BNET filing — read by section

UNITED STATES 

 SECURITIES AND EXCHANGE COMMISSION 

 Washington, D.C. 20549 

 FORM 10-K 

 ☒ 
 
 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 

 For the Fiscal Year Ended: June 30 , 2023 
 
 OR 

 ☐ 
 
 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 

 For the transition period from: __________ to __________

 Commission File No. 000-19333 

 BION ENVIRONMENTAL TECHNOLOGIES, INC. 

 (Exact Name of Registrant as Specified in its Charter)

 Colorado 
 
 84-1176672 

 (State or Other Jurisdiction of Incorporation or Organization) 
 
 (I.R.S. Employer Identification Number) 

 9 East Park Court 

 Old Bethpage , New York 11804 

 (Address of Principal Executive Offices, Including
Zip Code)

 Registrant’s Telephone Number, including area
code: (516) 586-5643 

 Securities Registered Pursuant to Section 12(b) of
the Act:

 Title of Each Class 
 
 Name of Exchange on Which Registered 

 None 
 
 N/A 

 Securities Registered Pursuant to Section 12(g) of
the Act:

 Common Stock, No Par Value 

 (Title of Class)

 Indicate by check mark if the registrant is a well-known
seasoned issuer, as defined in Rule 405 of the Securities Act.

 ☐ YES
 ☒ No 

 Indicate by check mark if the registrant is not required
to file reports pursuant to Section 13 or Section 15(d) of the Act.

 ☐ YES
 ☒ No 

 Indicate by check mark whether the registrant (1)
has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days.

 ☒ Yes 
 ☐ NO 

 Indicate by check mark whether the registrant has
submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding
12 months (or for such shorter period that the registrant was required to submit).

 ☒ Yes ☐ NO No 

 Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. ☒ 

 Indicate by check mark whether the registrant is a
large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large
accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company”
in Rule 12b-2 of the Exchange Act.

 Large accelerated filer 
 ☐ 
 
 Accelerated filer 
 ☐ 

 Non-accelerated filer 
 ☐ 
 
 Smaller reporting company 
 ☒ 

 Emerging growth company 
 ☐ 
 
 If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ 

 Indicate by check mark whether the registrant is a
shell company (as defined in Rule 12b-2 of the Act)

 ☐ YES
 ☒ No 

 The aggregate market value of the approximately 37,000,000
shares of voting stock held by non-affiliates of the Registrant as of June 30, 2023 approximated $ 46.5 million. As of August 1,
2023, the Registrant had 49,408,214 shares of common stock issued and 48,703,905 shares of common stock outstanding.

 DOCUMENTS INCORPORATED BY REFERENCE

 None

 FORWARD-LOOKING STATEMENTS 

 THE RISK FACTORS BELOW ARE FURTHER HEIGHTENED BY THE
COVID-19 PANDEMIC AND RESULTING ECONOMIC DOWNTURN AND OTHER RELATED CRISES AS DISCUSSED BELOW.

 This Annual Report on Form 10-K (and the documents
incorporated herein by reference) contain forward-looking statements, within the meaning of Section 27A of the Securities Act and Section
21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), that involve substantial risks and uncertainties.
Forward-looking statements generally can be identified by the use of forward-looking terminology such as "may," "will,"
"expect," "intend," "estimate," "anticipate," "project," "predict," "plan,"
"believe," or "continue," or the negative thereof or variations thereon and/or references to goals, targets, projections
or similar terminology. The expectations reflected in forward-looking statements may prove to be incorrect.

 Important factors that could cause actual results
to differ materially from our expectations include, but are not limited to, the following (not set forth in any order that ranks priority
or magnitude):

 · 
 failure of the political, legal, regulatory and economic climate to support funding of environmental clean-up and enforcement of environmental rules and regulations; 

 · 
 changes in the public's perceptions of large scale livestock agriculture/CAFOs, consumption of meat and dairy, environmental protection and other related issues; 

 · 
 cybercrimes/hacking (actual and potential) of the Company’s online presence and limited operational computer systems; the Company’s <biontech.com domain was hacked/stolen during 2021 and the Company migrated to the bionenviro.com domain name. The Company initiated litigation seeking its recovery and other relief, recovered and subsequently sold the <biontech.com> domain. See Item 3 “Legal Proceedings” and Note 9 to Financial Statements, “Litigation”; 

 · 
 the Company's extremely limited financial and management resources which need to be augmented and the Company’s limited ability to raise additional needed funds and/or hire needed personnel; 

 · 
 Reactions to the wrap-up of the business activities of Bion PA-1 LLC (“PA1”) and/or resolution of PA-1’s negotiations with the Pennvest Infrastructure Authority (“Pennvest”) regarding PA1’s Pennvest Loan (presently in default) and the Kreider 1 System (see “Part I, Items 1 and Item 7 and “Notes to Financial Statements” below); 

 · 
 continued delays in (and/or failure of) development of markets (or other means of monetization) for nutrient reductions and other environmental benefits from agriculture and CAFOs and related waste treatment facilities; including failure of markets for nutrient (nitrogen and phosphorus) reductions to develop sufficient breadth and depth; 

 · 
 potential delays in constructing the Company’s Initial System, the initial beef Projects and other Gen3Tech system installations and/or further delays in the Kreider 2 project and other potential Projects (capitalized items defined in the Item 1 narrative below); 

 · 
 the ability of the Company to implement its business strategy; 

 · 
 the extent of the Company's success in the development of Gen3Tech joint ventures (“JVs”) and development/operation of Projects and retrofit/remediation of existing livestock facilities (“Retrofits”) and/or reaching the goals and targets set forth below, especially in light of the fact that at this date the Company has not yet developed its first Gen3Tech JV project and that the resources (CAPEX/personnel/expertise) required for development and operation of such projects will need to be sourced from outside the Company which has very limited resources in each listed category; 

 2 

 · 
 
 dependence upon key personnel and the ability of the
 Company to keep its existing personnel and their accumulated expertise including the substantial risk of illness or death of one or more
 key personnel (most of whom are over 70 years of age and/or have existing health vulnerabilities that are exacerbated by the COVID-19
 pandemic);

 · 
 the need to obtain the services of additional personnel as employees and/or consultants as the Company’s business progresses; 

 · 
 engineering, mechanical or technological difficulties with operational equipment including potential mechanical failure or under-performance of equipment; operating variances from expectations; 

 · 
 the substantial capital expenditures required for the Company’s proposed JVs and development/construction of the Company's proposed Projects and facilities and the related need to fund such capital requirements through commercial banks and/or public or private securities markets; 

 · 
 the need to develop and re-develop technology and related applications over time; 

 · 
 operating hazards attendant to the environmental clean-up, CAFO and renewable energy production, fertilizer and/or food retailing and biofuel industries; 

 · 
 seasonal and climatic conditions; 

 · 
 decreased availability and increased cost of material and equipment (including those caused by the COVID-19 pandemic and supply chain challenges); 

 · 
 the strength and financial resources of the Company's potential competitors; 

 · 
 general economic, Covid-19 pandemic (see Item 7. “Management's Discussion and Analysis of Financial Condition and Results of Operations” and Note 1 to Financial Statements, “Covid-19 pandemic related matters”) and capital market conditions; 

 · 
 industry risks, including environmental related problems; 

 · 
 delays in anticipated permit approval and/or start-up dates; 

 · 
 the limited liquidity of the Company's equity securities; limited availability of capital on acceptable terms for small public companies like Bion in the current financial markets; and 

 · 
 the Company’s limited ability to comply with current and rapidly evolving ESG (environmental, social and governance) related items to date (which is due in large part to the Company’s small size and the fact that the Company has engaged in almost no new hiring ‘in house’ during the past decade combined with the Company’s limited financial capacity and the particular industry segments in which the Company is working) may inhibit the Company’s ability to raise capital and increase its shareholder base. 

 We do not undertake and specifically disclaim any
obligation to publicly release the results of any revisions that may be made to any forward-looking statements to reflect the occurrence
of anticipated or unanticipated events or circumstances after the date of such statements.

 3 

 PART I 

 ITEM 1. BUSINESS. 

 GENERAL 

 Summary and Overview 

 Bion Environmental Technologies, Inc.'s ("Bion," "Company,"
"We," "Us," or "Our") was incorporated in 1987 in the State of Colorado. Bion’s mission is to create
extraordinary value for our shareholders and employees (all of whom own securities in the Company) while delivering premium, sustainable
meat products to our customers (and other stakeholders) through ventures developing profitable, transparent, and environmentally sustainable
solutions for livestock agriculture. Bion’s third generation technology-based platform (“Gen3Tech Platform” or
“Platform”) provides comprehensive environmental treatment for large-scale livestock waste streams (and other organic waste
streams), while simultaneously recovering resources that have traditionally been wasted or underutilized. Bion’s platform performs
the dual benefits of improving profitability of production by upcycling those resources into value-added byproducts, while preventing
their release to the environment, where they contribute to surface- and groundwater and air pollution, climate change, and other air quality
issues.

 Bion has identified three distinct market
opportunities for the Gen3Tech platform and its core Ammonia Recovery System (“ARS”) technology that captures,
stabilizes, and upcycles ammonia into low-carbon and/or organic pure nitrogen fertilizers. Bion intends to pursue: 1) a unique
opportunity to ‘reimagine’ beef production ( within the existing industry supply chain) to produce premium and
sustainable grain-finished beef, with minimal impacts to water, soil, and air, and better economics to its producers; 2) technology
licensing and/or joint venture opportunities internationally and in the U.S. for post-anaerobic digester use of our ARS: a) dairy
applications, and b) treatment of organic waste streams from food waste, food processing waste, biofuels, and other organic waste
streams whose processes include anaerobic digestion to produce renewable energy; and 3) retrofit of existing large-scale livestock
facilities, of which there are hundreds of operations in the U.S. alone (if not thousands – the exact number is not
reported).

 Currently, Bion’s efforts are primarily focused on the sustainable
beef production opportunity. We believe there is tremendous room for improvement in the beef production in this country. The beef industry
today faces a wide range of challenges, from a fragmented commodity-producing industry with narrow margins to antiquated and inefficient
production practices. Beef production and consumption is a primary target of the global ‘anti-meat’ messaging campaign from
consumer, investor, and environmental advocacy groups (and the industry’s competitors in the alternative plant-based and cellular
protein spaces). Bion intends to produce truly sustainable beef, certified by USDA, with dramatic, third-party verified reductions in
the negative environmental effects by mitigating nutrient, greenhouse gas, and other environmental impacts. To accomplish Bion’s
goal, we will partner with producers and other technology companies who provide solutions for different links of the beef value chain.
Our joint venture/strategic partner-focused business model is designed to deliver a premium sustainable product to the consumer and increased
profitability up and down the supply chain.

 During September 2023, Bion successfully
completed the initial startup of its patented Ammonia Recovery System (“ARS)” at its commercial-scale demonstration and
optimization facility near Fair Oaks, Indiana. The facility has now commenced an operational ‘optimization’ phase during
which modules will be tested/stressed to determine their operational characteristics and establish the best parameters (and related
control systems) for long term operation. We have begun varying the ARS’s operating parameters with the goal of meeting and/or
exceeding the results needed for Bion’s economic models for large-scale commercial projects. The Company expects the current
optimization phase will continue during the next quarter (or longer) and provide data required to support final design/engineering
for commercial project modules. We believe this data will also provide additional potential stakeholders (cattle producers, cattle
feeders, packers, distributors, retailers and financial institutions) with the information they need to proceed with confidence in
collaborating with Bion on multiple new projects. The ARS is the core of the Gen3Tech platform. Once its operations have been
optimized, Bion will be able to begin final design to support permitting, and financing of its first commercial beef project.

 To Bion’s knowledge, there is no comprehensive treatment solution
for beef manure waste other than our Gen3Tech Platform. Further, Bion’s business model, which addresses the entire supply chain,
creates additional opportunities to improve on both environmental impacts and production efficiencies. Bion has 30 years of experience
in livestock waste management and is building a world class team, focused on beef. We believe we have a significant advantage as the $66
billion U.S. beef industry contends with its environmental impacts, inherent inefficiencies, and a changing consumer demographic.

 Our patented and proprietary technology provides advanced
waste treatment and resource recovery for large-scale livestock production facilities (also known as “Concentrated Animal Feeding
Operations” or “CAFOs"). Livestock production and its waste, particularly from CAFOs, has been identified as one of the
greatest soil, air, and water quality problems in the U.S. today. Application of our third generation technology (“Gen3Tech”)
and business/technology platform in conjunction with other industry practices (“Gen3Tech Platform” or “Platform”)
can largely mitigate these environmental problems, while simultaneously improving operational/ resource efficiencies by recovering high-value
co-products from the CAFOs’ waste stream. These waste stream ‘assets’ – including primarily nutrients and methane
– have traditionally been wasted or underutilized and are the same ‘pollutants’ that today fuel harmful algae blooms,
contaminate groundwater, pollute the air and exacerbate climate change.

 4 

 During the first half of 2022 Bion began
pre-marketing our sustainable beef opportunity to retailers, food service distributors and the meat industry in the U.S. In general,
the response has been favorable. During July 2022, Bion announced a letter of intent (“Ribbonwire LOI”) to develop a large-scale
commercial project - a 15,000-head sustainable beef cattle feeding operation together with the Ribbonwire Ranch, in Dalhart, Texas (with
a provision to expand to 60,000 head) (“Dalhart Project”). During January 2023 Bion announced a letter of intent (“Olson
LOI”) to develop a large-scale commercial project - a 15,000-head sustainable beef cattle feeding operation together with the Olson
Feeders and TD Angus, near North Platte, Nebraska (with a provision to expand to 45,000 head or more) (“Olson Project”). During
April 2023 Bion announced a letter of intent (“DVG LOI”) to develop a large-scale commercial project - a 15,000-head sustainable
beef cattle feeding operation together with Dakota Valley Growers near Bathgate, North Dakota (“DVG Project”). Based on our
experience to date, we believe we will not have great difficulty in securing participation from additional feeders/cattlemen in our Projects.
The Olson, Dalhart and DVG Projects (and subsequent Projects) will be developed to produce blockchain-verified, sustainable beef in customized
covered barns (resulting in reduced stress on cattle caused by extreme weather and temperatures and resulting higher feed/weight gain
efficiency) with ongoing manure transfer (through slatted floors) to anaerobic digesters (AD) to capture nitrogen/ammonia from the manure
stream before loss to the atmosphere and generate renewable natural gas (RNG) for sale while remediating the environmental/carbon impacts
usually associated with cattle feedlots and CAFOs. Bion’s patented Gen3Tech platform will refine the waste stream into valuable
coproducts that include clean water, RNG, photovoltaic solar electricity and fertilizer (‘climate smart’ and/or organic) products.
We anticipate converting these LOIs into definitive JV agreements and creating related distribution agreements with key retailers and
food service distributors during the current fiscal year and the balance of 2024.

 Bion’s business model and technology platform
can create the opportunity for joint ventures (in various contractual forms)(“JVs”) between the Company and large livestock/food/fertilizer
industry participants based upon the supplemental cash flow generated by implementation of our Gen3Tech business model, which cash flows
will support the costs of technology implementation (including servicing related debt). We anticipate this will result in substantial
long-term value for Bion. In the context of such JVs, we believe that the verifiable sustainable branding opportunities (conventional
and organic) in meat will represent one of the single largest enhanced revenue contributors 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.

 Bion’s Gen3Tech was designed to capture and
stabilize these assets and produce renewable energy, fertilizer products, and clean water as part of the process of raising verifiably
sustainable livestock. All steps and stages in the treatment process will be third-party verified, providing the basis for additional
revenues, including renewable energy-related credits and, eventually, payment for ecosystem services, such as nutrient credits as described
below. The same verified data will be used to substantiate the claims of a USDA-certified sustainable brand that will support premium
pricing for the meat/ animal protein products that are produced in Bion facilities.

 Our business plan is focused on executing
multiple agreements and letters of intent related to additional sustainable beef JV projects over the next twenty-four (24) months while
moving forward with the Initial Project (see below) and commencing development of one or more of the Dalhart/Olson/DVG Projects (“LOI
Projects”)(and/or other Gen3Tech beef JV projects) while pursuing other opportunities in the livestock industry enabled by our Gen3Tech
business model. The LOI announcements have generated significant interest within the livestock industry (among ranchers, feedlot
operators, farmers and other AG industry parties) and has led to and assisted our discussions with many ‘major s’---large
national and regional agriculture/livestock industry companies (including those involved with distribution and/or sales of meat products)
in the country which are ongoing at this date. We believe that this interest, combined with consumer interest in ‘sustainable products’
and growing enthusiasm among some livestock industry parties for environmental/sustainable/regenerative practices, may provide Bion (and
its partners/venturers) with an opportunity to move forward with a truly sustainable solution in this industry segment at a rapid pace.

 Based on our endeavors in executing multiple
agreements and letters of intent related to the “Bion Beef Opportunity”, we intend to commence development of multiple sustainable
beef JV projects over the next twelve-eighteen (12-18) months while moving forward with the Initial Project (see below) and one or more
of the LOI Projects. Bion also intends to pursue other opportunities in the livestock industry enabled by our Gen3Tech business model. 

 During the past nine months, the Company has constructed
(construction is largely completed) our 3GTech Ammonia Recovery System (‘ARS’) at our Initial Project (our commercial scale
demonstration facility) located near Fair Oaks, Indiana and begun operations of phase 1 of our Initial Project . We recently announced
that the ARS has achieved and maintained controlled steady-state operations under a variety of conditions. When operated at steady state,
the system produces an ammonium distillate solution, the base of Bion’s nitrogen fertilizer products. Bion has begun optimizing
the ARS’s operating parameters with the goal of meeting and/or exceeding the results needed for Bion’s economic models for
large-scale commercial projects. The Company expects the current optimization phase will continue during the next quarter (or longer)
and provide data required to support final design/engineering for commercial project modules. We believe this data will also provide additional
potential stakeholders (cattle producers, cattle feeders, packers, distributors, retailers and financial institutions) with the information
they need to proceed with confidence in collaborating with Bion on multiple new projects (see below).

 The patented ARS is the core of Bion’s Gen3Tech platform.
The ARS recovers and upcycles problem ammonia contained in the effluent from anaerobic digestion (where methane is captured and more ammonia
is released) of the livestock manure waste stream. The ARS captures the ammonia, minimizing its environmental impacts and creating low-carbon
and/or organic nitrogen fertilizer products with it. Over during the next quarter, the Company intends to produce ammonium distillate
at Fair Oaks in several concentrations and initiate the application process for organic certification for each concentration of liquid
fertilizer product. Bion will also produce a solid/granular nitrogen fertilizer product at the Initial Project (when the crystalizer module
is ready for operation during the next quarter) which we believe will be both ‘ClimateSmart’ and ‘Water-Smart’
– a pure nitrogen fertilizer with a low carbon footprint, that is water soluble and readily available to plants. Samples of the
granular product will also be utilized to support organic certification applications. See Fertilizer: Organic and ‘ClimateSmart’
 below . 

 5 

 During the next three-six months , the Company intends
to fully complete construction of the Initial Project’s phase 1 (including the crystalizer module) and continue the optimization
operations. Bion expects the Initial Project data will document the effectiveness of our Gen3Tech in a commercial-scale setting during
the current fiscal year and support development of the LOI Projects (and/or other Gen3Tech beef JV projects) commencing later this fiscal
year. We do not presently know the order in which these JV Projects will be developed as that decision will be made based on many
factors not yet in place. We believe the Initial Project data will also provide additional potential stakeholders (cattle producers, cattle
feeders, packers, food distributors and retailers and financial institutions) with the information they need to proceed with confidence
in collaborating with Bion on multiple new projects (see below). 

 Bion
intends to focus primarily on: i) completion of development/construction and operation of the Initial Project, our initial commercial-scale
Gen3Tech installation (see below and Notes to Financial Statements ) ,
and optimization of its operational parameters, ii) pre-development planning of the Dalhart, Olson and DVG Projects (and/or other Gen3Tech
beef JV projects) including steps toward distribution agreements, iii) developing applications and markets for its low carbon ‘ClimateSmart’
and organic fertilizer products (including listings/certifications of multiple liquid and solid products) and its sustainable (conventional
and organic) animal protein products, and iv) discussions regarding initiation and development of agreements and joint ventures (“JVs”
as discussed herein) (and related Projects) based on the augmented capabilities of our Gen3Tech business platform (in the sustainable
beef and other livestock segments), while (v) continuing to pursue : A) licensing opportunities and B) business opportunities related
to large retrofit projects (such as the Kreider poultry project JV described below) and vi) ongoing R&D activities. 

 At present, there is essentially no traceable and
verifiable ‘sustainable beef’ available to the US market except for niche products. In response to consumer demand for transparency
and sustainability, Bion expects the meat industry in general, and beef specifically, to evolve towards using new technologies to deliver
these attributes in their products. While we anticipate a faster adoption of tracking, verification and sustainability technologies in
other perishable food categories like produce and dairy due to their shorter product cycles (and related harvest and production techniques),
meat industry leaders have also announced their willingness to move forward with initiatives in this area. Many companies have announced
‘sustainability’ initiatives but most appear to consist largely of ‘greenwashing’ marketing commitments rather
than substantive undertakings at this date. Note, however, that Tyson’s Brazen beef initiative (which was announced during March
2023) may develop into a substantive competitive factor in the sustainable beef marketplace. Bion predicts that within approximately five
years, consumers will be able to track and verify claims including sustainability on 25% (or more) of the products merchandised in the
meat department. Bion believes that the retail market share of verifiably sustainable beef in the US will approach 7-10 % within three
(3) years (end of 2026) and 25% in five (5) years (end of 2028) (approximately 6-7,000,000 cattle annually) (and more thereafter). If Bion
can successfully execute on its sustainable beef business plan (which is subject to many contingencies), we believe that JV facilities
utilizing Bion’s Gen3Tech platform will supply one-third (1/3) or more of that of the premium market segment (and a higher portion
of meat that is actually traceable and verifiably sustainable). Our goal is to have multiple sustainable beef projects under development
(within 3-5 distinct JVs) by the end of our 2025 fiscal year. Our first commercial project is likely to be one of our current LOI Projects
but we anticipate commencing development of additional sustainable beef projects during the current fiscal year as well. Our current target
is to have at least three (3) facility modules (15,000 head per module)(“Modules”) in development and/or under construction
during 2024 in three (3) different JVs with the initial barns being populated with livestock during 2025. Further expansion in the number
of distinct JVs is projected through 2026-7 aiming at 5-10 JVs in process --- each of which JVs will be pursuing development of multiple
Modules with targets of 12-15 populated Modules by the end of 2026 (approximately 2%-3% of the US beef market) and 30-45 Modules constructed
and being populated by 2029 (approximately 6%-8% of the US beef market) with further expansion thereafter. Bion’s current goal is
that its Gen3Tech platform will be utilized to produce 33% of the verifiable “sustainable beef” category at the end of the
period (which will equal approximately 2 million cattle annually)(45 Modules).

 There is no assurance that the Company will reach
or approach the goals/targets set forth above. Reaching such goals/targets will require access to very large amounts of capital (equity
and debt) as each module is projected to cost in excess of $50 million to construct and require mobilization of substantial personnel,
technical resources and management skills. The Company does not possess either the financial or personnel resources required internally
and will need to source such resources from outside itself.

 During this five (5) year period, the Company also
anticipates having additional Gen3Tech projects underway in the pork/dairy/egg sectors of the US animal protein market.

 In parallel with the business activities outlined
above, during the current fiscal year the Company intends to proceed with adding to its senior management personnel, while strengthening
its corporate governance (including environmental/social/governance steps (‘ESG’)) and seeking to ‘uplist’ its
common stock on a national securities exchange improve both liquidity and ability to access capital markets.

 6 

 HISTORY, BACKGROUND AND CURRENT ACTIVITIES 

 Since the Company’s inception, Bion has
designed and developed advanced waste treatment systems for livestock. The first and second generations of Bion’s technology platform
were biological systems, primarily focused on nutrient control. Over 30 of these systems were deployed at New York dairies, Florida food
processing facilities and dairies, North Carolina hog farms, a Texas dairy and a Pennsylvania dairy (“Kreider 1 Project”).
The systems were highly effective at their intended purpose: capturing nitrogen and phosphorus. They produced BionSoil as a byproduct,
which was a remarkably effective soil amendment/ fertilizer product, but whose value was not enough to support a viable business model.
As such, these early technology iterations were entirely dependent on either implementation of new regulations requiring waste treatment,
or subsidy/ incentive programs that would provide ‘payment for ecosystem services’. By the mid-2010’s, it became apparent
that neither of these options were imminent or even assured, so the Company initiated the steps to reimagine and redesign its technology.

 From 2016 to 2021 fiscal years, the Company focused
most of its activities and resources on developing, testing and demonstrating the third generation of its technology and technology platform
(“Gen3Tech”) that was developed with an emphasis producing more valuable co-products from the waste treatment process, including
renewable natural gas and ammonium bicarbonate, a low-carbon, organic ’pure’ nitrogen fertilizer product, while raising sustainable
livestock.

 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 limitations
and impacts) which threaten its ‘economic sustainability’. Its failure to adequately respond to consumer concerns including
food safety, environmental impacts, and inhumane 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 (despite the lack of verifiably sustainable attributes).

 The Company believes that its Gen3Tech, in addition
to providing superior environmental remediation, creates opportunities for large scale production of i) verifiably sustainable-branded
conventional livestock products and ii) verifiably sustainable organic-branded livestock products, both of which 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 production/marketing opportunity for Bion (but the former is far larger). Our Gen3Tech will also produce (as co-products) biogas,
solar photovoltaic electricity in appropriate locations, and valuable low carbon/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 2022-23, the Company entered into 3 LOIs setting
forth the parties’ intention to negotiate joint venture agreement (“JVA”) and enter into joint ventures (“JV”)
to develop and operate 15,000 head integrated, sustainable beef facilities (with future expansion under consideration) including:

 a) 
 innovative cattle barns (with slatted floors to facilitate movement of manure to the anaerobic digester and potentially solar PV generation on the rooftops which barns will improve the living conditions of the animals while increasing feeding/weight gain efficiency, 

 b) 
 ‘customized’ anaerobic digestion systems (including pretreatment to increase renewable natural gas (‘RNG’) production and an RNG cleaning system (which will include capture/recycling of the CO2) to allow pipeline sales and monetization of related environmental credits, 

 c) 
 a Bion Gen3Tech module (which will utilize the recycled CO2 to increase ammonia nitrogen/ammonium bicarbonate recovery) for the production of ammonia nitrogen fertilizer for use in organic and/or ‘ClimateSmart’ low carbon crop production (plus residual organic solids and clean water), 

 d) 
 which will produce verifiably sustainable beef products with USDA certified branding. 

 7 

 The opportunity presented by the LOIs to
commercialize the Company’s Gen3Tech and business model matured more quickly than anticipated (reflecting strong industry and public
momentum in favor of verifiably sustainable food ventures). As a result, we have shifted our plans to focus resources and make our initial
15,000 head operation a reality as soon as possible.

 To place the LOI Projects in the context of Company’s
business plan (and our prior public disclosure), if the contemplated ventures moves forward on the timelines currently contemplated, active
development of the initial LOI Project will commence during 2024.

 Prior to such activity, the Company has constructed
and commenced operation of the initial phase of our previously discussed Gen3Tech demonstration project near Fair Oaks, Indiana (“Initial
Project”): i) to validate our existing data and modeling at commercial scale and ii) to optimize the Bion Gen3Tech module for finalization
of design parameters and fabrication details of our planned 15,000 head commercial facilities (including the LOI Projects). For the purposes
of this initial phase, the Company, in order to accelerate the data acquisition phase, is utilizing anaerobic digester effluent from the
nearby/contiguous Fair Oaks dairy. Thereafter, the Company will evaluate what, if any, additional facilities and testing will take place
at that location.

 The Initial 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.

 During September 2021, Bion entered into a lease for
the development site of the Initial Project, our initial commercial scale Gen3Tech project, which Initial Project will be located on approximately
four (4) acres of leased land near Fair Oaks, Indiana, and a related agreement regarding disposal of certain manure effluent with the
Curtis Creek Dairy unit of Fair Oaks Farms (“FOF”). Design and pre-development work commenced during August 2021 and preliminary
surveying, site engineering and other work is now underway along with site-specific engineering and design work. The Initial Project was
initially planned to 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. If all phases of the Initial Project are constructed, the facility will include Bion’s Gen3Tech platform including:
i) covered barns (possibly including roof top 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 Gen3Tech facilities capable
of treating the waste from approximately 1,500 head). The facility is large enough to demonstrate engineering capabilities of Bion’s
Gen3Tech at commercial scale, but small enough that it can be constructed and commissioned relatively quickly. Originally, construction
and onsite assembly operations were targeted to commence sometime late in 2022, however, supply chain backlogs (many pandemic associated)delayed
delivery dates for core modules of the Bion system to the site until during January 2023. Construction has been substantially completed
related to Phase 1 of the Initial Project, shakedown operations undertaken and the operation is now focused on optimization of operation
parameters. See Note 3 “Property and Equipment” and Note 12 “Subsequent Events” (for activities since the start
of the first quarter of the 2024 fiscal year).

 The Initial 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.

 8 

 Specifically, the Initial Project was designed/developed
to provide and/or accomplish the following:

 i. 
 
 Proof of Gen3Tech platform scalability 

 - 
 Document system efficiency and environmental benefits and enable final engineering modifications to optimize each unit process within the Bion Gen3Technology 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. 

 ii. 
 
 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. 

 iii. 
 
 Produce sufficient ammonium bicarbonate nitrogen fertilizer (“AD Nitrogen”) in liquid and solid forms for commercial testing by potential joint venture partners and/or purchasers, for university growth trials and to provide samples (and related documentation) to support applications for organic and/or ‘ClimateSmart’ certifications. 

 iv. 
 
 Produce sustainable beef products for initial test marketing efforts. 

 On January 28, 2022
Bion Environmental Technologies, Inc. (‘Bion’), on behalf of Bion 3G1 LLC (‘3G1’), a wholly-owned
subsidiary, entered into a Purchase Order Agreement with Buflovak and Hebeler Process Solutions (collectively
‘Buflovak’) in the amount of $2,665,500 (and made the initial 25% payment ($666,375) for the core of the ‘Bion
System’ portion (without the crystallization modules which will be ordered and fabricated pursuant to subsequent
agreements) of the previously announced 3G Tech Initial Project. This Purchase Order encompasses the core of Bion’s 3G
Technology. Subsequent agreements were executed with engineering firms, contractors and other entities related to the construction
of the Initial Project. The Company received progress billing in March 2022 and June 2022 for the second and third 25% installments,
both of which have been paid as of the filing date. On January 17, 2023 the Company received an invoice from Buflovak for $533,100
which was paid on March 1, 2023 and on April 24, 2023 for $83,275 which was paid on May 2, 2023 bringing the aggregate payments to
$2,615,500 as of the date of this filing. There remaining $50,000 open on the Purchase Order has been billed on July 26,2023. In
addition to the Purchase Order, the Company has incurred additional costs of $4,182,260 on the Initial Project for capitalized
interest and costs, non-cash compensation and consulting fees. $3,962,207 has been paid and $220,053 has been billed and not yet
been paid.

 The Initial Project will be carried out in stages
with phase one focused largely on portions of items i. and iii. set forth above.

 Upon completing the primary goals of phase 1 of the
Initial Project (coupled with obtaining organic certifications(s) for our liquid and/or solid ammonium bicarbonate fertilizer product
lines), Bion expects to be ready to move forward with its plans for development of much larger facilities such as the LOI Projects, by
moving toward final design of its Gen3Tech modules. The Company anticipates that discussions and negotiations it has begun (together with
additional opportunities that will be generated over the next 12-24 months) regarding potential JVs with strategic partners in the financial,
livestock and food distribution industries to develop large scale projects will continue during the optimization operations of the Initial
Project with a 2024 goal of establishing multiple JV’s for large scale projects that will produce sustainable and/or sustainable-organic
corn-fed beef. These 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 Gen3Tech platform.

 After the basic technology start-up milestones of
the Initial Project (primarily optimization and steady-state operations of the core modules of our Gen3Tech platform) have been met, the
Company will determine whether to complete the entire Initial Project as originally designed at that location or the relocate the core
modules to an alternative permanent location. The Company has engaged in discussion with the University of Nebraska-Lincoln to jointly
develop an integrated beef facility based on Bion’s Gen3Tech and business model at its Klosterman Feedyard Innovation Center (“KFIC”)
(or other mutually agreed upon location) which facility would include innovative barns, an anaerobic digester and a Bion Gen3Tech system
to conduct ongoing research and development related thereto and the KFIC is a possible site for the long-term re-location of the core
modules. This venture, if it moves forward, is anticipated to include joint preparation of applications for grants and other funding from
the USDA (‘climate smart’ program, rural development, etc.) and other sources. The Company will also evaluate re-locating
the core module of the Initial Project to Dalhart, Texas, where it might be integrated into the first phases of the Dalhart Project and/or
to other locations. 

 9 

 Additionally, the Company believes there will also
be opportunities to proceed with selected ‘retrofit projects’ of existing facilities (see ‘ Gen3Tech Kreider 2
Poultry Project ’ below as an example) in the swine, dairy and poultry industries utilizing our Gen3Tech.

 Gen3Tech Beef Business Model 

 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 Gen3Tech
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’ products
that can participate in the growth and premium pricing that appears to be readily available for the ‘right’ products.

 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 large, but apparently limited, segment of consumers is choosing a seemingly sustainable offering, and are
also willing to pay a premium for it. Tyson Foods, in the context of launching its Brazen beef initiative, recently said, “consumers
would be willing to pay at least 24 percent more for environmentally friendly, sustainable options at retail.” 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 on average.

 In terms of changing customer preferences, ‘saving
the planet’ has proven to be a more compelling argument than the traditional animal activism/ welfare pitch. To date, the primary
beef ‘industry response’ to this has been grass-fed beef, which is regarded as a generally more sustainable offering than
grain-fed (largely without support in empirical evidence). 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. Sustainability initiatives have been
launched by large US livestock producers (including Tyson’s very recent ‘Brazen’ program), but it is not yet possible
to determine the extent the attributes of such products will be substantive and verifiable rather than completely ‘modeled’
and largely public relations ‘greenwashing’.

 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. 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 also recently entered the plant protein space. However, while meat alternatives, especially plant-based protein
producers like Beyond Meat and Impossible Foods, have been heavily promoted (by themselves and the media) and enjoyed remarkable initial
sales growth until recently, sales have flattened and/or declined over the past 18 months. 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---and market growth rates have substantially
slowed and may have already plateaued and/or peaked. 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 verifiably sustainable beef products that address these consumer concerns.
We believe that the real meat/beef products that can be cost-effectively produced today using our Gen3Tech platform, both sustainable
and/or sustainable organic, can provide an affordable product that satisfies the consumer’s desire for sustainability, while providing
the superior taste and texture those consumers have grown to prefer.

 While
the beef industry has largely continued historic practices, the dairy industry has housed milk cows in barns and has been processing cow
waste through anaerobic digesters (ADs) to generate energy for years. In recent years the renewable biogas (RNG) from the dairy ADs 
 has become increasingly lucrative due to related environmental
credits . 

 10 

 Bion‘s sustainable beef business model, based
on our Gen3Tech platform, will develop and operate large scale facilities that: a) utilize custom designed barns (which enable a more
controlled and monitored husbandry environment) and photovoltaic solar electricity generation utilizing the rooftops (where climate conditions
permit), b) with continual manure transfer to anaerobic digesters (“ADs”), c) which produce RNG and related environmental
revenues, and d) then channel the AD waste (including CO2 recovered from the RNG processing/cleanup) through a series of patented technologies
to refine the waste into its various components. The diagram below depicts a simplified facility schematic/flow chart:

 This overall business model unites several interrelated
businesses driven by Bion’s technology and augments and aggregates multiple revenue streams as described below. See “ Technology
and Technology Platform ” below for descriptions of the 4 major categories of products/revenue streams which Bion anticipates
from its Gen3Tech beef facilities: a) premium ‘sustainable branded’ beef, b) renewable energy and energy/environmental/carbon-related
credits, c) fertilizer products (organic and/or ‘ClimateSmart’) and d) nutrient credits.

 Sustainable Beef 

 Bion’s goal is to be first (or at least early)
to market with meaningfully verified sustainable beef products that can be produced at sufficient scale to service national market demand.
The cattle produced at Bion facilities will have a substantially lower carbon footprint, dramatically reduced nutrient impacts to water
and air, and an almost total pathogen kill in the waste stream. Further, the economics of producing these cattle (including the cost of
the facility/technology upgrade) will be greatly enhanced by the revenue realized from the recovery of valuable resources, including renewable
energy, high-value fertilizer products, and clean water.

 A Bion sustainable beef facility (see diagram above)
will be comprised of covered barns with slotted floors (allowing the waste to pass through) which will reduce ammonia volatilization and
loss to the atmosphere, as well as odors, thereby improving animal health and human working conditions while preventing air/soil/water
pollution. The manure will be collected and moved directly to customized anaerobic digestion facilities which will produce renewable natural
gas (and re-cycle CO2 from the gas cleaning process). Covered 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’ very large roof surface area 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. The barn roofs will also be configured to capture rainwater, which, coupled with the
water recovered from the treatment process, will reduce the projects’ reliance on current water supplies.

 Waste treatment and resource recovery will be provided
by Bion’s Gen3Tech 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.

 11 

 Recently there have been efforts to establish sustainable
brands (including USDA PVP certification) for a number of small-scale livestock producers (largely in the grass fed beef category). To
date, the reach and extent of such efforts is limited and it is difficult to determine their effectiveness. Additionally, there have
been public announcements of initiatives related to beef sustainability (largely focused on the ‘cow-calf’ segment of the
livestock chain) in procurement by major beef processing companies, but a closer look finds that most consist largely of ‘green
washing’ public proclamations in the wake of environmental and social criticism that re-package prior initiatives and lack any significant
new substance (excepting Tyson’s ‘Brazen’ announcement this past Spring which appears to have some substance).

 At present, there is essentially no traceable and
verifiable ‘sustainable beef’ available to the US market except for niche products. In response to consumer demand for transparency
and sustainability, Bion expects the meat industry in general, and beef specifically, to evolve towards using new technologies to deliver
these attributes in their products. While we anticipate a faster adoption of tracking, verification and sustainability technologies in
other perishable food categories like produce and dairy due to their shorter product cycles (and related harvest and production techniques),
meat industry leaders have also announced their willingness to move forward with initiatives in this area. Many companies have announced
‘sustainability’ initiatives but most appear to consist largely of ‘greenwashing’ marketing commitments rather
than substantive undertakings at this date. Note, however, that Tyson’s Brazen beef initiative (which was announced during March
2023) may develop into a substantive competitive factor in the sustainable beef marketplace. Bion predicts that within approximately five
years, consumers will be able to track and verify claims including sustainability on 25% (or more) of the products merchandised in the
meat department. Bion believes that the retail market share of verifiably sustainable beef in the US will approach 7-10 % within three
(3) years (end of 2026) and 25% in five (5) years (end of 2028) (approximately 6-7,000,000 cattle annually) (and more thereafter). If Bion
can successfully execute on its sustainable beef business plan (which is subject to many contingencies), we believe that JV facilities
utilizing Bion’s Gen3Tech platform will supply one-third (1/3) or more of that of the premium market segment (and a higher portion
of meat that is actually traceable and verifiably sustainable). Our goal is to have multiple sustainable beef projects under development
(within 3-5 distinct JVs) by the end of our 2025 fiscal year. Our first commercial project is likely to be one of our current LOI Projects
but we anticipate commencing development of additional sustainable beef projects during the current fiscal year as well. Our current target
is to have at least three (3) facility modules (15,000 head per module)(“Modules”) in development and/or under construction
during 2024 in three (3) different JVs with the initial barns being populated with livestock during 2025. Further expansion in the number
of distinct JVs is projected through 2026-7 aiming at 5-10 JVs in process --- each of which JVs will be pursuing development of multiple
Modules with targets of 12-15 populated Modules by the end of 2026 (approximately 2%-3% of the US beef market) and 30-45 Modules constructed
and being populated by 2029 (approximately 6%-8% of the US beef market) with further expansion thereafter. Bion’s current goal is
that its Gen3Tech platform will be utilized to produce 33% of the verifiable “sustainable beef” category at the end of the
period (which will equal approximately 2 million cattle annually)(45 Modules).

 There is no assurance that the Company will reach
or approach the goals/targets set forth above. Reaching such goals/targets will require access to very large amounts of capital (equity
and debt) as each module is projected to cost in excess of $50 million to construct and require mobilization of substantial personnel,
technical resources and management skills. The Company does not possess either the financial or personnel resources required internally
and will need to source such resources from outside itself.

 Some portion of which sustainable beef will likely
be organic (see below).

 Sustainable Organic Beef 

 Bion believes it has a unique opportunity to produce,
at scale, affordable corn-fed organic beef that is also 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 ammonia nitrogen fertilizer captured by
the Gen3Tech platform. Bion believes its meat products will meet consumer demands with respect to sustainability and safety (organic)
and and also provide the tenderness and taste American consumers have come to expect from premium conventional American beef that has
been missing in current organic beef products. 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 relatively 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.

 12 

 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 – a widely 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 to this trend 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 CAFOs – where most of the negative environmental impacts take place.

 Fertilizer (Organic and ‘ClimateSmart’)
Listing/Certification Process 

 The Company has focused a large portion of its activities
on developing, testing and demonstrating the 3rd generation of its technology and technology platform (“Gen3Tech”) with emphasis
on increasing the efficiency of production of valuable co-products from the waste treatment process, including ammonia nitrogen in the
form of low carbon and/or organically certified soluble nitrogen fertilizer products. The Company’s low concentration ammonium bicarbonate
liquid product successfully completed its Organic Materials Review Institute (“OMRI”) application and review process with
listing approval during May 2020. During the next 3-4 months the Company intends to file applications with OMRI and the California Department
of Food & Agriculture (“CDFA”) for a line of higher concentration liquid ammonium nitrogen products (ranging from 6% up
to 16% (or higher)) based on production of liquid samples during operation of the Initial Project over the next 2 months. The Company
anticipates applying for and obtaining one or more listings/certifications for higher concentration products in our liquid ammonium nitrogen
fertilizer line well prior to operational dates for the Company’s initial large-scale JV Gen3Tech Sustainable Beef Projects. See
 Fertilizer: Organic and ‘ClimateSmart’ below.

 Gen3Tech Kreider 2 Poultry Project 

 Bion has done extensive pre-development work related
to a waste treatment/renewable energy production facility to treat the waste from KF’s approximately 6+ million chickens (planned
to expand to approximately 9-10 million) (and potentially other poultry operations and/or other waste streams) ('Kreider Renewable Energy
Facility' or ‘Kreider 2 Project’). On May 5, 2016, the Company executed a stand-alone joint venture agreement (“JVA”)
with Kreider Farms covering all matters related to development and operation of Kreider 2 system to treat the waste streams from Kreider’s
poultry facilities in Bion PA2 LLC (“PA2”). During May 2011 the PADEP certified a smaller version of the Kreider 2 Project
(utilizing our 2 nd generation technology) under the old EPA’s Chesapeake Bay model. The Company anticipates that if and
when new designs are finalized utilizing our Gen3Tech, a larger Kreider 2 Project will be re-certified for a far larger number of credits
(management’s current estimates are between 2-4 million (or more) nutrient reduction credits for treatment of the waste stream from
Kreider’s poultry pursuant to the amended EPA Chesapeake Bay model and agreements between the EPA and PA). Note that this Project
may also be expanded in the future to treat wastes from other local and regional CAFOs (poultry and/or dairy---including the Kreider Dairy)
and/or additional Kreider poultry expansion (some of which may not qualify for nutrient reduction credits). The Company has commenced
discussions with Kreider Farms regarding updating the JVA to reflect the capabilities of our Gen3Tech platform and anticipates executing
an amended (or new) JVA during the current fiscal year. The Company anticipates that if and when PA2 re-commences work on the Kreider
2 Project, it will submit a new application based on our Gen3Tech. Site specific design and engineering work for this facility have not
commenced, and the Company does not yet have financing in place for the Kreider 2 Project. This opportunity is being pursued through PA2.
If there are positive developments related to the market for nutrient reductions in Pennsylvania, of which there is no assurance, the
Company intends to pursue development, design and construction of the Kreider 2 Project with a goal of achieving operational status for
its initial modules during the following calendar year. The economics (potential revenues and profitability) of the Kreider 2 Project,
despite its proposed use of Bion’s Gen3Tech for increased recovery of marketable by-products and sustainable branding, are based
in material part the long-term sale of nutrient (nitrogen and/or phosphorus) reduction credits to meet the requirements of the Chesapeake
Bay environmental clean-up. However, liquidity in the Pennsylvania nutrient credit market has not yet developed significant breadth and
depth, which lack of liquidity has negatively impacted Bion’s business plans and will most likely delay PA2’s Kreider 2 Project
and other proposed projects in Pennsylvania.

 13 

 Bion believes that the Kreider 2 Project and/or subsequent
Bion Projects in PA and the Chesapeake Bay Watershed will eventually generate revenue from the sale of: a) nutrient reductions (credits
or in other form), b) renewable energy (and related credits), c) sales of fertilizer products, and/or d) potentially, in time, credits
for the reduction of greenhouse gas emissions, plus e) license fees/premiums related to a ‘sustainable brand’. The Covid-19
pandemic has delayed legislative efforts in Pennsylvania needed to commence its development. However, the Company has had ongoing dialogue
with the regional EPA office and the Chesapeake Bay Program Office regarding the potential of the Company’s Gen3Tech Kreider2 Project
(and other potential projects) to enable Pennsylvania to move forward toward meeting its Chesapeake Bay clean-up goals. We believe that
the potential market is very large, but it is not possible to predict the exact timing and/or magnitude of these potential markets at
this time.

 Technology Deployment: Bion Gen3Tech 

 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 Gen3Tech business platform has been developed to create opportunities for such
augmented revenue streams, while providing third party verification of sustainability claims. The Gen3Tech 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 and/or ‘ClimateSmart’ certified). 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 and/or ‘ClimateSmart’
certification of the fertilizer coproducts and c) USDA PVP certification of an ‘Environmentally Sustainable’ brand, and d)
payment for verified ecosystem services. The Company’s first patent on its Gen3Tech was issued during 2018. 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 Gen3Tech
coverage, and the Company has additional applications pending and/or planned.

 Bion’s business model and technology platform
can create the opportunity for joint ventures s (in various contractual forms) (“JVs”) between the Company and large livestock/food/fertilizer
industry participants based upon the supplemental cash flow generated by implementation of our Gen3Tech business model, which cash flows
will support the costs of technology implementation (including servicing related debt). We anticipate this will result in substantial
long term value for Bion. In the context of such JVs, we believe that the verifiable sustainable branding opportunities (conventional
and organic) in meat will represent one of the largest enhanced revenue contributors 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
U.S. nutrient and carbon reduction strategy. These market-driven strategies can generate “payment for ecosystem services”,
in which farmers or landowners are rewarded for managing their land and operations to provide environmental benefits that will generate
additional revenues. Existing renewable energy credits for the production and use of biogas are an example of payment for ecosystem services.
Another such strategy is nutrient trading (or water quality trading), which will potentially create markets (in Pennsylvania and other
states) that will utilize taxpayer funding for the purchase of verified pollution reductions from agriculture (“nutrient credits”)
by the state (or others) through competitively-bid procurement programs. Such credits then can be used as a ‘qualified offset’
by an individual state (or municipality) to meet its federal clean water mandates at significantly lower cost to the taxpayer. Market-driven
strategies, including competitive procurement of verified credits, are supported by U.S. EPA, the Chesapeake Bay Commission, national
livestock interests, and other key stakeholders. Legislation in Pennsylvania to establish the first such state competitive procurement
program passed the Pennsylvania Senate by a bi-partisan majority during March 2019 but has not yet crossed other hurdles required for
actual adoption. 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
changing. With our commercial-ready technology and business model, Bion believes it has a ‘first-mover advantage’ over others
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 Gen3Tech, during the current 2024 calendar
year. We believe that Bion’s Gen3Tech 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.

 14 

 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
practices. Environmental cleanup is inevitable and has already begun - and policies have already begun to change, as well. Bion’s
Gen3Tech 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.

 In the U.S. (according to the USDA’s 2017 agricultural
census) there are over 9 million dairy cows, 90 million beef cattle, 60 million 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
manner. 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.

 15 

 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’ everywhere. 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. U.S. 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 relied on to reduce agricultural runoff are largely bypassed by this subsurface
flow.

 Nitrogen and ammonia are also global concerns, with
a growing number of harmful algae blooms and recurring dead zones across the world. In the EU, a nitrogen cap has been established that
has led to political and social unrest, especially in Ireland and the Netherlands, where farmers are faced with culling their dairy and
swine herds by as much as 50 percent. The ability to capture and stabilize their ammonia, so that it can be easily transported away from
regions where it is not wanted and then precision applied where and when needed, could have a profound impact on the agricultural economies
of these countries that export the majority of the dairy and pork products they produce.

 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. While not regulated yet, there have been ongoing discussions between the US EPA and
the California Air Resources Board (CARB) what potential ammonia regulation might encompass. However, as above, California is moving forward
with changes to how it deals with nitrates.

 16 

 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.
In the U.S. 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.

 Chronic droughts in the west have also impacted the
long-term sustainability of some beef herds. Relocation of some beef cattle feeding locations may be required. Access to clean water is
an issue of concern that is rising in the world of risks on the ranch.

 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 Gen3Tech platform was designed to resolve these environmental
issues and bring the industry in line with twenty-first century consumer expectations.

 Technology and Technology Platform 

 Bion has invested decades of work and substantial
capital on the development of our technology and technology platform since 1989. The predecessor to Bion’s Gen3Tech platform, our
patented second-generation technology (“2G Tech”), was proven at commercial scale and was reviewed and qualified for federal
loan guarantees under USDA’s Technical Assessment program. Bion’s 2G Tech dairy project (“Kreider 1” or “KF1”),
located at Kreider Farms in Pennsylvania (“PA”) received the first verified /measurable nutrient reduction credits from a
non-point source livestock facility in the U.S. and its nutrient reductions were verified by the Pennsylvania Department of Environmental
Protection (“DEP”) during 2012.

 17 

 A key attribute of Bion’s 2G Tech (now supplanted
by our Gen3Tech) was that nutrient and other pollution reductions could be measured, providing a level of verification on par with a
municipal wastewater treatment plant, which created the opportunity for the nutrient reductions to be used as “qualified offsets”
to EPA-mandated requirements. While it was an engineering success, Kreider 1 has failed financially because the 2G Tech platform was almost
wholly dependent for revenue from anticipated demand for nutrient credits, based on PA’s mandated nitrogen reductions under the
Chesapeake Bay Strategy and their proposed nutrient trading program that did not materialize. Bion began development of its Gen3Tech platform
when it became apparent there was significant opposition to the PA trading program (and private sector participation in clean water activities,
generally) from entrenched clean water interests. The Company is no longer implementing Projects based on its 2G Tech and the Kreider
1 project has been shut down.

 Bion’s Gen3Tech was developed to avoid the dependence
of our 2G Tech systems on the sale of water quality trading credits in order to develop profitable projects. The Gen3Tech platform has
been designed to maximize revenues from co-products, including biogas and fertilizer products, achieve premium pricing from USDA PVP-certified
‘environmentally sustainable’ retail branding of the animal protein products it supports, as well as generate verified credits
for still-developing water quality trading programs. The first patent on the Gen3Tech was filed in 2015 for an ammonia recovery process
that produces ammonium bicarbonate (a commercial fertilizer) without external chemical additives, thereby providing the basis for organic
certification. A Notice of Allowance from the US Patent and Trademark Office (“USPTO”) was received during August 2018 related
to this patent application and the patent was subsequently issued. Since July 2017 Bion has filed for extensions of this patent application
to provide broadened protections and to cover improvements to the process developed in the interim. During August 2020 the Company received
a Notice of Allowance’ for our third patent related to our Gen3Tech and additional related applications are pending and/or planned
(See “Patents”.) The Gen3Tech platform incorporates Bion’s patented and proprietary technology which utilizes existing
commercial evaporation and distillation process equipment (with decades of reliability and service history) that is customized for Bion’s
specific applications.

 Gen3Tech Platform 

 Our Gen3Tech platform is the basis for a JV business
model with four primary distinct revenue streams : 1) pipeline quality renewable natural gas and related carbon and other environmental
credits, 2) premium fertilizer products: organic and ‘ClimateSmart’, 3) nutrient reduction credits, and 4) premium pricing/license
fees for verifiably sustainable, USDA PVP-certified ‘Environmentally Sustainable’ branded meat at the retail level. Carbon
and nutrient credit revenues will be supported by third-party verification of the waste treatment processes that simultaneously capture
methane and nutrients, while producing renewable energy and fertilizer products from them with relatively limited incremental cost to
Bion. The same verified data will also provide the backbone for the USDA PVP-certified sustainable brand, again with limited incremental
cost.

 1) Renewable
energy- and carbon-related credits: 

 Bion’s
Gen3Tech platform utilizes anaerobic digestion (“AD”) customized to maximize recovery of biogas (methane) (and ammonia nitrogen
components) from the waste stream. At sufficient scale, methane produced from AD can be cost-effectively conditioned/cleaned, 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 of biogas and its subsequent use as a renewable transportation fuel. The
CO2 recovered in the gas cleaning process will be recycled for use in the production of organic fertilizer products along with the ammonia-rich
digestate. Gen3Tech facilities will also generate photovoltaic (solar) electricity from modules placed on the roofs of the barns (approximately
12 acres of rooftop per 15,000 head of cattle module). Additional renewable energy-related credit programs are being developed that Bion
believes will impact these revenues, including a Carbon Intensity (CI) score that measures the amount of carbon produced per unit of
energy produced.

 18 

 2) Fertilizer: Organic and
 ‘ClimateSmart’ : The Company has focused a large portion of its activities
 on developing, testing and demonstrating the 3rd generation of its technology and technology
 platform (“Gen3Tech”) with emphasis on increasing the efficiency of production
 of valuable co-products from the waste treatment process, including ammonia nitrogen in the
 form of low carbon and/or organically certified soluble nitrogen fertilizer products. The
 Company’s low concentration ammonium bicarbonate liquid product successfully completed
 its Organic Materials Review Institute (“OMRI”) application and review process
 with listing approval during May 2020. During the next 3-4 months the Company intends to
 file applications with OMRI and the California Department of Food & Agriculture (“CDFA”)
 for a line of higher concentration liquid ammonium nitrogen products (ranging from 6% up
 to 16% (or higher)) based on production of liquid samples during operation of the Initial
 Project over the next 2 months. The Company anticipates applying for and obtaining one or
 more listings/certifications for higher concentration products in our liquid ammonium nitrogen
 fertilizer line well prior to operational dates for the Company’s initial large-scale
 JV Gen3Tech Sustainable Beef Projects. 

 Additionally,
the Company intends to explore the market potential for its fertilizer (in liquid and/or solid forms) to be a verifiably ‘ClimateSmart’
product (potentially a much larger market than the organic market) with focus on higher value specialty crops. This will require working
with industry and academic entities to develop appropriate metrics and producing a ‘life cycle assessment’ (LCA) for Bion’s
ammonium nitrogen fertilizer product which can be compared to conventional nitrogen fertilizer products. Bion’s processes will
capture and utilize CO2 in the waste stream (including CO2 produced with the renewable natural gas (RNG) by anaerobic digestion that
is usually vented to the atmosphere) as stabilizing agent thereby potentially creating carbon offsets compared to natural gas utilized
as feedstock in chemical ammonia production which reduction will be reflected in the LCA. This LCA will assess environmental impacts
associated with fertilizer production in support of the beef cattle supply chain for both the existing conventional approach (primarily
fossil fuel-based Haber-Bosch production methods) and the largely decarbonized Bion production approach. We believe a series of coincident
yet significant LCA benefits accrue from Bion’s patented fertilizer production approach including the reduced loss of ammonia to
the environment via air (volatilized) and water (nitrate in groundwater) pathways, recycled/reused water, elimination of pathogens, the
production of renewable natural gas, the production solar energy from photovoltaic panels on barn roofs, enhanced animal welfare practices
and reduced animal husbandry risks from extreme weather events. Bion believes that current evaluations of the carbon impact from feedlot
operations materially underestimate the negative impacts because existing models do not properly include significant ‘downstream’
carbon impacts of required energy intensive waste water treatment for re-deposited ammonia nitrogen. If the Company determines there
is a significant ‘ClimateSmart’ opportunity for our fertilizer products, such an LCA can be completed (based in part on data
from the Initial Project) and support marketing efforts well prior to operational dates for the Company’s initial large scale JV
Gen3Tech projects.

 Ammonium
bicarbonate, manufactured using thermal and mechanical processes, has a long history of use as a fertilizer. In addition to liquid ammonium
nitrogen fertilizer, Bion’s Gen3Tech is capable of recovering nitrogen in the form of solid ammonium bicarbonate products containing
up to 18%-22% (or higher) nitrogen in a crystalline form that is easily transported (while producing liquids with various percentages
of ammonium bicarbonate nitrogen during interim stages of the process). This solid product is water soluble and provides a readily available
nitrogen source for crops. It 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 and/or ClimateSmart grains for livestock feed, row crops, horticulture, greenhouse and hydroponic production, and
potentially retail lawn and garden products.

 The
ammonium bicarbonate products (liquid and solid) produced by Bion’s Gen3Tech platform will enjoy a dramatically lower carbon footprint
than synthetic nitrogen fertilizers. Much of the reactive nitrogen captured and upcycled into our fertilizer products was going to be
lost through volatilization and runoff, and that loss would generally need to be offset with a synthetic nitrogen fertilizer, such as
anhydrous ammonia or urea. These synthetic nitrogen products are produced through the Haber-Bosch (and other) synthetic processes, which
converts hydrogen and atmospheric nitrogen to ammonia, with methane from fossil fuels as the energy source. It is an extremely energy-intensive
process with a carbon footprint that, while not yet fully understood, is widely accepted to by very large. While a complete Life Cycle
Assessment (LCA) of carbon impacts from synthetic fertilizer production is not yet available, according to the Institute for Industrial
Productivity, its production alone is responsible for approximately 1 percent of total global CO2 emissions. To the extent that Bion
can capture and repurpose the nitrogen traditionally lost from livestock waste, that carbon cost will no longer need to be paid by the
environment/climate.

 Applications
for our first solid form of concentrated ammonia, soluble nitrogen fertilizer product line were filed with OMRI (filed during May 2021)
and CDFA (filed during May 2022) without success to date. After an extended review processes (which was largely opaque), the OMRI application
proceeded through multiple stages without receiving a positive result. We have initiated an informal dialogue with CDFA regarding the
basis for and re-consideration of its initial negative determination and anticipate submitting additional supporting materials to CDFA
during the next 30 days. The Company’s solid product line is novel (in the context of organic certification) in part due to the
fact that no formal listing category currently in the organic space for a solid form of concentrated ammonia, soluble nitrogen fertilizers
and there is no clear guidance at present from internal policy manuals on how to categorize this product and the process that produces
it. There is also no clear guidance at present from either the NOP or the National Organic Standards Board (“NOSB”) (which
is currently involved in a related review and recommendations process regarding ‘high nitrogen liquid fertilizers’ derived
from ammonia from manure). The Company and its representatives, along with a number of other organic fertilizer stakeholders, are involved
in discussions regarding resolution of these matters at all three levels. The Company intends to continue efforts to obtain listing/certification
for its solid nitrogen fertilizer line over the course of this fiscal year.

 19 

 To
provide a first level degree of clarity regarding organic approvals and the processes/procedures involved, Bion believes that the initial
OMRI approval is of importance, because our other ammonium nitrogen organic products will produced by using the very same technology
platform (our Gen3Tech). Note that there are different layers to the U.S. organic program and that fertilizers do not get ‘certified’
as organic, per se. Rather, they are evaluated to determine if they are acceptable for ‘use in organic production’.

 The
National Organic Program (“NOP”) was established by Congress in 2001 under the USDA’s Agricultural Marketing Service.
The NOP develops and enforces uniform national standards for organically-produced agricultural end products – meat/dairy/milk,
fruits, vegetables – sold in the United States. Operating as a public-private partnership, NOP accredits private companies and
helps train their inspectors (USDA-accredited Certifiers) to certify that farms and businesses meet the national organic standards. For
example, in a potential Midwest organic beef project, each element in the supply chain must provide their certifying agent’s certification
that the specific product, such as organic corn, has been produced in accordance with their organic plan. The end product - the beef
- would be USDA-certified as organic by an accredited Certifier after a review of ALL the farming practices and inputs (which would include
Bion’s ammonium bicarbonate fertilizer).

 OMRI
enables a national listing thru one application versus the alternative of using certifiers to secure listings in individual states and
regions. To those who wish to sell organic fertilizers into national distribution channels, an OMRI listing provides nearly uniform acceptance
in the U.S. The OMRI listing Bion received in May was for our initial commercial product, a low-concentration liquid ammonia. It is valid
ONLY for that particular product. For future Bion product offerings using the same technology platform, Bion will either need to file
for specific state approval, or file for a national listing, or a combination of the two. Bion may elect to use an individual state listing
initially to be followed by an OMRI application if and when the need for a regional or national listing arises.

 The
overarching standard of organic production, per NOP guidelines, is that a “product shall have been produced and handled without
the use of synthetic chemicals…” That is rule Number One. At NOP, the term "synthetic" means “a substance
that is formulated or manufactured by a chemical process or by a process that chemically changes a substance extracted from naturally
occurring plant, animal, or mineral sources, except that such term shall not apply to substances created by naturally occurring biological
processes.” In evaluating and approving Bion’s liquid ammonia for OMRI listing, Bion’s patented ammonia recovery system
was not deemed synthetic. That is an important distinction for future Bion product filings based upon the same patented process.

 The
Company believes that organic approvals for its products will: a) 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 be sold as organic. Based on preliminary market surveys to date, 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. We also believe that livestock products from animals raised with feed grains grown using Bion organic ammonium
bicarbonate fertilizer products (and that otherwise qualify) will receive organic approvals. It is anticipated that the Company will
continue to seek approvals for such products during the balance of the current fiscal year and will commence JVs that undertake initial
production and marketing of such products during the 2024 calendar year.

 20 

 3) 
 Nutrient credits: 

 Bion believes that nutrient reduction (and
other similar) credits and/or other methods of monetizing environmental benefits from the capture and re-purposing of the nutrients (largely
nitrogen and phosphorus) from the livestock waste stream, will become available in multiple states over the next several years. The passage
in the Pennsylvania (“PA”) Senate of key legislation – SB 575 – in June 2019 that would have established a competitively-bid
market for nutrient credits in PA, is indicative of the trends. Despite the fact that the bill was not considered in the House, due to
the Covid-19 pandemic (a re-introduced bill will have to be considered again in the current and/or future sessions, Bion anticipates that
after passage of a similar bill in the future, PA will establish a competitively-bid market for nutrient credits within twelve months
after legislative passage and being signed into law by the Governor. See “Policy Change is Coming” and “Kreider Poultry
Joint Venture and Pennsylvania and Chesapeake Bay Initiatives” below for discussion of the history and status of matters in PA.

 Note, however, that the Covid-19 pandemic
and resultant social and 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.

 4) 
 Sustainable Branding: 

 Consumers have demonstrated a willingness
to pay a premium for their safe and sustainable food choices. Based on Bion’s recognition of the potential opportunities created
by such willingness, beginning in 2015, Bion worked with the USDA’s Process Verified Program (“PVP”) – the ‘gold
standard’ in food verification and branding – to establish a USDA PVP-certified sustainable brand. Bion received conditional
approval from the PVP related to its Kreider 1 project (utilizing 2G Tech). It is our intention to submit an application for the Gen3Tech
platform when the initial Gen3Tech Project is operational and seek an approval for certification based on third-party-verified reductions
in nutrient impacts, greenhouse gases and pathogens in the waste stream (and other attributes), based on our Gen3Tech platform. PVP certification
incorporated as part of a recognizable brand (together with point-of-sale information) will provide consumers with products and brands
that can be trusted. Bion believes that such a brand and livestock product line will command a pricing premium for Bion’s livestock
JVs and their customers.

 Food safety and sustainability are issues
of growing importance in the U.S. and worldwide. Bion’s branding initiative reflects trends already underway in the livestock industry.
Driven by growing consumer demand, large food retailers (such as Walmart and Costco) and restaurant chains (including Chipotle and McDonalds)
are increasingly demanding greater responsibility and improved sustainability in food production practices from their suppliers. The Global
Roundtable for Sustainable Beef (“Roundtable”) was created to advance a sustainable global beef value chain that is “environmentally
sound, socially responsible and economically viable”. The Roundtable represents members from across the supply chain, including
U.S., Canadian and Australian cattlemen’s associations, Cargill, JBS, Elanco, McDonalds and A&W.

 Large institutional investors have begun
to pressure the livestock industry. Ceres and several other large activist institutional investors have already expressed concerns about
carbon footprint, water quality, antibiotic usage and animal welfare in letters to management of their investment holdings in the food
production industry. The Collier Farm Animal Investment Risk & Return (“FAIRR”) Initiative was recently launched to highlight
the environmental, social, and governance (“ESG”) risks associated with large-scale livestock production.

 In past years, the UN FAO has issued
several highly critical reports of the livestock industry, more recently focused on its impacts on climate change. While some of their
early reports were based on incomplete data and faulty methodologies and have since been somewhat quietly ‘retracted’, a wide
array of activist groups, including climate, animal rights, and anti-factory farming advocates, have seized on them to create a global
“anti-meat” messaging campaign. Their messaging is predicated on the (incorrect) notion that agriculture, and the livestock
sector specifically, is the largest contributor to climate change, greater than the energy and transportation sectors. While this fact
has been publicly ‘debunked’, the anti-meat campaign has been joined and amplified by various other stakeholders, governments,
and more recently, competitors in the alternative protein space, such as plant-based and cellular meats.

 Over the last few years, most large
meat and dairy product retailers have announced ‘sustainability’ initiatives, although the definition of sustainability is
often unclear. Based on recent statements from the industry regarding sustainability policy, many that identify goals that are 10 to 30
years in the future, Bion believes that sustainability on the production side will look a lot like what the Company’s Gen3Tech
platform can provide today. The Gen3Tech platform can deliver verifiable metrics that demonstrate meaningful improvements in sustainability
for livestock production that are unmatched in the industry today, including a dramatically reduced carbon and nutrient footprint; lower
negative impacts to water, soil and air; increased pathogen destruction; and other environmental and public health impacts. The Covid-19
pandemic has further heightened consumer awareness and concerns related to a) environmental sustainability, b) food safety, c) sourcing
and traceability and d) humane treatment of both animals and workers.

 21 

 The more the livestock industry’s
supply chain practices become transparent and known by consumers, the more consumers are seeking alternatives. Bion’s ‘Sustainable’
branding program is designed to address a wide array of consumer concerns including: a) ‘where does your food come from?’
(animal heritage information); b) climate change (carbon) and other key environmental impacts (air/water/soil); c) antibiotic use/ standards;
d) animal welfare/ humane treatment; e) laborer welfare/ working conditions. These issues can be addressed with the consumer through general
advertising and/or at the point of sale with a QR code on the packaging that links back to product-specific data. The verification processes
that will be employed by Bion’s Gen3Tech platform support block chain traceability, providing accountability throughout that part
of the supply chain addressed by Bion’s platform and enabling any quality issues to be quickly identified by lot and location, minimizing
risk to its consumers. In essence, Bion’s comprehensive technology platform will enable its livestock JVs and other adopters to
be not only the provider of the product the consumer wants, but also the businesses that shares their consumers’ values.

 Technology Applications/Business Opportunities 

 For the past decade, Bion has been focused on developing
its Gen3Tech platform and creating applications for its patented and proprietary waste management technology platform to pursue JVs and
other business opportunities in three broad categories:

 a) Development
of new state-of-the-art large scale waste treatment facilities (now utilizing our Gen3Tech) as JVs (or through other contractual arrangements
and licensing), which may be developed in conjunction with new CAFOs in strategic locations (some of which were previously impracticable
due to environmental impacts) and/or to treat the waste streams from one or more existing large livestock facilities (“Projects”).
Some of these Projects may be either a) Integrated Projects as described below, b) ‘central processing facilities’ which receive
the waste from multiple livestock facilities, c) Retrofit Projects or d) hybrids with elements of each of these types. Each version will
be able to realize revenue from multiple revenue streams potentially generated by our Gen3Tech.

 The “Sustainable Beef” and
“Sustainable Organic Beef” opportunities (discussed both above and below) would be examples of this category. Bion anticipates
that some of our Gen3Tech projects will involve swine and poultry. Some Projects may be international.

 b) Installation
of Bion systems to retrofit and environmentally remediate existing large CAFOs (“Retrofits” and “Retrofit Projects”)
in selected markets where:

 a) government policy supports such efforts
(such as the Chesapeake Bay watershed, Great Lakes Basin states, and/or other states and watersheds facing EPA ‘total maximum daily
load’ (“TMDL”) issues), and/or

 b) where CAFO’s need our technology
to obtain permits to expand or develop without negative environmental consequences.

 The Kreider Poultry JV project (“Kreider
2” or Kreider Poultry”) (discussed below) is an example of such a Retrofit Project.

 c) Technology licensing
and/or joint venture opportunities internationally and in the U.S. for post-anaerobic digester: a) dairy applications, and b) treatment
of organic waste streams from food waste, food processing waste, biofuels, and other organic waste streams whose processes include anaerobic
digestion to produce renewable energy.

 In each category (but especially in categories a)
and b)) above, the Company intends to directly participate (whether by joint venture agreement or other contractual arrangements) in the
revenues of the Retrofits and Projects.

 The opportunities described in categories a) and b)
above each require substantial political and regulatory (federal, state and local) efforts on the part of the Company and a substantial
part of Bion’s efforts are focused on such political and regulatory matters. Bion currently intends to pursue the international
opportunities primarily through the use of consultants with existing relationships in target countries.

 At this time, our primary focus is on categories a)
and b) above, using our Gen3Tech to develop new (or expanded) large-scale Projects with strategic partners (including the Kreider 2 Project)
on a joint venture (or other participating contractual form) basis----but we have engaged in preliminary discussions concerning opportunities
described in category c). Bion’s business model opens up the opportunity for JVs in various forms, based upon the revenue generated
by our Gen3Tech platform from nutrient reductions, fertilizer co-products and renewable natural gas (which revenue streams will be secured
through long term take-off agreements for each of these co-products) providing initial support for financing of required capital expenditures
(whether equity or debt). We anticipate that these revenue streams will be supplemented by revenue realized from long-term premium pricing
resulting from the sustainable branding opportunity. We believe that, over time, the branding opportunity may provide the single largest
contribution to the overall economic opportunity enabled by Bion’s Gen3Tech platform and business model.

 22 

 Initial Project: Gen3Tech Demonstration Facility 

 During the 2021 fiscal year, Bion completed a series
of core optimization trials of its Gen3Tech platform that were required to move forward with its initial commercial scale Gen3Tech project.
See discussion of the Initial Project above.

 Sustainable/Organic Corn-Finished Beef Opportunity
 
 It is likely that one of the LOI Projects discussed
above will be the first Bion Gen3Tech project in this category.

 The U.S. is the largest producer of beef (and veal)
in the world, accounting for 11.5 million tons out of 61.5 million tons produced worldwide in 2020. Per capita beef consumption in the
U.S. was approximately 70 pounds in 2020, up from 55 pounds in 2011. Annual cash receipts for all U.S. ‘cattle and calves’
were lower at approximately $62 billion in 2020, with 2021 receipts anticipated to be higher (and back in line with recent years) at $66
billion. Retail sales of fresh beef in the U.S. in 2020 were $30.2 billion. In 2020, there were approximately 93.8 million cattle and
calves in the U.S., with 14.7 million on feed. Of those cattle on feed, 81.4 percent were in feedlots with a capacity over 1,000 head.

 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 beef industry is highly fragmented, and it is designed to produce multiple levels of commodity products (without
any significant pricing premiums) that are graded based on marbling (fat) that determines taste and tenderness. Further, during its several
decades of growth, the industry has avoided significant environmental regulation, and instead, has externalized its environmental costs
by returning its waste to crop fields, where much of it is ‘flushed’ downstream. Today, however, consumer demand is shifting
to products that are more sustainable, regarding carbon footprint, impacts to air and water, and other metrics. The result has been an
opening for disruptive startups, including Beyond Meat and Impossible Foods, that are backed by large institutional investors and offer
plant-based (in part) meat substitutes. The CEO of Impossible Foods has made bold claims that the $100B-plus (U.S. alone) meat industry
will be obsolete in 15 years (before the ‘alt meat’ boom flattened). Bion disagrees --- but such competition provides and
highlights opportunities for us.

 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). Nor do market studies
bear out the concept that consumers want to replace the current supply chain. Rather, the studies indicate that consumers want the supply
chain to be more sustainable --- and still taste good . Bion believes that strong demand exists for a verified sustainable
beef product that is real meat, with the taste and texture of traditional corn-fed beef, but which addresses consumers’ sustainability
concerns. Bion’s technology platform is designed to produce such an environmentally sustainable beef (and other meat) product. Bion
previously achieved conditional approval (for its 2G Tech pending resubmission and final inspections) for USDA brand certification that
would initially include verified reductions in carbon, nutrients, and pathogens. The Company is confident that its Gen3Tech will support
a PVP brand for products of sustainable and organic beef JVs.

 Market studies indicate there is potentially a large,
currently unserved, market for sustainable/organic corn-finished beef; and further, that this is a long term and growing trend. Bion believes
its 30 years of experience and expertise in livestock waste management, coupled with its state-of-the-art Gen3Tech platform and first-mover
advantage, put the Company and its selected JV partners in a unique position to develop the most environmentally and economically sustainable
animal protein production facilities possible today. The Company is unaware of any other technology and/or business model that can offer
the same level of comprehensive treatment of livestock waste, produce high value coproducts, and deliver a sustainable brand that can
provide an industry response to counter today’s anti-meat messaging, along with the inroads in the animal protein market being made
by alternative protein competitors.

 ‘Sustainable’ and ‘organic’
are two separate and distinct designations and represent different markets and consumers. While the markets and consumer demographics
may overlap, it is assumed for purposes of Bion’s analysis and planning that the market for sustainable beef will be substantially
larger but command a smaller pricing premium; while the market for organic will be smaller but command a substantially larger premium
and be costlier to produce. Note that in the sustainable and organic markets targeted by Bion, ‘corn-finished’ is a constant.
Bion believes, and the market has demonstrated, that delivering the same taste and texture that consumers expect in American beef and
other meat products is a key to successful market acceptance, within both the sustainable and sustainable organic markets. The success
of grass-fed/organic ground beef vs that of grass-fed/organic steaks demonstrates that palatability, as well as price, is a key criterion
in whether a consumer chooses sustainability. Bion’s Gen3Tech platform supports production of beef products that check all the boxes:
sustainable, expected taste/texture, and affordable.

 23 

 Bion believes there is an opportunity, without the
need to ‘reinvent’ the beef production supply chain, to provide at least a premium segment of the market with an affordable
product that satisfies consumers’ sustainability concerns. Further, we believe that the opportunity is large in scope and of sufficient
duration and potential economic upside to warrant the investment of significant capital and resources. Our anticipated project development
timeline can potentially allow us and our JV partners to be first to market with a sustainable/organic beef product at scale. The ability
to deliver a large supply of a consistent product will be critical to the large retail distribution partners Bion will seek to include
in its JVs. Our first/early-mover advantage should allow us to capture a significant portion of the early adopters in what market studies
indicate is a potentially large, and essentially unserved, market.

 In parallel with the beef demonstration project described
above, we continue to move forward with preliminary pre-development work on a JV to build a large-scale state-of-the-art beef cattle feeding
operations in the Midwest U.S. Such projects will be developed to produce a supply of corn-fed beef that is a mixture of both USDA PVP-certified
sustainable and sustainable-organic brands. One of the three LOIs (Ribbonwire/Olson/DVG )(discussed above), representing the first fruition
of this initiative, will most likely be our first large scale sustainable beef JV with development commencing during the 2024 calendar
year.

 Bion intends to pursue its ‘beef opportunity’
in a series of large-scale JV projects, which will be based on construction of modules housing approximately 15,000 head each, for differing
aggregate totals depending on multiple geographic and economic factors. Bion anticipates that these JVs would be comprised of parties
that could include a) Bion, b) capital market/financing providers, and c) strategic industry partners who would be equity participants
and/or offtake customers for the products of the ventures. The supply chain for each JV would vary and might include participating a)
organic corn producers, b) cow-calf operators, c) cattle feedlot operators, d) slaughter/processing plants, and e) retail distribution
partners--- each subject to negotiated standards and controls. Bion’s model will potentially enable segment of the supply chain
to generate greater profitability as part of an integrated program, rather than the present fragmented industry model, for essentially
performing the same basic services. One example of such synergies/integration might involve providing an organic corn producer with sufficient
ammonium bicarbonate fertilizer to support a higher yield per acre, in return for a share of the excess yield value and a production purchase
commitment.

 At present, there is essentially no traceable and
verifiable ‘sustainable beef’ available to the US market except for niche products. In response to consumer demand for transparency
and sustainability, Bion expects the meat industry in general, and beef specifically, to evolve towards using new technologies to deliver
these attributes in their products. While we anticipate a faster adoption of tracking, verification and sustainability technologies in
other perishable food categories like produce and dairy due to their shorter product cycles (and related harvest and production techniques),
meat industry leaders have also announced their willingness to move forward with initiatives in this area. Many companies have announced
‘sustainability’ initiatives but most appear to consist largely of ‘greenwashing’ marketing commitments rather
than substantive undertakings at this date. Note, however, that Tyson’s Brazen beef initiative (which was announced during March
2023) may develop into a substantive competitive factor in the sustainable beef marketplace. Bion predicts that within approximately five
years, consumers will be able to track and verify claims including sustainability on 25% (or more) of the products merchandised in the
meat department. Bion believes that the retail market share of verifiably sustainable beef in the US will approach 7-10 % within three
(3) years (end of 2026) and 25% in five (5) years (end of 2028) (approximately 6-7,000,000 cattle annually) (and more thereafter). If Bion
can successfully execute on its sustainable beef business plan (which is subject to many contingencies), we believe that JV facilities
utilizing Bion’s Gen3Tech platform will supply one-third (1/3) or more of that of the premium market segment (and a higher portion
of meat that is actually traceable and verifiably sustainable). Our goal is to have multiple sustainable beef projects under development
(within 3-5 distinct JVs) by the end of our 2025 fiscal year. Our first commercial project is likely to be one of our current LOI Projects
but we anticipate commencing development of additional sustainable beef projects during the current fiscal year as well. Our current target
is to have at least three (3) facility modules (15,000 head per module)(“Modules”) in development and/or under construction
during 2024 in three (3) different JVs with the initial barns being populated with livestock during 2025. Further expansion in the number
of distinct JVs is projected through 2026-7 aiming at 5-10 JVs in process --- each of which JVs will be pursuing development of multiple
Modules with targets of 12-15 populated Modules by the end of 2026 (approximately 2%-3% of the US beef market) and 30-45 Modules constructed
and being populated by 2029 (approximately 6%-8% of the US beef market) with further expansion thereafter. Bion’s current goal is
that its Gen3Tech platform will be utilized to produce 33% of the verifiable “sustainable beef” category at the end of the
period (which will equal approximately 2 million cattle annually)(45 Modules).

 There is no assurance that the Company will reach
or approach the goals/targets set forth above. Reaching such goals/targets will require access to very large amounts of capital (equity
and debt) as each module is projected to cost in excess of $50 million to construct and require mobilization of substantial personnel,
technical resources and management skills. The Company does not possess either the financial or personnel resources required internally
and will need to source such resources from outside itself.

 Retrofit Gen3Tech Project: Kreider Poultry JV
(“Kreider 2”) 

 The JV Kreider 2 Gen3Tech project is intended to treat
the waste from Kreider Farms’ approximately six million egg layer chickens (with capacity for an additional three million layers)(and
potentially 1,600 dairy cows). The Project will be designed for an initial capacity of 450 tons 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 Project is planned to be built in multiple phases and may be expanded to include a ‘central processing facility’ with
modules that will accept transported waste from the region on a fee basis.

 24 

 Bion has a long-standing relationship with Kreider
Farms, including a 2016 joint venture agreement related to these potential facilities. 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 technology.
Note, however, that the Kreider 2 project is dependent, in part, on development of a substantial competitively-bid market for long-term
commercial sale of the nutrient reduction credits produced at Kreider 2 (or another form of payment for ecosystem services). If/when a
viable competitive procurement program for nutrient credits or similar program is implemented in PA, we intend to move forward on the
development of the initial portions of the Kreider 2 Project during the subsequent year. Certain matters related to Kreider 2 are discussed
at “Kreider Poultry Joint Venture and Pennsylvania and Chesapeake Bay Initiatives”.

 Policy Change is Coming 

 Because Bion believes that policy change is coming,
we continue to work with an array of stakeholders, including national representatives of the livestock industry, to support establishing
new market driven strategies to allow the private sector, including the livestock industry, to provide low-cost large-scale verifiable
solutions to our Nation’s clean water challenges. There are many states that face similar (or worse) to Pennsylvania’s livestock
waste-related pollution issues, and they will be forced to adopt new strategies, as well. In the face of a growing problem that will only
be exacerbated by climate change, it will be necessary to go beyond status quo solutions or risk losing the ecosystems that comprise many
of our watersheds and estuaries.

 When competitively-bid markets for nutrient reductions
(and/or other forms of payment for ecosystem services that will allow us to monetize environmental benefits) become fully established,
Bion anticipates a robust opportunity to use its Gen3Tech-based platforms to retrofit both existing CAFOs and equip new large-scale livestock
facilities (“Projects”) which will generate the supplemental revenue needed to profitably afford technology implementation
from sales of verified nutrient reduction credits.

 Bion's Gen3Tech can provide a solution to a significant
portion of the livestock problem discussed above, because it upcycles the nutrients, providing a pathway to export and precision apply
them when and where needed, which prevents the uncontrolled release to the environment of most of the nutrients from the CAFO waste stream.
Treatment costs are offset by recovering a substantial portion of those nutrients for value-added commercial utilization.

 Our technology platform largely eliminates ammonia
emissions, other substantial greenhouse gas emissions, odors and other harmful air pollutants. Additionally, the platform destroys virtually
all pathogens in the waste stream that have been linked to foodborne illnesses and growing antibiotic resistance. Similar to point-source
treatment, such as provided by an industrial or municipal wastewater treatment plant, the performance of Bion’s technology platform
can be precisely monitored, measured and quantified (in contrast to the modeled, in-exact - and so far, disappointing - results from modeled
BMPs). Third-party data from our facilities can provide the basis for verified environmental credits, and related revenues, as well as
sustainable branding claims.

 In contrast, the current clean water strategy being
utilized in the U.S. is clearly failing, because it doesn’t adequately address waste from agriculture. A lot of U.S. crops are now
fertilized with raw, untreated manure. However, approximately 80 percent of the nitrogen in that manure is not utilized by the plants
being fertilized but rather ‘escapes’ to contaminate the environment through various pathways. Because livestock waste is
one of the largest contributors to nutrient problems in certain watersheds, livestock waste treatment can be the source of the low-cost
solution for such problems – if the waste is treated upstream at (or close to) the source of production. Manure control technologies,
applied to large scale facilities where concentration and scale enable cost-effective cleanup, can potentially offer the lowest cost nutrient
solutions available in most watersheds today. More than 80 percent of U.S. livestock production takes place on large-scale facilities,
where cost-effective treatment can be implemented. There is no longer any real question regarding whether such facilities need to be cleaned
up. The actual question for public policy concerns is developing sources of new revenues which will enable the livestock industry to offset
the implementation costs for the cleanup.

 Despite trends toward concentration in segments over
the last several decades, the U.S. animal-protein industry, particularly beef, remains (in large part) a fragmented, low-margin commodity
business without effective integrated efforts toward either environmentally or economically sustainable production. Cleaning it up will
have to be orderly and contain a path to sustainability that does not cause U.S. food costs to spike or bankrupt the industry. This will
require treatment sufficient to remove the volume of nutrients in excess of crop requirements. Because the global export market represents
a significant part of the U.S. livestock production industry, direct increases in federal regulation without offsetting revenues would
likely create costs that could not be absorbed by the industry in a manner that would allow it to remain competitive in international
markets. Selective state regulation would have a similar chilling effect within the U.S., since regulated producers in one state would
be unable to compete with unregulated producers in adjoining states. Subsidies and/or new revenue sources are required.

 Bion believes that reallocating some part of the approximately
$110 billion in existing U.S. taxpayer-funded clean water spending to lower-cost alternative solutions in agriculture (including
competitively-bid nutrient reduction procurement) is inevitable. It will provide the taxpayer with accelerated and substantially lower-cost (and
verified) air and water quality solutions compared to current strategies. If Bion’s technology is implemented in appropriate
situations, it will provide the livestock industry with the recurring revenues that are needed to offset the costs of technology adoption
without major disruption to the industry. To date, a wide range of entrenched interests have opposed and fought policy change that might
reallocate clean water spending to more cost-effective alternatives; but this common-sense approach is being accepted by a widening group
of stakeholders.

 25 

 NOTE, THAT THE COVID-19 PANDEMIC AND RESULTANT
ECONOMIC CRISES AND BUDGETARY CONSTRAINTS APPEAR TO 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.
 
 However, Bion believes that some opportunity exists
at the federal level in the projected infrastructure spending to create funding for climate and environmental initiatives. For example,
the recently passed Inflation Reduction Act includes provisions that may provide up to a 30% federal tax credit to partially offset costs
of adoption of environmental technologies such as AD and Bion’s Gen3Tech waste treatment technology. Such an incentive, if available
(of which there is no assurance), would materially impact JV project economics (including the Dalhart Project and the Kreider 2 project).
Further, we believe that AD projects will ultimately be required to utilize ammonia control technologies, since ammonia emissions are
an area of increasing concern, and AD exacerbates the release of ammonia from the organic waste stream.

 Note that a bipartisan 2013 Pennsylvania legislative study projected
that creating a competitive bidding program to procure verified nitrogen reductions to meet federal Chesapeake Bay mandates, regardless
 of source , could reduce the state’s tax- and ratepayer-funded compliance costs by up to 80 percent (approximately $1.5B annually).
The legislative study was updated in 2018 to reflect new policies. The updated report projected savings of up to 90 percent. As discussed
in the original study, much of the savings were due to low-cost high-impact manure control projects (Bion’s technology figured prominently
in the report). Senate Bill 575, which was supported by legislative leadership, national livestock interests and other key stakeholders
(and is consistent with US EPA policies), which would have established a competitive procurement program and unlock some of these opportunities
in PA was passed during June 2019 by the Pennsylvania Senate voted 33 to 17 but one effect of the Covid-19 pandemic crisis has been that
PA funding for new initiatives is largely ‘on hold’ at the present time. Bion anticipates that after passage of a similar
bill in the future (of which there is no assurance), PA will establish a competitively-bid market for nutrient credits within twelve months
after legislative passage and being signed into law by the Governor. See “ Pre-Gen3Tech: Chesapeake Bay Watershed: Kreider Farms
Projects/Pennsylvania Initiatives ” below for discussion of the history and status of matters in PA.

 In a 2017 Letter of Expectation to PA’s
Department of Environmental Protection, US EPA demonstrated its support of a procurement strategy to engage the private sector - as long
as the Credits are verified. It is noteworthy that US EPA and national livestock industry representatives agree on this strategy. Such
a procurement strategy is also consistent with USDA and EPA support of ‘Private Partnerships’ and OMB’s guidance that
supports acquiring verified results vs. financing projects with uncertain outcomes and taxpayer risks. Not surprisingly, the primary opponents
of this strategy are the entrenched interests of the clean water status quo, although how much longer they can avoid accountability for
a failing strategy remains to be seen.

 We believe that such strategies that may be developed
in Pennsylvania and the Chesapeake Bay, if implemented, are likely to serve as a model for the 40 other states now seeking solutions to
similar water quality problems. Today, most states face a similar issue---unfunded federal clean water mandates. Pennsylvania’s
proposed competitive bidding program provides an opportunity to significantly reduce the cost to PA (and a model for other states to utilize
in the future) in meeting such mandates.

 Going Concern: 

 The Company’s audited financial
statements have been prepared assuming the Company will continue as a going concern. The Company has not generated significant
revenues and incurred a net income of $8,291,000 for the year ended June 30, 2022 and a net loss of approximately $3,189,000 during
the year ended June 30, 2023. The net income for the year ended June 30, 2022 was largely due to a one-time, non-cash event of the
dissolution of PA-1 resulting in a gain of approximately $10,235,000 as well as a one-time gain of $902,000 from the sale of the
Company’s ‘biontech.com’ domain pursuant to a purchase agreement during the period. At June 30, 2023, the Company
has a working deficit and a stockholders’ equity of approximately $968,000 and $4,194,000, respectively. During the year ended
June 30, 2023 the Company had debt modifications that resulted in a reduction of debt of $3,522,000 and an increase in equity in the same amount.
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.

 PRINCIPAL PRODUCTS AND SERVICES 

 The Company’s primary focus is on implementing
its Gen3Tech in JVs (as described above). Therefore, the category ‘PRINCIPAL PRODUCTS AND SERVICES’ is not fully appropriate
for the Company’s business. While the Company may implement some Gen3Tech systems on a contractual basis, our business does not
primarily involve sale of our systems or long term direct operations/management of our systems. The discussion below should be read in
the context this business focus (described in detail above and below).

 Bion has invested over $100 million in its business
since 1989, much of which has been expended development of its technologies and technology platform, policy change initiatives and other
activities. Our 2G Tech (now supplanted by our Gen3Tech) was proven at commercial scale and has been reviewed and qualified for federal
loan guarantees under USDA’s Technical Assessment program. The 2G Tech platform (as will our Gen3Tech going forward) provided verified
nutrient credits from wet livestock waste (dairy, beef, and swine) that can be used to offset US EPA-mandated TMDL requirements. The Company
intends to implement its first Gen3Tech systems during the current fiscal year. Our Gen3Tech and Gen3Tech platform provide the basis for
our planned JVs and Projects and therefore constitute our ‘principal products’.

 26 

 Each Bion system (whether prior 2G Tech or current
Gen3Tech) is comprised of several process units combined in a ‘process train’, much like a municipal wastewater treatment
plant. The platform utilizes a combination of mechanical, biological, and thermal processes and can be configured in a variety of ways,
based on the needs and economics of the location, to provide the level of environmental treatment required, while separating and aggregating
the various components of the waste stream for processing and recovery. A key attribute of the Bion platform is that the performance of
the systems can be measured, quantified and verified through a proprietary data collection system, providing a level of oversight and
verification similar to waste water treatment facilities. In addition to providing third-party verification of reductions for regulatory/credit
purposes, the same data can also be used to support the claims of a USDA-certified sustainable branding.

 Bion’s waste treatment solutions are scalable,
proven in commercial operations (2G Tech) and the verified results have been accepted by EPA (for use as a “qualified offset”),
USDA and other regulatory agencies. Bion’s core processes are protected by five United States patents. Additionally, Bion has two
United States patent applications pending and has three international patent applications currently pending. We do not know of any other
cost-effective technology that provides Bion Gen3Tech platform’s system’s level of treatment of livestock waste (dairy, beef,
poultry and swine) or which can provide the full set of ‘sustainability benefits’ anticipated to be provided by the Company’s
JVs. Note that while revenues from Bion’s 2G platform were 90 percent dependent on developing markets for nutrient reductions, our
Gen3Tech platform will generate revenues from multiple co-product streams to supplement revenues from nutrient reductions . 

 Bion’s Gen3Tech platform has been developed
over the past six years to maximize co-product recovery values from large scale facilities (or multiple modular facilities) while maintaining/improving
the level of environmental remediation produced by our 2G systems. The 3G systems will recover nitrogen from the CAFO waste stream for
production of nitrogen-rich products that Bion believes will qualify for certification for use as fertilizer in growing organic crops
(the first approval was received during the 2020 fiscal year) for livestock and human consumption and/or for other uses. Further, the
Gen3Tech platform will recover methane that can be conditioned/cleaned to pipeline quality gas (with the CO2 recovered from the cleaning
process re-cycled and utilized in the fertilizer production process) and will qualify for various credits and subsidies as clean, renewable
natural gas. These two revenue streams will supplement revenues from the sale of USDA PVP-certified, verifiably sustainable branded
meat products. In some locations, revenues may also be realized from nutrient credits and other environmental services.

 Building upon our 2G Tech and Bion's over 20 years
of experience providing waste treatment services to the livestock industry, commencing with our first generation technology applications,
the Company is also pursuing the Retrofit opportunities related to environmental remediation of existing CAFOs in appropriate situations
(see discussion of Kreider Poultry venture herein). Our technology has evolved and been upgraded over the decades to meet changing
standards and requirements. Bion's Gen3Tech platform creates potentially profitable business opportunities to provide waste treatment
services and systems and/or renewable energy production capability to existing large livestock operations (of which there are many), and
potentially to smaller facilities through aggregation of waste streams. However, this is not our primary focus. Candidates for these solutions
include individual CAFO facilities that face impending regulatory action, CAFOs that wish to expand or relocate, and operations located
in regions that suffer severe and immediate environmental issues, such as the Chesapeake Bay watershed, Great Lakes region and/or the
San Joaquin Valley, where financial incentives (such as nutrient reduction credit trading programs) are (or may become) available that
encourage voluntary reductions of nutrient releases and/or atmospheric emissions from agricultural sources.

 See ‘ HISTORY, BACKGROUND AND CURRENT ACTIVITIES’
 above.

 Sustainable/Organic Corn-Fed Beef Opportunity 

 The Company believes that one of its major opportunities
will be in JVs to pursue the Sustainable Beef Opportunity and the Sustainable/Organic Corn-Fed Beef Opportunity in the Midwest as discussed
at some length above. It is the Company’s current intention to initiate several JVs pursuing this opportunity as developer of, technology
provider to, and direct participant. See discussion above.

 While it is not possible at this time to firmly predict
where the initial JVs and/or Project will be developed or the order in which JVs and Projects will be developed, the Dalhart Project (see
discussion above) will most likely be the Company’s first large scale Gen3Tech commercial project. All potential JVs and/or Projects
are in very early pre-development stages and may never progress to actual development or may be developed after other JVs and/or Projects
not yet under active consideration.

 The Company's successful accomplishment of its business
activities is dependent upon many factors (see 'Forward-Looking Statements' above) including without limitation the following, none of
which can be assured at this date:

 • 
 
 Successful development and completion of the Initial Project (at least phase 1) and the first large scale Gen3Tech commercial Project(s) to demonstrate the commercial economics of its Gen3Tech platform; 

 • 
 
 Successful development of the first Integrated Project to demonstrate the operation of a fully-integrated, environmentally-compliant Integrated Project at a profitable level; 

 • 
 
 Establishment of a substantial and liquid market for nutrient reductions and other environmental attributes generated from the Company’s future facilities; 

 27 

 • 
 
 Establishment of marketing relationships needed for realization of full value from the saleable co-products including sustainable and organic meat products and organic nitrogen fertilizer products; 

 • 
 
 Successful completion of organic certifications and USDA PVP-certified sustainable brand; 

 • 
 
 Our ability to raise sufficient funds to allow us to finance our activities, JVs, and Projects; and 

 • 
 
 Regulatory and enforcement policies at the Federal, State and local levels. 

 Kreider Poultry Joint Venture and Pennsylvania
and Chesapeake Bay Initiatives 

 Bion’s activities in Pennsylvania (“PA”)
commenced with the Kreider 1 2G Tech dairy system in the Chesapeake Bay watershed. This retrofit installation was designed and intended
primarily to reduce nitrogen and phosphorus releases and ammonia emissions from the dairy waste streams to generate tradable nutrient
reduction credits as part of a nutrient credit trading program through the PA Department of Environmental Protection (‘PADEP’).
While this project was not a commercial success (due to PA’s failure to implement a viable long-term credit trading market), it
demonstrated that Bion’s manure treatment technology can generate low-cost verified credits and provided the basis of a 2013 PA
Legislative Budget and Finance Committee report (updated in 2018) that supports the use of manure technologies to provide low-cost alternatives
to meet Bay mandates.

 It is possible that the Kreider 2 poultry waste treatment
Project, which is in its early development and pre-permitting phase, will be one of our first large scale JV Projects if a workable market
for nutrient reduction credits develops in PA, of which there is no assurance. See “ Retrofit Gen3Tech Project: Kreider Poultry
JV (“Kreider 2”) ” above. The Kreider 2 Project will utilize our Gen3Tech platform to treat the waste stream from
Kreider Farm’s large poultry operations (possibly together with waste from other nearby poultry operations and/or other waste streams)
(and the dairy waste stream previously treated in the Kreider 1 system) to generate renewable energy, marketable nutrient reduction credits
and co-products (including nitrogen in organic and/or non-organic forms). It is targeted to treat the waste stream from approximately
9 million birds, in modules, when fully developed. Estimated capital costs (‘capex’) are currently estimated in the $60 million
range (with the caveat that no site has yet been chosen, technology development is not complete and the final design work has not yet
begun) and has the potential to generate gross revenues of up to $50 million annually from the multiple revenue streams based on current
projected yields and prices, none of which are assured. Note that tech and system design work is continuing and the Company anticipates
reduce reductions of both capex and operating costs.

 To date the market for long-term nutrient reduction
Credits in Pennsylvania has been very slow to develop and the Company’s activities have been negatively affected by such lack of
development. However, Bion is confident that if and when these markets are established, the Credits it produces will be competitive
in the credit trading markets, based on its cost to remove nitrogen from the livestock waste stream, compared to the cost to remove nitrogen
through various other treatment activities.

 Several independent studies have calculated the average
cost to remove nitrogen through various sector practices. Reports prepared for the PA Senate (2008), Chesapeake Bay Commission (2012)
and PA legislature (2013; described below), as well as the Maryland Chesapeake Bay Financing Strategy Report (2015), demonstrate that
the cost to remove nitrogen (per pound on average) from agriculture is $44 to $54, municipal wastewater: $28 to $43, and storm water:
$386 to $633. Pursuant to the PA legislative study, by replacing sector allocation (for all sectors) with competitive bidding, up to 80
percent savings could be achieved in PA’s Chesapeake Bay compliance costs ($1.5 billion annually) by 2025. If the legislative study
had focused on the cost differentials of competitive bidding compared only with storm water, the relative savings would be substantially
greater.

 Since these studies were completed, most of the larger
(Tier 1) municipal wastewater treatment plants in PA have been upgraded, at a cost of approximately $2.5 billion (vs initial 2004 PA DEP
cost estimates of $376 million). US EPA is now focused on PA’s storm water allocation (3.5 million pounds) and has this sector on
‘backstop level actions’, the highest level of EPA-oversight and the final step before sanctions. In the same 2004 PA DEP
cost estimate that led to the more than a $2 billion underestimate/miscalculation in municipal wastewater plant upgrade costs, the estimate
for storm water cost was $5.6 billion. In April 2017, US EPA sent a Letter of Expectation to PA DEP, expressing the agency’s support
for the use of nutrient credit trading and competitive bidding to engage the private-sector to lower costs. The letter specifically encouraged
the use of credit trading to offset the state’s looming storm water obligations.

 Bion anticipates that it will be able to profitably
develop the Kreider 2 project if it is able sell nutrient credits generated at the Kreider 2 facilities (and subsequent projects) at prices
are in the range of $6-$12 (or higher) per lb. of nitrogen reduction under long-term contracts, of which there is no assurance. Bion
further believes that with the studies and information now available to other states that are (or will shortly be) facing these same decisions,
a cost-benefit analysis will make it clear from the outset that competitive bidding for nutrient reduction credits from alternative approaches
can provide dramatically lower-cost solutions than traditional strategies.

 The Kreider 2 poultry waste treatment facility in
PA may be one of our initial Gen3Tech Projects outside of the sustainable beef segment. However, Bion intends that it will select a site
for the Kreider 2 Project and/or its initial Integrated Project (and possibly additional Projects) only after PA adopts a competitively-bid
nutrient reduction Credit purchase program (see discussion above and below).

 28 

 CORPORATE BACKGROUND 

 The Company is a Colorado corporation organized on
December 31, 1987. Our principal executive offices are located in the home offices of our senior executives. Our primary administrative
office is now located at the residence of our Office Manager at 9 East Park Court, Old Bethpage, New York 11804, at which location most
of the Company’s physical records and central computer reside. Our primary telephone number is 516-586-5643. We have no additional
offices at this time as all employees and primary consultants work from their home offices.

 HISTORY AND DEVELOPMENT OF OUR BUSINESS 

 Substantially all of our business and operations to
date has been conducted through wholly-owned subsidiaries, Bion Technologies, Inc. (a Colorado corporation organized September 20, 1989),
Bion Integrated Projects Group, Inc. ("Projects Group") (formerly Bion Dairy Corporation through August 2008 and originally
Bion Municipal, Inc., a Colorado corporation organized July 23, 1999) and Bion Services Group, Inc. ("Services Group") (formerly
Bion International, Inc., a Colorado corporation organized July 23, 1999) and BionSoil, Inc. (a currently inactive Colorado corporation
organized June 3, 1996). Bion is also the parent of Bion PA 2 LLC (a Colorado entity organized June 24, 2010) (“PA2”)
and Bion 3G-1, LLC (a Colorado entity organized on September 23, 2021). In January 2002, Bion entered into a series of transactions whereby
the Company became a 57.7% (now 58.9%) owner of Centerpoint Corporation (a Delaware corporation organized August 9, 1995) ("Centerpoint").
Bion was formerly the parent of Bion PA 1 LLC (a Colorado entity organized August 14, 2008) (“PA1”) which was dissolved on
December 29, 2021 (See “ Pennvest Loan and Bion PA1 LLC Dissolution ” herein).

 Although we have been conducting business since 1989,
we determined that we needed to redefine how we could best utilize our technology during 2003 and again in 2015. From 2003 through
early 2008, we primarily worked on technology improvements and applications and in furtherance of our business model of Integrated Project
development. During 2008 we re-commenced pursuing active commercial transactions involving installation of our 2G Tech for CAFO
waste treatment and related environmental remediation and initiation of pre-development modeling and pre-development work to prepare for
our initial Integrated Projects. Commencing during 2015, the Company focused its efforts largely on the development of our Gen3Tech platform
which was largely completed during 2021. We are now focused primarily on development of JVs and Projects based on implementation of our
Gen3Tech platform (and business model) in the industry segments discussed above.

 Our original systems were wastewater treatment systems
for dairy farms and food processing plants. The basic design was modified in late 1994 to create Nutrient Management Systems ("NMS")
that produced organic soil products as a byproduct of remediation of the waste stream when installed on large dairy or swine farms. 
Through June 30, 2002, we sold and subsequently installed, in the aggregate, approximately 30 of these first iteration of Bion’s systems
in 7 states, of which we believe a few may still in operation in 3 states. We discontinued marketing of our first-generation NMS
systems during fiscal year 2002 and turned control and ownership of the first-generation systems over to the farms on which they were
installed over the following two years. We were unable to produce a business model based on the first-generation systems that would
generate sufficient revenues to create a profitable business. While continuing to market and operate the first-generation systems,
during the second half of calendar year 2000, we began to focus our activities on developing the next generation of the Bion technology.
We no longer operate or own any of the first-generation NMS systems.

 As a result of our research and development efforts,
the core of our current technology was re-developed during fiscal years 2001-2004. We designed and tested Systems that used state-of-the-art,
computerized, real-time monitoring and system control with the potential to be remotely accessed for both reporting requirements and control
functions. These Systems were smaller and faster than our first-generation NMS systems. The initial versions of our second
generation of Bion Systems were designed to harvest solids used to produce organic fertilizer and soil amendments or additives (the "BionSoil(R)
products") in a few weeks as compared to six to twelve months with our first-generation systems.

 During 2003-4 we designed, installed and began testing
a commercial scale, second generation Bion System as a temporary modification or retrofit to a waste lagoon on a 1,250-milking cow dairy
farm in Texas, known as the DeVries Dairy. In December 2004, Bion published an independently peer-reviewed report, a copy of which
may be found on our website, www.biontech.com , with data from the DeVries project demonstrating a reduction in nutrients (nitrogen
and phosphorus) of approximately 75% and air emissions of approximately 95%. More specifically, those published results indicated
that the Bion System produced a 74% reduction of nitrogen and a 79% reduction of phosphorus. The air results show that the Bion
System limited emissions from the waste stream as follows: (in pounds per 1,400-pound dairy cow per year):

 • 
 Ammonia 
 0.20 
 
 • 
 Hydrogen Sulfide 
 0.56 
 
 • 
 Volatile Organic Compounds 
 0.08 
 
 • 
 Nitrogen Oxides 
 0.17 
 
 These emissions represented a reduction from published
baselines of 95%-99%.

 29 

 Through 2007 the demonstration project at the DeVries
Dairy in Texas also provided Bion with the opportunity to explore mechanisms to best separate the processed manure into streams of coarse
and fine solids, with the coarse cellulosic solids/biomass supporting generation of renewable energy and the fine solids potentially becoming
the basis of organic fertilizer products and/or a high-protein animal feed ingredients. On-going research was also carried out on various
aspects of nutrient releases and atmospheric emissions.

 Bion discontinued operation of the DeVries demonstration
research system during 2008.

 During the 2005-2008 period, Bion focused on completing
development of its 2G Tech platform and business model. As such, we did not pursue near term sales and revenue opportunities, such
as retrofitting existing CAFO's with interim versions of our waste management solutions, because such efforts would have diverted scarce
management and financial resources and negatively impacted our ability to complete development of an integrated technology platform in
support of large-scale sustainable Projects.

 From 2009 through 2015 (when development of our Gen3Tech
platform began), Bion actively pursued business opportunities in three broad areas 1) Bion systems to retrofit of existing CAFO’s
(some of which may generate verified nutrient credits and revenues from the production of renewable energy and byproducts) (“Retrofits”),
and 2) development of new state-of-the-art large scale waste treatment facilities, potentially in conjunction with new CAFOs developed
in strategic locations that were not previously possible due to environmental constraints in strategic locations (“Projects”)
(some of these may be “closed loop’ Integrated Projects that were not previously possible due to environmental constraints
as described below), and 3) licensing and/or joint venturing of Bion’s technology (primarily) outside North America. Bion is now
primarily pursuing JVs related to these opportunities within the United States and internationally based on our Gen3Tech as described
above.

 Pre-Gen3Tech: Chesapeake Bay Watershed: Pennvest
Loan and Bion PA1 LLC (“PA1”) Dissolution/Kreider Farms Projects/Pennsylvania Initiatives 

 Pennvest Loan and Bion PA1 LLC (“PA1”)
Dissolution 

 PA1, the Company’s wholly-owned subsidiary,
was dissolved on December 29, 2021 on which date it owed approximately $10,010,000 under the terms of the Pennvest Loan related to the
construction of the Kreider 1 System including accrued interest and late charges totaling $2,255,802 as of that date. Through the date
of the dissolution, PA1 was a wholly-owned subsidiary of the Company and its assets and liabilities were included on the Company’s
consolidated balance sheets. At September 30, 2021, PA1’s total assets were $297 and its total liabilities were $10,154,334 (including
the Pennvest Loan in the aggregate amount of $9,939,148, accounts payable of $214,235 and accrued liabilities of $950) which sums were
included in the Company’s consolidated balance sheets in its Form 10-Q for the quarter ended September 30, 2021. Subsequent to the
dissolution of PA1, its assets and liabilities are no longer consolidated and included in the Company’s consolidated balance sheets.
As of December 29, 2021, PA1’s total assets were nil and its total liabilities were $10,234,501 (including the Pennvest Loan in
the aggregate amount of $10,009,802, accounts payable of $212,263 and accrued liabilities of $12,436. The net amount of $10,234,501 was
recognized as a gain on the legal dissolution of a subsidiary in other (income) expense.

 As background, 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 accrued 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 $5,886,000 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 was collateralized by PA1’s
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
was 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 $123,444 and $246,887 for the years ended June 30, 2022 and 2021, respectively. Based on the limited
development of the depth and breadth of the Pennsylvania nutrient reduction credit market, PA1 commenced discussions and negotiations
with Pennvest related to forbearance and/or re-structuring the obligations under the Pennvest Loan during 2013. In the context of such
negotiations, PA1 elected not to make interest payments to Pennvest on the Pennvest Loan since January 2013. Additionally, the PA1 did
not make any principal payments, which were to begin in fiscal 2013, and, therefore, the Company classified the Pennvest Loan as a current
liability through the dissolution of PA1 on December 29, 2021.

 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 solely an obligation of PA1 since that date. Note, however,
the Company’s consolidated balance sheet as of June 30, 2021 reflects the Pennvest Loan as a liability of $9,868,495 despite the
fact that the obligation (if any) was solely an obligation of PA1 . 

 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 solely an obligation of PA1 since that date. Note, however,
the Company’s consolidated balance sheets as of June 30, 2021 reflects the Pennvest Loan as a liability of $9,868,495 despite the
fact that the obligation (if any) was solely an obligation of PA1 . 

 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. PA1 did not
make the payment and did/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 final proposal
to Pennvest during September 2021 which proposal was also rejected by Pennvest. PA1 provided 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.” Pennvest responded favorably to the approach of selling the equipment. 

 30 

 On December 29, 2021, the Company approved and executed
a ‘Consent of the Sole Member of Bion PA 1’ (the “Consent to Dissolution”) that authorized the complete liquidation
and dissolution of PA1. A Statement of Dissolution was filed by PA1 with the Colorado Secretary of State on December 29, 2021. The Company
is of the understanding that the liquidation value of Bion PA 1’s property is substantially below the current amount outstanding
under the Funding Agreement dated October 27, 2010 by and between PA1 and Pennvest, the only known secured creditor of PA1. Post-dissolution,
PA1’s activities will be limited entirely to activities required to properly distribute its net assets to creditors and wind down
its business.

 PA1 and Pennvest agreed to have the equipment sold
by a third party auctioneer who arranged for the sale of its property and delivery of all proceeds (net of commissions and customary
costs of sale) to Pennvest. The auction took place during the period between May 13-18, 2022. The Company’s personnel assisted PA1
with this process as needed at no cost to PA1. The net sum of $104,725 was realized from the asset sale, which sum was delivered
to Pennvest on June 15, 2022. The remaining unsold assets will be transferred to Kreider Farms during the next quarter in order to complete
the winding up of the Kreider 1 project.

 Upon the complete distribution of all assets of PA1,
whether by transfer or sale and distribution of net proceeds as provided above, PA1 will use commercially reasonable efforts to cause
the cessation of all activities. No distributions of PA1’s assets will be made to the Company or its affiliates. The Consent to
Dissolution authorized Mark A. Smith, the Company’s President and the sole manager of PA1, to cause to be delivered for filing the
Statement of Dissolution, to give notice of the dissolution, and to take any other act necessary to wind up and liquidate the business.

 PA1 has made no payments to vendors or other creditors
in connection with the dissolution. No distributions or payments of any kind have ever been made to the Company, the sole member of PA1
since inception and no payment will be made to the Company or any affiliate in connection with the dissolution.

 For more information regarding the history and background
of the Pennvest Loan and PA1, please review our Form 10-K Annual Reports for the years from 2008 through 2021 including the Notes to the
Financial Statements included therein.

 Chesapeake Bay Watershed: Kreider Farms Projects/Pennsylvania
Initiatives 

 The urgency and priority of the need to clean up nutrient
(primarily nitrogen and phosphorus) pollution to the Chesapeake Bay was clearly demonstrated with promulgation of President Obama's 2009
Executive Order concerning clean-up of the Chesapeake Bay and the EPA’s publication and issuance during December 2010 of the Chesapeake
Bay Total Maximum Daily Load (TMDL) standard (http://www.epa.gov/reg3wapd/tmdl/ChesapeakeBay/tmdlexec.html) for nutrient pollution
in Chesapeake Bay tributaries. In May 2010, the EPA published their overall strategy for remediating the Chesapeake Bay, and they have
committed to reducing nitrogen and phosphorus flows to the Bay sufficiently to enable 60% of the Bay watershed segments to meet water
quality standards by 2025. At that time, 89 of the 92 Bay and tidal watershed segments were not in compliance with water quality
standards (97% were out of compliance). The EPA and associated state agencies also committed to short-term 3-year compliance milestones
to enhance accountability and corrective actions, along with a host of definable and measurable goals, enhanced partnerships, and major
environmental initiatives. Based on these actions, greater compliance has been required commencing with the 2016 ‘water year’. 
EPA documents defined the overall mission as requiring an approximately 65-million-pound annual reduction from existing nitrogen (N) loading
to the Chesapeake Bay by 2025, of which 35 million pounds was allocated to Pennsylvania. Importantly, the 3-year compliance milestones
were established as a part of the compliance program to add both short- and long-term accountability to state actions associated with
reduced nutrient and sediment flows to the Chesapeake Bay. According to the EPA’s Interim Evaluation of Pennsylvania’s Milestone
Progress published in June 2015, PA was 14.6 million pounds behind its 2014-2015 milestone commitments for nitrogen, a remarkably large
deficit given the previously stated 2-million-pound deficit from the 2012-2013 water year. EPA has placed PA’s agriculture
and urban/suburban sectors under a “Backstop Actions Level”, the highest level of EPA oversight. EPA has also stated
that if load reductions remain off track, EPA may consider seeking additional (and expensive) pollutant reductions from the wastewater
sector. 

 In an effort to get back on track and hold off federal
intervention, PA unveiled a purported “comprehensive strategy” to "reboot" the state's efforts to improve water
quality in January 2016. The reboot strategy relied upon a mix of enhanced farm compliance and enforcement activities along with
the promotion of additional best management practices (BMP). This proposed strategy has been met with skepticism about its efficacy/practicality
and resistance within the agricultural community. While many of these reboot efforts are continuing today, the PADEP Secretary resigned
in May 2016 and PA appears to have slowed implementation efforts recently while seeking alternative approaches to reduce PA’s nitrogen
pollution to the Chesapeake Bay. The EPA has continued to reject PA’s proposed plans related to the Chesapeake Bay clean-up mandate
as inadequate. Recent reports indicate that PA is in need of 32 million pounds of nitrogen reductions to meet its requirements. Litigation
has been initiated against PA and the EPA by neighboring states to compel performance by PA and enforcement by the EPA. The recent PA
budget spending package that was passed by the PA legislature in 2022 includes allocation of some PA’s remaining pandemic relief
funding for clean water related to either the Chesapeake Bay compliance mandates or state water quality. However, it appears that the
funds will likely be expended on existing unsuccessful programs and clean-up strategies.

 31 

 As a result of PA’s default of its Bay mandates,
and the host of upcoming both short and long-term specific commitments and compliance deadlines, Bion believes that its long-term opportunity
related to the Chesapeake Bay clean-up has potentially been significantly expanded and accelerated.

 During 2008, Bion executed an agreement to install
a Bion System at the Kreider Farms (“KF”) in Lancaster County, Pennsylvania to reduce nitrogen (including ammonia emissions
which are re-deposited as nitrogen from the atmosphere) and phosphorus in the farm's effluent. Bion undertook this project (through PA1)
due, in large part, to Pennsylvania's nutrient credit trading program, which was established to provide cost-effective reductions of the
excess flow of nutrients (nitrogen and phosphorus) into the Chesapeake Bay watershed. Bion worked extensively with the Pennsylvania Department
of Environmental Protection ('PADEP') over several years to establish nutrient credit calculation/ verification methodologies that were
appropriate to Bion's 2G Tech and recognizes its 'multi-media' (both water and atmospheric) approach to nutrient reductions. Pennsylvania's
nutrient credit trading program allows for voluntary credit trading between a 'non-point source' (such as a dairy or other agricultural
sources) and a 'point source' polluter, such as a municipal waste water treatment plant or a housing development. However, the market
for long term Credits in PA has failed to develop any significant breadth or depth and no Credits were sold by PA1 from the Kreider 1
system.

 The original Kreider agreements also provided for
Bion to develop a waste treatment/renewable energy production facility to treat the waste from Kreider's approximately 6+ million chickens
(planned to expand to approximately 9-10 million)(and potentially other poultry operations and/or other waste streams)('Kreider Renewable
Energy Facility' or ' Kreider 2 Project'). On May 5, 2016, the Company executed a stand-alone joint venture agreement (‘JVA’)
with Kreider Farms covering all matters related to development and operation of a system to treat the waste streams from Kreider's poultry
facilities in Bion PA2 LLC ("PA2"). Bion anticipates that it will execute an updated JVA with Kreider Farms during the current
fiscal year which will include utilization of Bion’s Gen3Tech and other matters. The Company continues its pre-development work
related to the details of the Kreider 2 Project. For more information regarