective January 1, 2015, whereby unpaid compensation earned after January 1, 2015, accrues interest

at 4% per annum and can be converted into shares of the Company’s common stock at the election of the employee during the

first five calendar days of any month.

The conversion price shall be the average closing price of the Company’s common stock

for the last 10 trading days of the immediately preceding month.

The deferred compensation owed Bassani and Smith as of June 30,

2019 was $363,761 and $133,972, respectively.

The Company also owes various consultants and an employee, pursuant to various agreements,

for deferred compensation of $478,955 and $302,945 as of June 30, 2020 and 2019, respectively, with similar conversion terms as

those described above for Bassani and Smith, with the exception that the interest accrues at 3% per annum.

The Company also owes

a former employee $72,500, which is not convertible and is non-interest bearing.

Bassani and Smith have each been granted

the right to convert up to $300,000 of deferred compensation balances at a price of $0.75 per share until December 31, 2022 (to

be issued pursuant to the 2006 Plan).

Smith also has the right to convert all or part of his deferred compensation balance into

the Company’s securities (to be issued pursuant to the 2006 Plan) “at market”

and/or on the same terms as the

Company is selling or has sold its securities in its then current (or most recent if there is no current) private placement.

During the year ended June 30, 2020, Smith

elected to convert $3,828 of deferred compensation into units of the Company at its $0.50 per unit offering price (Note 8).

and Smith also elected to transfer $436,508 and $199,573, respectively, of their respective deferred compensation into their 2020

Convertible Obligations (formerly the January 2015 Convertible Notes) (Note 7).

In connection with the agreements related to Smith’s

December 31, 2019 transfer, Smith received the right to transfer future deferred compensation to his 2020 Convertible Obligation

at his election.

The Company recorded interest expense

of $23,439 ($11,937 with related parties) and $20,983 ($15,747 with related parties) for the years ended June 30, 2020 and 2019,

respectively.

Company owes deferred compensation to various employees, former employees and consultants totaling $479,208 and $778,217 as of June 30,

2021 and 2020, respectively.

Included in the deferred compensation balances as of June 30, 2021, are $399,971 and nil owed Dominic Bassani

(“Bassani”), the Company’s Chief Executive Officer, and Mark A.

Smith (“Smith”), the Company’s President ,

respectively, pursuant to extension agreements effective January 1, 2015, whereby

unpaid compensation earned after January 1, 2015, accrues interest at 4% per annum and can be converted into shares of the Company’s

common stock at the election of the employee during the first five calendar days of any month.

The conversion price shall be the average

closing price of the Company’s common stock for the last 10 trading days of the immediately preceding month.

The deferred compensation

owed Bassani and Smith as of June 30, 2020 was $172,103 and $54,659, respectively.

The Company also owes various consultants and an employee,

pursuant to various agreements, for deferred compensation of $6,738 and $478,955 as of June 30, 2021 and 2020, respectively, with similar

conversion terms as those described above for Bassani and Smith, with the exception that the interest accrues at 3% per annum.

also owes a former employee $72,500, which is not convertible and is non-interest bearing.

Bassani and Smith have each been granted the right

to convert up to $300,000 of deferred compensation balances at a price of $0.75 per share until December 31, 2022 (to be issued pursuant

to the 2006 Plan).

Smith also has the right to convert all or part of his deferred compensation balance into the Company’s securities

(to be issued pursuant to the 2006 Plan) “at market”

and/or on the same terms as the Company is selling or has sold its securities

in its then current (or most recent if there is no current) private placement.

During the year ended June 30, 2020, Smith elected

to convert $3,828 of deferred compensation into units of the Company at its $0.50 per unit offering price (Note 7).

Bassani and Smith

also elected to transfer $436,508 and $199,573, respectively, of their respective deferred compensation into their 2020 Convertible Obligations

(formerly the January 2015 Convertible Notes) (Note 6).

In connection with the agreements related to Smith’s December 31, 2019 transfer,

Smith received the right to transfer future deferred compensation to his 2020 Convertible Obligation at his election.

During the year ended June 30, 2021, Smith elected

to convert $128,039 of deferred compensation into units of the Company at its $0.50 per unit offering price (Note 7).

During the year ended June 30, 2021, the Board

of Directors approved elections by two consultants to convert $593,411, in aggregate, of deferred compensation into units of the Company’s

securities at its $0.50 per unit offering price (Note 7).

The Company recorded interest expense of $25,838

($12,249 with related parties) and $23,439 ($11,937 with related parties) for the years ended June 30, 2021 and 2020, respectively.

LOANS PAYABLE:

PA1, the Company’s wholly-owned

subsidiary, owes $9,585,883 as of June 30, 2020 under the terms of the Pennvest Loan related to the construction of the Kreider

1 System including accrued interest and late charges totaling $1,831,883 as of June 30, 2020.

The terms of the Pennvest Loan provided

for funding of up to $7,754,000 which was to be repaid by interest-only payments for three years, followed by an additional ten-year

amortization of principal.

The Pennvest Loan accrues interest at 2.547% per annum for years 1 through 5 and 3.184% per annum for

years 6 through maturity.

The Pennvest Loan required minimum annual principal payments of approximately $5,067,000 in fiscal years

2013 through 2020, and $819,000 in fiscal year 2021, $846,000 in fiscal year 2022, $873,000 in fiscal year 2023 and $149,000 in

fiscal year 2024.

The Pennvest Loan is collateralized by the Kreider 1 System and by a pledge of all revenues generated from Kreider

1 including, but not limited to, revenues generated from nutrient reduction credit sales and by-product sales.

In addition, in

consideration for the excess credit risk associated with the project, Pennvest is entitled to participate in the profits from Kreider

1 calculated on a net cash flow basis, as defined.

The Company has incurred interest expense related to the Pennvest Loan of $246,887

and $238,655 for the years ended June 30, 2020 and 2019, respectively.

Based on the limited development of the depth and breadth

of the Pennsylvania nutrient reduction credit market to date, PA1 commenced negotiations with Pennvest related to forbearance and/or

re-structuring the obligations under the Pennvest Loan.

In the context of such negotiations, PA1 has elected not to make interest

payments to Pennvest on the Pennvest Loan since January 2013.

Additionally, the Company has not made any principal payments, which

were to begin in fiscal 2013, and, therefore, the Company has classified the Pennvest Loan as a current liability as of June 30,

On September 25, 2014, Pennvest exercised

its right to declare the Pennvest Loan in default and has accelerated the Pennvest Loan and demanded that PA1 pay $8,137,117 (principal,

interest plus late charges) on or before October 24, 2014.

PA1 did not make the payment and does not have the resources to make

the payment demanded by Pennvest.

PA1 has engaged in on/off discussions and negotiations with Pennvest concerning this matter but

no such discussions/negotiations are currently active.

As of the date of this report, no proposals (formal or informal) are under

consideration and only sporadic communication has taken place regarding the matters involved in over 5 years.

It is not possible

at this date to predict the outcome of this matter given the extended period which has passed without resolution and the fact that

the technology employed in the Kreider 1 system is now outdated.

However, the Company believes that a loan modification agreement

(coupled with an agreement regarding an update and restart of the full operation of Kreider 1 may in the future be possible in

conjunction with the Kreider 2 project, subject to the results of the negotiations with Pennvest and pending development of a more

robust market for nutrient reductions in Pennsylvania.

The Covid-19 pandemic has further increased uncertainties.

will continue to evaluate various options with regard to Kreider 1 over the next six to twelve months.

PA1, the Company’s wholly-owned subsidiary,

owes $9,868,495 as of June 30, 2021 under the terms of the Pennvest Loan related to the construction of the Kreider 1 System including

accrued interest and late charges totaling $2,114,495 as of June 30, 2021.

The terms of the Pennvest Loan provided for funding of up to

$7,754,000 which was to be repaid by interest-only payments for three years, followed by an additional ten-year amortization of principal.

The Pennvest Loan accrues interest at 2.547% per annum for years 1 through 5 and 3.184% per annum for years 6 through maturity.

Loan required minimum annual principal payments of approximately $5,886,000 in fiscal years 2013 through 2021, and $846,000 in fiscal

year 2022, $873,000 in fiscal year 2023 and $149,000 in fiscal year 2024.

The Pennvest Loan is collateralized by the Kreider 1 System

and by a pledge of all revenues generated from Kreider 1 including, but not limited to, revenues generated from nutrient reduction credit

sales and by-product sales.

In addition, in consideration for the excess credit risk associated with the project, Pennvest is entitled

to participate in the profits from Kreider 1 calculated on a net cash flow basis, as defined.

The Company has incurred interest expense

related to the Pennvest Loan of $246,887 and $246,887 for the years ended June 30, 2021 and 2020, respectively.

Based on the limited development

of the depth and breadth of the Pennsylvania nutrient reduction credit market to date, PA1 commenced negotiations with Pennvest related

to forbearance and/or re-structuring the obligations under the Pennvest Loan.

In the context of such negotiations, PA1 elected not to

make interest payments to Pennvest on the Pennvest Loan since January 2013.

Additionally, the Company has not made any principal payments,

which were to begin in fiscal 2013, and, therefore, the Company has classified the Pennvest Loan as a current liability as of June 30,

On September 25, 2014, Pennvest exercised its right

to declare the Pennvest Loan in default and accelerated the Pennvest Loan and demanded that PA1 pay $8,137,117 (principal, interest plus

late charges) on or before October 24, 2014.

PA1 did not make the payment and does not have the resources to make the payments demanded

PA1 commenced discussions and negotiations with Pennvest concerning this matter but Pennvest rejected PA1’s proposal

made during the fall of 2014.

PA1 made a new proposal to Pennvest during September 2021 which proposal is presently under consideration

PA1 provides Pennvest with its financial statements (which include a description of system status) annually.

During the 2021

fiscal year, Pennvest’s auditors requested a ‘corrective action plan’

and PA1 informed Pennvest that “…

there is no viable corrective action plan for the Pennvest Loan (‘Loan’).

The facility funded by the Loan has been shut down

for many years (which has been disclosed in the annual financial reports to Pennvest and in public filings by the parent of Bion PA 1,

LLC) and the technology utilized in the facility is now obsolete.

The facility has not been commercially operated for approximately six

years and has generated zero income.

We recommend that Pennvest take appropriate steps to remove and sell the equipment.”

responded favorably to the approach of selling the equipment but no actions have yet taken place.

PA1 and the Company are currently discussing

proposals with Pennvest seeking full resolution of these matters.

The Company anticipates additional communication with Pennvest on this

matter during the current year.

It is not possible at this date to predict the final outcome of this matter, but the Company believes

it is likely that that the equipment will be sold with the proceeds delivered to Pennvest during the 2022 fiscal year.

However, the resolution

of these matters including the manner and means of such equipment sale has not been agreed upon as of this date.

PA1 will evaluate the

appropriate manner to resolve/wrap-up its business over the balance of the current fiscal year.

In connection with the Pennvest Loan financing

documents, the Company provided a ‘technology guaranty’

regarding nutrient reduction performance of Kreider 1 which

was structured to expire when Kreider 1’s nutrient reduction performance had been demonstrated.

During August 2012 the Company

provided Pennvest (and the PADEP) with data demonstrating that the Kreider 1 System had surpassed the requisite performance criteria

and that the Company’s ‘technology guaranty’

As a result, the Pennvest Loan is solely an obligation

regarding nutrient reduction performance of Kreider 1 which was structured

to expire when Kreider 1’s nutrient reduction performance had been demonstrated.

During August 2012 the Company provided Pennvest

(and the PADEP) with data demonstrating that the Kreider 1 System had surpassed the requisite performance criteria and that the Company’s

‘technology guaranty’

As a result, the Pennvest Loan is solely an obligation of PA1.

Paycheck Protection Program

During the year ended June 30, 2020, the

Company received proceeds from a loan in the amount of $34,800 from Covenant Bank as the lender, pursuant to the Small Business

Administration (“SBA”) Paycheck Protection Program (“PPP”) under the Coronavirus Aid, Relief, and Economic

Security (“CARES”) Act.

The loan is uncollateralized, has a fixed interest rate of one percent, a term of two years

and the first payment is deferred for six months.

Under the CARES Act, borrowers are eligible for forgiveness of principal and

interest on PPP loans to the extent that the proceeds were used to cover eligible payroll costs, rent and utility costs over either

an 8 or 24 week period after the loan was made.

As of June 30, 2020 the total PPP loan and accrued interest was $34,852.

believes that the Company has met the conditions for full forgiveness of the PPP loan and will be applying for forgiveness once

Covenant Bank and the SBA are ready to accept applications.

CONVERTIBLE NOTES

PAYABLE - AFFILIATES:

2020 Convertible Obligations (formerly January

2015 Convertible Notes and 2019 Convertible Note)

The 2020 Convertible Obligations (formerly

named January 2015 Convertible Notes and 2019 Convertible Notes) which accrue interest at either 4% per annum or 1% compounded

quarterly and effective January 1, 2020 are 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 three quarters warrant to purchase a share of

the Company’s common stock, at a price of $0.50 per Unit until July 1, 2024.

During the year ended June 30, 2020, the Company

received proceeds from a loan in the amount of $34,800 from Covenant Bank as the lender, pursuant to the Small Business Administration

(“SBA”) Paycheck Protection Program (“PPP”) under the Coronavirus Aid, Relief, and Economic Security (“CARES”)

The loan was uncollateralized, had a fixed interest rate of one percent, a term of two years and the first payment is deferred for

Under the CARES Act, borrowers were eligible for forgiveness of principal and interest on PPP loans to the extent that the

proceeds were used to cover eligible payroll costs, rent and utility costs over either an 8 or 24-week period after the loan was made.

As of June 30, 2021, the total PPP loan and accrued interest was fully forgiven by the SBA.

CONVERTIBLE NOTES PAYABLE

- AFFILIATES:

2020 Convertible Obligations

The 2020 Convertible Obligations, which accrue interest

at either 4% per annum or 4% compounded quarterly and effective January 1, 2020 are 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 warrant contained in the Unit was originally

exercisable at $1.00 per unit but was modified to $0.75 during the year ended June 30, 2020 and is exercisable until a date three

years after the date of the conversion.

The original conversion price of $0.50 per Unit approximated the fair value of the Units

at the date of the agreements;

exercisable at $1.00 per unit but was modified to $0.75 during the year ended June 30, 2020 and is exercisable until a date three years

after the date of the conversion.

During the year ended June 30, 2021, the Company approved the increase of warrants by one-third to be

received by the noteholder if a conversion takes place.

The original conversion price of $0.50 per Unit approximated the fair value of

the Units at the date of the agreements;

therefore, no beneficial conversion feature exists.

1 unchanged sentence

of the embedded conversion features based on the guidance of ASC 815-15 “Embedded Derivatives”

to determine if there

was an embedded derivative requiring bifurcation.

An embedded derivative instrument (such as a conversion option embedded in the

deferred compensation) must be bifurcated from its host instruments and accounted for separately as a derivative instrument only

if the “risks and rewards”

to determine if there was an

embedded derivative requiring bifurcation.

An embedded derivative instrument (such as a conversion option embedded in the deferred compensation)

must be bifurcated from its host instruments and accounted for separately as a derivative instrument only if the “risks and rewards”

of the embedded derivative instrument are not “clearly and closely related”

to the risks and rewards of the host instrument in which it is embedded.

Management concluded that the embedded conversion feature

of the deferred compensation was not required to be bifurcated because the conversion feature is clearly and closely related to

the host instrument, and because of the Company’s limited trading volume that indicates the feature is not readily convertible

to cash in accordance with ASC 815-10, “Derivatives and Hedging”.

to the risks and rewards of the host instrument

in which it is embedded.

Management concluded that the embedded conversion feature of the deferred compensation was not required to be

bifurcated because the conversion feature is clearly and closely related to the host instrument, and because of the Company’s limited

trading volume that indicates the feature is not readily convertible to cash in accordance with ASC 815-10, “Derivatives and Hedging”.

As of June 30, 2021, the 2020 Convertible Obligation

3 unchanged sentences

including accrued interest, owed Bassani, Smith and Schafer were $2,408,432, $1,123,736 and $462,963, respectively.

The Company recorded

interest expense of $137,130 and $104,525 for the years ended June 30, 2020 and 2019, respectively.

During the year ended June 30, 2020, Bassani

and Smith elected to transfer $436,508 and $199,573, respectively, from deferred compensation owed them to their 2020 Convertible

During the year ended June 30, 2019, the Company

agreed to sell Bassani and Smith, 3,000,000 and 300,000 warrants, respectively, exercisable at $0.60 per share until June 30, 2025

and June 30, 2023, respectively.

The purchase price for the warrants is $0.10 per warrant and is represented by secured promissory

notes of $300,000 and $30,000 from Bassani and Smith, respectively, both of which are secured by portions of their 2020 Convertible

Obligations (Note 9).

The promissory notes accrue interest at 4% per annum and as of June 30, 2020 the accrued interest owed by

Bassani and Smith is $22,948 and $2,295, respectively.

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

The September 2015 Convertible Notes bear interest at 4% per annum, originally had maturity dates of December 31, 2017 but

during the year ended June 30, 2019 the maturity dates were extended to July 1, 2021, 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.

During the year ended

June 30, 2020, the maturity dates of the September 2015 Convertible Notes were further extended until July 1, 2024.

As the conversion

price of $0.60 approximated the fair value of the common shares at the date of the September 2015 Convertible Notes, no beneficial

conversion feature exists.

During the year ended June 30, 2018, Bassani and the Company agreed to split his original September

2015 Convertible Note into two replacement notes with all the terms remaining the same.

One of the replacement notes’

principal is $130,000, which is being held by the Company as collateral for a subscription receivable promissory note from Bassani.

During the year ended June 30, 2019, with the Company’s approval, Bassani sold $300,000 of his second replacement note to

a Shareholder with all the terms remaining the same.

The balances of the September 2015 Convertible

Notes as of June 30, 2020, including accrued interest owed Bassani, Schafer and Shareholder, are $165,653, $19,535 and $415,522,

respectively.

The balances of the September 2015 Convertible Notes as of June 30, 2019, including accrued interest, were $159,963,

$18,879 and $400,405, respectively.

June 30, 2020, Bassani and Smith elected to transfer $436,508 and $199,573, respectively, from deferred compensation owed them to their

2020 Convertible Obligations.

The Company recorded interest expense of $175,794

and $137,130 for the years ended June 30, 2021 and 2020, respectively.

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, originally had maturity dates of December 31, 2017 but during the year ended June

30, 2019 the maturity dates were extended to July 1, 2021, 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.

During the year ended June 30, 2020, the maturity dates of the

September 2015 Convertible Notes were further extended until July 1, 2024.

As the conversion price of $0.60 approximated the fair value

of the common shares at the date of the September 2015 Convertible Notes, no beneficial conversion feature exists.

The balances of the September 2015 Convertible Notes

as of June 30, 2021, including accrued interest owed Bassani, Schafer and Shareholder, are $171,343, $20,190 and $430,639, respectively.

The balances of the September 2015 Convertible Notes as of June 30, 2020, including accrued interest, were $165,653, $19,535 and $415,522,

respectively.

The Company recorded interest expense of $21,462 and

$21,462 for the years ended June 30, 2021 and 2020, respectively.

STOCKHOLDERS' EQUITY:

Series B Preferred stock:

Since July 1, 2014, the Company has 200 shares

of Series B redeemable convertible Preferred stock outstanding with a par value of $0.01 per share, convertible at the option of

the holder at $2.00 per share, with dividends accrued and payable at 2.5% per quarter.

The Series B Preferred stock is mandatorily

redeemable at $100 per share by the Company three years after issuance and accordingly was classified as a liability.

The 200 shares

have reached their maturity date, but due to the cash constraints of the Company have not been redeemed.

During the years ended June 30, 2020 and 2019,

the Company declared dividends of $2,000 and $2,000 respectively.

Since July 1, 2014, the Company has 200 shares of

Series B redeemable convertible Preferred stock outstanding with a par value of $0.01 per share, convertible at the option of the holder

at $2.00 per share, with dividends accrued and payable at 2.5% per quarter.

The Series B Preferred stock is mandatorily redeemable at

$100 per share by the Company three years after issuance and accordingly was classified as a liability.

The 200 shares have reached their

maturity date, but due to the cash constraints of the Company have not been redeemed.

During the years ended June 30, 2021 and 2020, the

Company declared dividends of $2,000 and $2,000 respectively.

At June 30, 2021, accrued dividends payable are $20,000.

dividends are classified as a component of operations as the Series B Preferred stock is presented as a liability in these financial

The dividends are

classified as a component of operations as the Series B Preferred stock is presented as a liability in these financial statements.

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.

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 704,309 shares of the Company’s

common stock.

These shares of the Company’s common stock held by Centerpoint are for the benefit of its shareholders without

any beneficial interest.

During the year ended June 30, 2019, the

Company issued 134,162 shares of the Company’s common stock at prices ranging from $0.50 to $0.74 per share for services

valued at $93,408 in the aggregate, to two consultants and an employee.

During the year ended June 30, 2019, the

Company issued 1,028 shares as commissions for the warrant exercises during the year ended June 30, 2018 valued at $514.

During the year ended June 30, 2019, the

Company entered into subscription agreements under four different offerings to sell units for $0.50 per unit, with each unit consisting

of one share of the Company’s restricted common stock and one warrant to purchase one half of a share of the Company’s

restricted common stock for $0.75 per share with expiry dates ranging from June 30, 2019 through December 31, 2020, and pursuant

thereto, the Company issued 1,793,606 units for total proceeds of $896,801, net proceeds of $832,921 after commissions.

allocated the proceeds from the 1,793,606 shares and the 896,806 warrants based upon their relative fair values, using the share

price on the day each of the subscription agreements were entered into and the fair value of the warrants, which was determined

to be $0.05 per warrant.

As a result, $31,560 was allocated to the warrants and $865,241 was allocated to the shares, and both

were recorded as additional paid in capital.

During the year ended June 30, 2019, Smith

elected to convert deferred compensation and accounts payable of $87,063 and $12,937, respectively, into an aggregate 200,000

units at $0.50 per unit, with each unit consisting of one share of the Company’s restricted common stock and one warrant

to purchase one half of a share of the Company’s restricted common stock for $0.75 per share until December 31, 2022.

the year ended June 30, 2020, the Company issued 29,000 shares of the Company’s common stock at prices ranging from $0.48

to $0.75 per share for services valued at $16,350 in the aggregate, to two consultants.

During the year ended June 30, 2020, the Company

entered into a subscription agreement to sell units for $0.50 per unit, with each unit consisting of one share of the Company’s

restricted common stock and one warrant to purchase one half of a share of the Company’s restricted common stock for $0.75

per share with an expiry date of December 31, 2020, and pursuant thereto, the Company issued 18,000 units for total proceeds of

$9,000, net proceeds of $8,100 after commissions of $900.

The Company allocated the proceeds from the 18,000 shares and the 9,000

warrants based upon their relative fair values, using the share price on the day each of the subscription agreements were entered

into and the fair value of the warrants, which was determined to be $0.05 per warrant.

As a result, $333 was allocated to the warrants

and $8,667 was allocated to the shares, and both were recorded as additional paid in capital.

These shares of the Company’s common stock held by Centerpoint are for the benefit of its shareholders without any

beneficial interest.

During the year ended June 30, 2020, the Company issued

29,000 shares of the Company’s common stock at prices ranging from $0.48 to $0.75 per share for services valued at $16,350 in the

aggregate, to two consultants.

During the year ended June 30, 2020, the Company entered

into a subscription agreement to sell units for $0.50 per unit, with each unit consisting of one share of the Company’s restricted

common stock and one warrant to purchase one half of a share of the Company’s restricted common stock for $0.75 per share with an

expiry date of December 31, 2020, and pursuant thereto, the Company issued 18,000 units for total proceeds of $9,000, net proceeds of

$8,100 after commissions of $900.

The Company allocated the proceeds from the 18,000 shares and the 9,000 warrants based upon their relative

fair values, using the share price on the day each of the subscription agreements were entered into and the fair value of the warrants,

which was determined to be $0.05 per warrant.

As a result, $333 was allocated to the warrants and $8,667 was allocated to the shares,

and both were recorded as additional paid in capital.

During the year ended June 30, 2020, the Company entered

into subscription agreements to sell units for $0.50 per unit, with each unit consisting of one share of the Company’s restricted

common stock and one warrant to purchase one share of the Company’s restricted common stock for $0.75 per share with an expiry date

of December 31, 2020, and pursuant thereto, the Company issued 2,000,001 units for total proceeds of $1,000,000, net proceeds of $910,500

after commissions of $89,500.

The Company allocated the proceeds from the 2,000,001 shares and the 2,000,001 warrants based upon their

relative fair values, using the share price on the day each of the subscription agreements were entered into and the fair value of the

warrants, which was determined to be $0.05 per warrant.

As a result, $48,604 was allocated to the warrants and $951,396 was allocated

to the shares, and both were recorded as additional paid in capital.

During the year ended June 30, 2020, the Company entered

into subscription agreements to sell units for $0.50 per unit, with each unit consisting of one share of the Company’s restricted

common stock and one warrant to purchase one share of the Company’s restricted common stock for $0.75 per share with an expiry date

of December 31, 2021, and pursuant thereto, the Company issued 1,150,000 units for total proceeds of $575,000, net proceeds of $517,500

after commissions of $57,500.

The Company allocated the proceeds from the 1,150,000 shares and the 1,150,000 warrants based upon their

relative fair values, using the share price on the day each of the subscription agreements were entered into and the fair value of the

warrants, which was determined to be $0.05 per warrant.

As a result, $25,041 was allocated to the warrants and $549,959 was allocated

to the shares, and both were recorded as additional paid in capital.

During the year ended June 30, 2020, Smith elected

to convert deferred compensation, loan payable - affiliates and accounts payable of $3,828, $15,000 and $52,830, respectively, into an

aggregate 143,316 units at $0.50 per unit, with each unit consisting of one share of the Company’s restricted common stock and one

warrant to purchase one share of the Company’s restricted common stock for $0.75 per share until December 31, 2020, which were subsequently

extended to December 31, 2024.

During the year ended June 30, 2021, the Company entered

into subscription agreements, under three different offerings, to sell units for $0.50 per unit, with each unit consisting of one share

of the Company’s restricted common stock and one warrant to purchase one share of the Company’s restricted common stock for

$0.75 per share with an expiry date of December 31, 2021, and pursuant thereto, the Company issued 3,720,000 units for total proceeds

of $1,860,000, net proceeds of $1,699,000 after commissions of $161,000.

The Company allocated the proceeds from the 3,720,000 shares

and the 3,720,000 warrants based upon their relative fair values, using the share price on the day each of the subscription agreements

were entered into and the fair value of the warrants, which was determined to be $0.05 per warrant.

As a result, $114,148 was allocated

to the warrants and $1,745,852 was allocated to the shares, and both were recorded as additional paid in capital.

During the year ended June 30, 2021, 300,000 share

of the Company’s restricted company stock were sold to an investor for $300,000.

During the year ended June 30, 2021, Smith elected

to convert deferred compensation and accounts payable of $128,039 and $52,361, respectively, into an aggregate 360,805 units at $0.50

per unit, with each unit consisting of one share of the Company’s restricted common stock and one warrant to purchase one share

of the Company’s restricted common stock for $0.75 per share until December 31, 2024.

During the year ended June 30, 2021, two consultants

elected to convert deferred compensation of $593,411, into an aggregate 1,186,824 units at $0.50 per unit, with each unit consisting of

one share of the Company’s restricted common stock and one warrant to purchase one share of the Company’s restricted common

stock for $0.75 per share until December 31, 2023.

During the year ended June 30, 2021, the Company

entered into subscription agreements to sell units for $0.50 per unit, with each unit consisting of one share of the Company’s

restricted common stock and one warrant to purchase one share of the Company’s restricted common stock for $0.75 per share

with an expiry date of December 31, 2020, and pursuant thereto, the Company issued 2,000,001 units for total proceeds of $1,000,000,

net proceeds of $910,500 after commissions of $89,500.

The Company allocated the proceeds from the 2,000,001 shares and the 2,000,001

warrants based upon their relative fair values, using the share price on the day each of the subscription agreements were entered

into and the fair value of the warrants, which was determined to be $0.05 per warrant.

As a result, $48,604 was allocated to the

warrants and $951,396 was allocated to the shares, and both were recorded as additional paid in capital.

issued 144,000 units to Smith for salary of $72,000, with each unit consisting of one share of the Company’s restricted common stock

and one warrant to purchase one share of the Company’s restricted common stock for $0.75 per share with an expiry date of December

During the year ended June 30, 2021, 4,065,988

warrants were exercised to purchase 4,065,988 shares of the Company’s common stock at $0.75 per share for total proceeds of $3,049,490.

During the year ended June 30, 2021, the Company

entered into subscription agreements to sell units for $0.50 per unit, with each unit consisting of one share of the Company’s

restricted common stock and one warrant to purchase one share of the Company’s restricted common stock for $0.75 per share

with an expiry date of December 31, 2021, and pursuant thereto, the Company issued 1,150,000 units for total proceeds of $575,000,

net proceeds of $517,500 after commissions of $57,500.

The Company allocated the proceeds from the 1,150,000 shares and the 1,150,000

warrants based upon their relative fair values, using the share price on the day each of the subscription agreements were entered

into and the fair value of the warrants, which was determined to be $0.05 per warrant.

As a result, $25,041 was allocated to the

warrants and $549,959 was allocated to the shares, and both were recorded as additional paid in capital.

During the year ended June 30, 2020, Smith

elected to convert deferred compensation, loan payable - affiliates and accounts payable of $3,828, $15,000 and $52,830, respectively,

into an aggregate 143,316 units at $0.50 per unit, with each unit consisting of one share of the Company’s restricted common

stock and one warrant to purchase one share of the Company’s restricted common stock for $0.75 per share until December 31,

2020, which were subsequently extended December 31, 2024.

issued 129,364 shares of the Company’s common stock to a broker as commissions for the warrant exercises.

As the issuance was both

a reduction and addition to additional paid in capital there was no impact to the financial statements.

The company also paid a broker

$3,537 in commissions for the warrant exercises.

As of June 30, 2021, the Company had approximately

21.9 million warrants outstanding, with exercise prices from $0.60 to $1.50 and expiring on various dates through June 30, 2025.

The weighted-average exercise price for the

outstanding warrants is $0.73, and the weighted-average remaining contractual life as of June 30, 2020 is 3.6 years.

During the year ended June 30, 2020, the Company

entered into a subscription agreement to sell units for $0.50 per unit, with each unit consisting of one share of the Company’s

restricted common stock and one warrant to purchase one half of a share of the Company’s restricted common stock for $0.75

per share with an expiry date of December 31, 2020, and pursuant thereto, the Company issued 18,000 units for total proceeds of

$9,000, net proceeds of $8,100 after commissions of $900.

The Company allocated the proceeds from the 18,000 shares and the 9,000

warrants based upon their relative fair values, using the share price on the day each of the subscription agreements were entered

into and the fair value of the warrants, which was determined to be $0.05 per warrant.

As a result, $333 was allocated to the warrants

and $8,667 was allocated to the shares, and both were recorded as additional paid in capital.

The weighted-average exercise price for the outstanding

warrants is $0.73, and the weighted-average remaining contractual life as of June 30, 2021 is 2.8 years.

During the year ended June 30, 2021, the Company entered

into subscription agreements, under three different offerings, to sell units for $0.50 per unit, with each unit consisting of one share

of the Company’s restricted common stock and one warrant to purchase one share of the Company’s restricted common stock for

$0.75 per share with an expiry date of December 31, 2021, and pursuant thereto, the Company issued 3,720,000 units for total proceeds

of $1,860,000, net proceeds of $1,699,000 after commissions of $161,000.

The Company allocated the proceeds from the 3,720,000 shares

and the 3,720,000 warrants based upon their relative fair values, using the share price on the day each of the subscription agreements

were entered into and the fair value of the warrants, which was determined to be $0.05 per warrant.

As a result, $114,148 was allocated

to the warrants and $1,745,852 was allocated to the shares, and both were recorded as additional paid in capital.

During the year ended June 30, 2021, the Company issued

50,000 warrants to a consultant to purchase 50,000 shares of the Company’s restricted common stock at an exercise price of $0.90

per share and an expiration date of December 31, 2021.

The warrants were in exchange for services expensed at $2,500.

During the year ended June 30, 2021, Smith elected

to convert deferred compensation and accounts payable of $128,039 and $52,361, respectively, into an aggregate 360,805 units at $0.50

per unit, with each unit consisting of one share of the Company’s restricted common stock and one warrant to purchase one share

of the Company’s restricted common stock for $0.75 per share until December 31, 2024.

During the year ended June 30, 2021, the Company

entered into subscription agreements to sell units for $0.50 per unit, with each unit consisting of one share of the Company’s

restricted common stock and one warrant to purchase one share of the Company’s restricted common stock for $0.75 per share

with an expiry date of December 31, 2020, and pursuant thereto, the Company issued 2,000,001 units for total proceeds of $1,000,000,

net proceeds of $910,500 after commissions of $89,500.

The Company allocated the proceeds from the 2,000,001 shares and the 2,000,001

warrants based upon their relative fair values, using the share price on the day each of the subscription agreements were entered

into and the fair value of the warrants, which was determined to be $0.05 per warrant.

As a result, $48,604 was allocated to the

warrants and $951,396 was allocated to the shares, and both were recorded as additional paid in capital.

agreed to extend the expiration dates of 4,497,924 warrants owned by certain individuals which were scheduled to expire at various dates

from December 31, 2020 through December 31, 2021.

The Company recorded non-cash compensation of $25,506 and interest expense of $187,139

related to the modification of the warrants.

During the year ended June 30, 2021, warrants

to purchase 164,251 shares of the Company’s common stock at prices ranging from $0.75 to $2.00 expired.

During the year ended June 30, 2021, 4,065,988

warrants were exercised to purchase 4,065,988 shares of the Company’s common stock at $0.75 per share for total proceeds of $3,049,490.

During the year ended June 30, 2021, the Company

entered into subscription agreements to sell units for $0.50 per unit, with each unit consisting of one share of the Company’s

restricted common stock and one warrant to purchase one share of the Company’s restricted common stock for $0.75 per share

with an expiry date of December 31, 2021, and pursuant thereto, the Company issued 1,150,000 units for total proceeds of $575,000,

net proceeds of $517,500 after commissions of $57,500.

The Company allocated the proceeds from the 1,150,000 shares and the 1,150,000

warrants based upon their relative fair values, using the share price on the day each of the subscription agreements were entered

into and the fair value of the warrants, which was determined to be $0.05 per warrant.

As a result, $25,041 was allocated to the

warrants and $549,959 was allocated to the shares, and both were recorded as additional paid in capital.

issued warrants to brokers as commissions to purchase 322,000 shares of the Company’s common stock at an exercise price of $0.75

per share and an expiration of December 31, 2022.

As the issuance was both a reduction and addition to additional paid in capital there

was no impact to the financial statements.

During the year ended June 30, 2021, the Company

issued 50,000 warrants to a consultant to purchase 50,000 shares of the Company’s restricted common stock at exercise prices

ranging from $0.74 to $0.90 per share and expiration dates of December 31, 2021.

The warrants were in exchange for services expensed

During the year ended June 30, 2020, the

Company agreed to extend the expiration dates of 12,821,889 warrants owned by certain individuals which were scheduled to expire

at various dates ranging from December 31, 2019 to December 31, 2022 and the Company reduced the exercise price to $0.75 if the

original price was greater than $0.75.

The Company recorded $36,239 and $1,521,776 of interest expense and non-cash compensation,

respectively, related to the modification of the warrants (including $880,062, $431,060 and $3,111 for Bassani, Smith and Schafer,

respectively.

During the year ended June 30, 2020, Smith

elected to convert deferred compensation, loan payable - affiliates and accounts payable of $3,828, $15,000 and $52,830, respectively,

into an aggregate 143,316 units at $0.50 per unit, with each unit consisting of one share of the Company’s restricted common

stock and one warrant to purchase one share of the Company’s restricted common stock for $0.75 per share until December 31,

2020, which were subsequently extended December 31, 2024.

During the year ended June 30, 2020, the

Company issued warrants to brokers as commissions to purchase 330,189 shares of the Company’s common stock at an exercise

price of $0.75 per share and an expiration of December 31, 2021.

As the issuance was both a reduction and addition to additional

paid in capital there was no impact to the financial statements.

issued 144,000 units to Smith for salary of $72,000, with each unit consisting of one share of the Company’s restricted common stock

and one warrant to purchase one share of the Company’s restricted common stock for $0.75 per share with an expiry date of December

Stock options:

The Company’s 2006 Consolidated Incentive

Plan, as amended (the “2006 Plan”), provides for the issuance of options (and/or other securities) to purchase up to

30,000,000 shares of the Company’s common stock.

Terms of exercise and expiration of options/securities granted under the

2006 Plan may be established at the discretion of the Board of Directors, but no option may be exercisable for more than ten years.

During the year ended June 30, 2019, the

Company approved the modification of existing stock options held by Smith, which extended certain expiration dates.

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 36,000,000 shares of the Company’s common stock.

Terms of exercise and expiration of options/securities granted

under the 2006 Plan may be established at the discretion of the Board of Directors, but no option may be exercisable for more than ten

During the year ended June 30, 2020, the Company

approved the modification of existing stock options held by certain employees, directors and consultants, which extended certain expiration

dates and reduced certain exercise prices.

The modifications resulted in incremental non-cash compensation of $626,058 (including $184,550,

$110,625, $116,970 and $32,700 for Bassani, Smith, Schafer and Jon Northrop (“Northrop”), the Company’s other board

member, respectively).

During the year ended June 30, 2021, the Company

approved the modification of existing stock options held by two former consultants, which extended certain expiration dates.

The modifications

resulted in incremental non-cash compensation of $8,775.

During the year ended June 30, 2020, the

Company approved the modification of existing stock options held by certain employees, directors and consultants, which extended

certain expiration dates and reduced certain exercise prices.

The modifications resulted in incremental non-cash compensation of

$626,058 (including $184,550, $110,625, $116,970 and $32,700 for Bassani, Smith, Schafer and Jon Northrop (“Northrop”),

the Company’s other board member, respectively).

The Company recorded compensation expense related

to employee stock options of $429,200 and $236,100 for the year ended June 30, 2020 and 2019, respectively.

to employee stock options of $1,107,700 and $429,200 for the years ended June 30, 2021 and 2020, respectively.

The Company granted 960,000

and 2,210,000 options during the years ended June 30, 2021 and 2020, respectively.

During the year ended June 30, 2020

the Company issued 500,000, 600,000, 175,000 and 150,000 options to Basaani, Smith, Schafer and Northrop, respectively and recorded

compensation expense of $90,000, $115,000, $33,250 and $28,750 for Bassani, Smith, Schafer and Northrop, respectively.

The fair value of the options granted during

the years ended June 30, 2020 and 2019 were estimated on the grant date using the Black-Scholes option-pricing model with the following

During the year ended June 30, 2021 the Company issued

250,000, 250,000, 50,000 and 25,000 options to Bassani, Smith, Schafer and Northrop, respectively and recorded compensation expense of

$277,500, $277,500, $55,500 and $27,500 for Bassani, Smith, Schafer and Northrop, respectively.

During the year ended June 30, 2020 the

Company issued 500,000, 600,000, 175,000 and 150,000 options to Bassani, Smith, Schafer and Northrop, respectively and recorded compensation

expense of $90,000, $115,000, $33,250 and $28,750 for Bassani, Smith, Schafer and Northrop, respectively.

The fair value of the options granted during the years

ended June 30, 2021 and 2020 were estimated on the grant date using the Black-Scholes option-pricing model with the following assumptions:

Dividend yield

Risk-free interest rate

0.47% –

Expected term (years)

1 unchanged sentence

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.

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.

A summary of option activity under the 2006 Plan for

the years ended June 30, 2020 and 2019 is as follows:

The dividend yield represents the Company’s anticipated cash dividend on common

stock over the expected term of the stock options.

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.

A summary of option activity under the 2006 Plan for the years

ended June 30, 2021 and 2020 is as follows:

Outstanding at July 1, 2019

8 unchanged sentences

Nonvested at June 30, 2021

The total fair value of stock options that

vested during the years ended June 30, 2020 and 2019 was $429,200 and $236,100 respectively.

As of June 30, 2020, the Company had

no unrecognized compensation cost related to stock options.

Stock-based employee compensation charges in operating

expenses in the Company’s financial statements for the years ended June 30, 2020 and 2019 are as follows:

General and administrative:

Change in fair value from modification of

The total fair value of stock options that vested

during the years ended June 30, 2021 and 2020 was $1,017,700 and $429,200 respectively.

As of June 30, 2021, the Company had no unrecognized

compensation cost related to stock options.

Stock-based employee compensation charges in operating expenses

in the Company’s financial statements for the years ended June 30, 2021 and 2020 are as follows:

and administrative:

in fair value from modification of

warrant terms

Fair value of stock options expensed

Research and development:

Change in fair value from modification of

value of stock options expensed

and development:

in fair value from modification of

warrant terms

Fair value of stock options expensed

value of stock options expensed

RECEIVABLE - AFFILIATES:

As of June 30, 2020, the Company has three

interest bearing, secured promissory notes with an aggregate principal amount of $428,250 ($466,304, including interest), from

Bassani as consideration to purchase warrants to purchase 5,565,000 shares of the Company’s restricted common stock, which

warrants have exercise prices ranging from $0.60 to $1.00 and have expiry dates ranging from December 31, 2020 to December 31,

The promissory notes bear interest at 4% per annum, and are secured by portions of Bassani’s 2020 Convertible Obligation

and Bassani’s September 2015 Convertible Notes.

The secured promissory notes were payable July 1, 2020 but were extended

to July 1, 2024 during the year ended June 30, 2020.

Also during the year ended June 30, 2020, warrants with exercise prices greater

than $0.75 were reduced to $0.75 and warrants with expiry dates prior to December 31, 2024 were extended to December 31, 2024.

As of June 30, 2020, the Company has two

interest bearing, secured promissory notes with an aggregate principal amount of $46,400 ($51,307 including interest) from two

former employees as consideration to purchase warrants to purchase 928,000 shares of the Company’s restricted common stock,

which warrants are exercisable at $0.75 and have expiry dates of December 31, 2020.

During the year ended June 30, 2020, the expiry

dates of the warrants were extended to December 31, 2024.

These warrants have a 90% exercise bonus.

As of June 30, 2021, the Company has three interest

bearing, secured promissory notes with an aggregate principal amount of $428,250 ($483,387, including interest), from Bassani as consideration

to purchase warrants to purchase 5,565,000 shares of the Company’s restricted common stock, which warrants have exercise prices

ranging from $0.60 to $1.00 and have expiry dates ranging from December 31, 2020 to December 31, 2025.

The promissory notes bear interest

at 4% per annum, are secured by a perfected security interest in the warrants, and were payable on July 1, 2020 but were extended

to July 1, 2024 during the year ended June 30, 2020.

As of June 30, 2020, the Company has an interest

bearing, secured promissory note for $30,000 ($32,295 including interest) from Smith as consideration to purchase warrants to purchase

300,000 shares of the Company’s restricted common stock, which warrants are exercisable at $0.60 and have expiry dates of

December 31, 2023.

at 4% per annum, and are secured by portions of Bassani’s 2020 Convertible Obligation and Bassani’s September 2015 Convertible

The secured promissory notes were payable July 1, 2020 but were extended to July 1, 2024 during the year ended June 30, 2020.

during the year ended June 30, 2020, warrants with exercise prices greater than $0.75 were reduced to $0.75 and warrants with expiry dates

prior to December 31, 2024 were extended to December 31, 2024.

As of June 30, 2021, the Company has an interest bearing,

secured promissory note for $30,000 ($33,491 including interest) from Smith as consideration to purchase warrants to purchase 300,000

shares of the Company’s restricted common stock, which warrants are exercisable at $0.60 and have expiry dates of December 31, 2023.

During the year ended June 30, 2020, the expiry dates of the warrants were extended to December 31, 2024.

warrants have a 75% exercise bonus and the promissory note bears interest at 4% per annum, and is secured by $30,000 of Smith’s

2020 Convertible Obligations.

The secured promissory note was payable on July 1, 2020 but was extended to July 1, 2024 during the

year ended June 30, 2020.

The warrants have a 75% exercise

bonus and the promissory note bears interest at 4% per annum, and is secured by $30,000 of Smith’s 2020 Convertible Obligations.

The secured promissory note was payable on July 1, 2020 but was extended to July 1, 2024 during the year ended June 30, 2020.

As of June 30, 2021, the Company has two interest

bearing, secured promissory notes with an aggregate principal amount of $46,400 ($53,158 including interest) from two former employees

as consideration to purchase warrants to purchase 928,000 shares of the Company’s restricted common stock, which warrants are exercisable

at $0.75 and have expiry dates of December 31, 2020.

During the year ended June 30, 2020, the expiry dates of the warrants were extended

to December 31, 2024.

These warrants have a 90% exercise bonus.

The promissory notes bear interest at 4% per annum, are secured by a perfected

security interest in the warrants, and were payable on July 1, 2020 but were extended to July 1, 2024 during the year ended June 30, 2020.

AND CONTINGENCIES:

2 unchanged sentences

and General Counsel of Company and its subsidiaries under various agreements (and extensions) and terms since March 2003.

10, 2016, the Company approved a month to month contract extension, with Smith which includes provisions for i) a monthly deferred

salary of $18,000 until the Board of Directors re-instates cash payments to all employees and consultants who are deferring compensation,

ii) the right to convert up to $300,000 of his deferred compensation, at his sole election, at $0.75 per share, until December

31, 2022), and iii) the right to convert his deferred compensation in whole or in part, at his sole election, at any time in any

amount at “market”

or into securities sold in the Company’s current/most recent private offering at the price

of such offering to third parties.

Smith agreed effective July 29, 2018 to continue to serve the Company under these terms.

On October 10,

2016, the Company approved a month to month contract extension, with Smith which includes provisions for i) a monthly deferred salary

of $18,000 until the Board of Directors re-instates cash payments to all employees and consultants who are deferring compensation, ii)

the right to convert up to $300,000 of his deferred compensation, at his sole election, at $0.75 per share, until December 31, 2022),

and iii) the right to convert his deferred compensation in whole or in part, at his sole election, at any time in any amount at “market”

or into securities sold in the Company’s current/most recent private offering at the price of such offering to third parties.

agreed effective July 29, 2018 to continue to serve the Company under the same basic terms.

Since March 31, 2005, the Company has had various

agreements with Brightcap and/or Bassani, through which the services of Bassani are provided (any reference to Brightcap or Bassani

for all purposes are the same individual).

agreements with Brightcap and/or Bassani, through which the services of Bassani are provided (any reference to Brightcap or Bassani for

all purposes are the same individual).

The Board appointed Bassani as the Company's CEO effective May 13, 2011.

10, 2015, the Company executed an Extension Agreement with Bassani pursuant to which Bassani extended the term of his service to

the Company to December 31, 2017, (with the Company having an option to extend the term an additional six months.) Pursuant to

the Extension Agreement, Bassani continued to defer his cash compensation ($31,000 per month) until the Board of Directors re-instates

cash payments to all employees and consultants who are deferring their compensation.

During October 2016 Bassani was granted the

right to convert up to $125,000 of his deferred compensation, at his sole election, at $0.75 per share, until March 15, 2018 (which

was expanded on April 27, 2017 to the right to convert up to $300,000 of his deferred compensation, at his sole election, at $0.75

per share, and subsequently extended until December 31, 2022).

During February 2018, the Company agreed to the material terms for

a binding two-year extension agreement for Bassani’s services as CEO, while a detailed, fully executed agreement is still

being negotiated and will be finalized in the future.

Bassani’s salary will remain $372,000 per year, which will continue

to be accrued until there is adequate cash available while negotiations proceed toward the re-instatement of a least a partial

cash payment.

Additionally, the Company has agreed to pay him $2,000 per month to be applied to life insurance premiums.

1, 2018, in the context of extending his agreement to provide services to the Company on a full time basis through December 31,

2022) plus 2 years after that on a part-time basis, the Company received an interest bearing secured promissory note for $300,000

from Bassani as consideration to purchase warrants to purchase 3,000,000 shares of the Company’s restricted common stock,

which warrants are exercisable at $0.60 and have expiry dates of June 30, 2025.

The promissory note is secured by Bassani’s

$300,000 of 2020 Convertible Obligation (Note 7) and as of June 30, 2020, the principal and accrued interest was $322,948.

On February 10, 2015,

the Company executed an Extension Agreement with Bassani pursuant to which Bassani extended the term of his service to the Company to

December 31, 2017, (with the Company having an option to extend the term an additional six months.) Pursuant to the Extension Agreement,

Bassani continued to defer his cash compensation ($31,000 per month) until the Board of Directors re-instates cash payments to all employees

and consultants who are deferring their compensation.

During October 2016 Bassani was granted the right to convert up to $125,000 of his

deferred compensation, at his sole election, at $0.75 per share, until March 15, 2018 (which was expanded on April 27, 2017 to the right

to convert up to $300,000 of his deferred compensation, at his sole election, at $0.75 per share, and subsequently extended until December

During February 2018, the Company agreed to the material terms for a binding two-year extension agreement for Bassani’s

services as CEO, while a detailed, fully executed agreement is still being negotiated and will be finalized in the future.

Bassani’s

salary will remain $372,000 per year, which will continue to be accrued until there is adequate cash available while negotiations proceed

toward the re-instatement of a least a partial cash payment.

Additionally, the Company has agreed to pay him $2,000 per month to be applied

to life insurance premiums.

On August 1, 2018, in the context of extending his agreement to provide services to the Company on a full-time

basis through December 31, 2022) plus 2 years after that on a part-time basis, the Company received an interest bearing secured promissory

note for $300,000 from Bassani as consideration to purchase warrants to purchase 3,000,000 shares of the Company’s restricted common

stock, which warrants are exercisable at $0.60 and have expiry dates of June 30, 2025.

The promissory note is secured by a portion of

Bassani’s 2020 Convertible Obligations and as of June 30, 2021, the principal and accrued interest was $335,965.

For the years ended

June 30, 2021 and 2020, Brightcap was paid $155,000 and $135,000, respectively.

Execution/exercise bonuses:

As part of agreements the Company entered into

with Bassani and Smith effective May 15, 2013, they were each granted the following:

a) a 50% execution/exercise bonus which shall

be applied upon the effective date of the notice of intent to exercise (for options and warrants) or issuance event, as applicable,

of any currently outstanding and/or subsequently acquired options, warrants and/or contingent stock bonuses owned by each (and/or

their donees) as follows:

i) in the case of exercise by payment of cash, the bonus shall take the form of reduction of the exercise

ii) in the case of cashless exercise, the bonus shall be applied to reduce the exercise price prior to the cashless exercise

calculations;

and iii) with regard to contingent stock bonuses, issuance shall be triggered upon the Company’s common stock

reaching a closing price equal to 50% of currently specified price;

and b) the right to extend the exercise period of all or part

of the applicable options and warrants for up to five years (one year at a time) by annual payments of $.05 per option or warrant

to the Company on or before a date during the three months prior to expiration of the exercise period at least three business days

before the end of the expiration period.

Effective January 1, 2016 such annual payments to extend warrant exercise periods have

been reduced to $.01 per option or warrant.

During the year ended June 30, 2014, the Company

extended 50% execution/exercise bonuses with the same terms as described Northrop.

During the year ended June 30, 2018, the Company

extended 50% execution/exercise bonuses with the same terms as described above to all options and warrants issued prior to November

7, 2017, to an employee and two former employees who are now consultants.

During the year ended June 30, 2018, the Company

increased the above 50% execution/exercise bonus on all outstanding options and warrants owned or acquired in the future by Bassani,

Smith and Schafer to 75% (to the extent such existing exercise bonus is less than 75%).

During the year ended June 30, 2019, the Company

approved the right to extend the exercise period of all or part of any options or warrants granted in the past or in the future,

for up to five years (one year at a time) by annual payments of $0.01 per option/warrant for one of its employees.

The extension

payment may be made in i) cash;

ii) by reduction of sums owed by the Company, and iii) by reduction of applicable exercise bonuses.

As of June 30, 2020, the execution/exercise

bonuses ranging from 50-90% were applicable to 9,354,600 of the Company’s outstanding options and 12,175,411 of the Company’s

outstanding warrants.

On September 25, 2014, Pennvest exercised its

right to declare the Pennvest Loan in default and has accelerated the Pennvest Loan and has demanded that PA1 pay $8,137,117 (principal,

interest plus late charges) on or before October 24, 2014.

PA1 did not make the payment and did not then and does not now have

the resources to make the payment demanded by Pennvest.

During August 2012, the Company provided Pennvest (and the PADEP) with

data demonstrating that the Kreider 1 system met the ‘technology guaranty’

standards which were incorporated in the

Pennvest financing documents and, as a result, the Pennvest Loan is now solely an obligation of PA1.

As part of agreements the Company entered into with

Bassani and Smith effective May 15, 2013, they were each granted the following:

a) a 50% execution/exercise bonus which shall be applied

upon the effective date of the notice of intent to exercise (for options and warrants) or issuance event, as applicable, of any currently

outstanding and/or subsequently acquired options, warrants and/or contingent stock bonuses owned by each (and/or their donees) as follows:

i) in the case of exercise by payment of cash, the bonus shall take the form of reduction of the exercise price;

ii) in the case of cashless

exercise, the bonus shall be applied to reduce the exercise price prior to the cashless exercise calculations;

and iii) with regard to

contingent stock bonuses, issuance shall be triggered upon the Company’s common stock reaching a closing price equal to 50% of currently

specified price;

and b) the right to extend the exercise period of all or part of the applicable options and warrants for up to five years

(one year at a time) by annual payments of $.05 per option or warrant to the Company on or before a date during the three months prior

to expiration of the exercise period at least three business days before the end of the expiration period.

Effective January 1, 2016 such

annual payments to extend warrant exercise periods have been reduced to $.01 per option or warrant.

During the year ended June 30, 2021, the Company applied

a 75% execution/exercise bonus on 3,000,000 warrants held by a trust owned by Bassani.

As of June 30, 2021, the execution/exercise bonuses

ranging from 50-90% were applicable to 10,326,600 of the Company’s outstanding options and 16,742,789 of the Company’s outstanding

On September 10, 2021, the Company filed a federal lawsuit ‘in rem’

to recover the <biontech.com> domain and the unknown ‘John Doe’

who hacked and attempted to steal the website.

The litigation

has been filed in the United States District Court for the Eastern District of Virginia, Alexandria Division under the heading ‘Bion

Environmental Technologies, Inc., Plaintiff, vs John Doe and <biontech.com>, Defendants’

1:21-cv-01034), seeking

recovery of the domain name and other relief as set forth therein.

On September 25, 2014, the Pennsylvania Infrastructure

Investment Authority (“Pennvest”) exercised its right to declare the PA1’s Pennvest Loan in default, accelerated the

Pennvest Loan and demanded that PA1 pay $8,137,117 (principal, interest plus late charges) on or before October 24, 2014.

make the payment and does not have the resources to make the payments demanded by Pennvest.

PA1 commenced discussions and negotiations

with Pennvest concerning this matter but Pennvest rejected PA1’s proposal made during the fall of 2014.

PA1 made a new proposal

to Pennvest during September 2021 which proposal is presently under consideration by Pennvest.

PA1 provides Pennvest with its financial

statements (which include a description of system status) annually.

During the 2021 fiscal year, Pennvest’s auditors requested a

‘corrective action plan’

and PA1 informed Pennvest that “…

there is no viable corrective action plan for the

Pennvest Loan (‘Loan’).

The facility funded by the Loan has been shut down for many years (which has been disclosed in the

annual financial reports to Pennvest and in public filings by the parent of Bion PA 1, LLC) and the technology utilized in the facility

is now obsolete.

The facility has not been commercially operated for approximately six years and has generated zero income.

that Pennvest take appropriate steps to remove and sell the equipment.”

Pennvest responded favorably to the approach of selling

the equipment but no actions have yet taken place.

PA1 and the Company are currently discussing proposals with Pennvest seeking full resolution

of these matters.

The Company anticipates additional communication with Pennvest on this matter during the current year.

It is not possible

at this date to predict the final outcome of this matter, but the Company believes it is likely that that the equipment will be sold with

the proceeds delivered to Pennvest during the 2022 fiscal year.

However, the resolution of these matters including manner and means of

such equipment sale has not been agreed upon as of this date.

PA1 will evaluate the appropriate manner to resolve/wrap-up its business

over the balance of the current fiscal year.

During August 2012, the Company provided Pennvest

(and the PADEP) with data demonstrating that the Kreider 1 system met the ‘technology guaranty’

standards which were incorporated

in the Pennvest financing documents and, as a result, the Pennvest Loan is now solely an obligation of PA1.

No litigation has commenced

2 unchanged sentences

PARTY TRANSACTIONS:

The Coalition for Affordable Bay Solutions

(“CABS”), a not-for-profit organization that engages in political and legislative lobbying and educational activities

regarding the competitive bidding procurement and nutrient credit trading program in Pennsylvania (and elsewhere), shares certain

key management members with the Company.

During the years ended June 30, 2020 and 2019,

the Company received nil and $30,000 for expense reimbursements from CABS, respectively.

During the years ended June 30, 2020 and

2019, the Company paid CABS $52,540 and $37,220, respectively for consulting expenses.

The Company also issued 16,000 shares of

its restricted common stock valued at $8,000 for third party consulting expenses on behalf of CABS during the year ended June 30,

2019, while there were no such expenses for the year ended June 30, 2020.

The Coalition for Affordable Bay Solutions (“CABS”),

a not-for-profit organization that engages in political and legislative lobbying and educational activities regarding the competitive

bidding procurement and nutrient credit trading program in Pennsylvania (and elsewhere), shares certain key management members with the

During the years ended June 30, 2021 and 2020, the

Company received nil and nil for expense reimbursements from CABS, respectively.

During the years ended June 30, 2021 and 2020, the Company

paid CABS nil and $52,540, respectively for consulting expenses.

GAIN ON EXTINGUISHMENT OF LIABILITIES:

During the year ended June 30, 2020, the

Company recognized other income due to the extinguishment of liabilities of $122,423, resulting from the legal release of certain

accounts payable.

These accounts payable were outstanding for over 6 years and the vendors had not made attempts to collect these

amounts from the Company over the past several years.

The extinguishment of liabilities was recorded after a review of the statute

of limitations in the state in which the original liability was incurred and in which the Company operates it business, as applicable.

The reconciliation between the expected

federal income tax benefit computed by applying the Federal statutory rate to loss before income taxes and the actual benefit for

taxes on loss for the years ended June 30, 2020 and 2019 is as follows:

Expected income tax benefit at statutory rate

State taxes, net of federal benefit

During the year ended June 30, 2020, the Company

recognized other income due to the extinguishment of liabilities of $122,423, resulting from the legal release of certain accounts payable.

These accounts payable were outstanding for over 6 years and the vendors had not made attempts to collect these amounts from the Company

over the past several years.

The extinguishment of liabilities was recorded after a review of the statute of limitations in the state

in which the original liability was incurred and in which the Company operates it business, as applicable.

The reconciliation between the expected federal

income tax benefit computed by applying the Federal statutory rate to loss before income taxes and the actual benefit for taxes on loss

for the years ended June 30, 2021 and 2020 is as follows:

income tax benefit at statutory rate

taxes, net of federal benefit

Excess Business Interest

Permanent differences and other

Expiration of net operating allowances

Change in valuation allowance

Income tax benefit

differences and other

of net operating allowances

in valuation allowance

The Company has net operating loss carry-forwards

1 unchanged sentence

These NOLs expire on various dates through 2041.

The utilization of the NOLs may be limited

under Section 382 of the Internal Revenue Code.

The Company’s deferred tax assets

for the years ended June 30, 2020 and 2019 are estimated as follows:

NOL Carryforwards (Federal and State)

Stock-based compensation

Business interest

Deferred compensation

Gross deferred tax assets

Valuation allowance

The utilization of the NOLs may be limited under

Section 382 of the Internal Revenue Code.

The Company’s deferred tax assets for the

years ended June 30, 2021 and 2020 are estimated as follows:

Carryforwards (Federal and State)

deferred tax assets

(19,724,000 )

(19,799,000 )

Net deferred tax assets

The Company has provided a valuation allowance

of 100% of its net deferred tax asset due to the uncertainty of generating future profits that would allow for the realization

of such deferred tax assets.

deferred tax assets

The Company has provided a valuation allowance of

100% of its net deferred tax asset due to the uncertainty of generating future profits that would allow for the realization of such deferred

The Company has adopted the Bion Technologies,

401(k) Profit Sharing Plan and Trust (the “401(k) Plan”), a defined contribution retirement plan for the benefit

of its employees.

The 401(k) Plan is currently a salary deferral only plan and at this time the Company does not match employee

contributions.

401(k) Profit Sharing Plan and Trust (the “401(k) Plan”), a defined contribution retirement plan for the benefit of its

The 401(k) Plan is currently a salary deferral only plan and at this time the Company does not match employee contributions.

The 401(k) is open to all employees over 21 years of age and no service requirement is necessary.

The Company has evaluated events that occurred

subsequent to June 30, 2020 for recognition and disclosure in the financial statements and notes to the financial statements.

The Company has evaluated events that occurred subsequent

to June 30, 2021 for recognition and disclosure in the financial statements and notes to the financial statements.

From July 1, 2021 through September 27, 2021,

the Company has sold 50,000 Units of its securities at $0.50 per Unit for aggregate consideration of $25,000.

Each Unit consists

of one share of common stock and a callable warrant to purchase one share of the Company’s common shares at $0.75 per share

until December 31, 2021.

139,334 warrants were exercised to purchase 139,334 shares of the Company’s common stock at $0.75 per share for total proceeds of

approximately $104,500.

From July 1, 2021 through September 27, 2021,

2020, Smith elected to convert deferred compensation and accounts payable of $37,961 and $20,364, respectively, into an aggregate

116,651 units at $0.50 per unit, with each unit consisting of one share of the Company’s restricted common stock and one

warrant to purchase one share of the Company’s restricted common stock for $0.75 per share until December 31, 2021.

Pursuant to the requirements of Section 13

or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned

thereunder duly authorized.

the Company issued 10,000 warrants to a broker as commissions to purchase 10,000 shares of the Company’s common stock at an exercise

price of $0.75 per share and an expiration of December 31, 2022.

From July 1, 2021 through September 27, 2021,

Smith elected to convert accounts payable of $5,126 into an aggregate 10,253 units at $0.50 per unit, with each unit consisting of one

share of the Company’s restricted common stock and one warrant to purchase one share of the Company’s restricted common stock

for $0.75 per share until December 31, 2024.

On September 16, 2021, PA1 made a new proposal

to Pennvest which proposal is presently under consideration by Pennvest.

See Notes 5 and 9 above for related information.

On September 23, 2021 the Company executed an

agreement to lease land near Fair Oaks, Indiana to construct its initial 3G Tech commercial scale installation which will include customized

covered barns for up to 300 head of cattle, an anaerobic digester and a Bion 3G Tech waste treatment/recovery system (“Lease”).

Pursuant to the Lease, an initial $60,000 rent payment is due on October 10, 2021 and, commencing on the earlier of December 31, 2022

or the date on which the barns are populated (“Start Date”), monthly rent of $7,250 will be payable.

The Lease has an initial

2-year term from the Start Date.

The impact of ASC 842 has not been determined for the lease.

Terms for an additional related agreement

regarding disposal of certain manure effluent have been agreed upon with the Curtis Creek Dairy unit of Fair Oaks Farms and the Company

expects the agreement to be finalized by the end of the first full week of October 2021.

Pre-development work commenced during August

2021 and preparation for active surveying, site engineering and other work is now underway.

Note 1 for more information.

Pursuant to the requirements of Section 13 or 15(d)

of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunder

duly authorized.

BION ENVIRONMENTAL TECHNOLOGIES, INC.

3 unchanged sentences

and Accounting Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934,

this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:

Pursuant to the requirements of the Securities Exchange Act of 1934, this

Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:

Executive Chairman,

13 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures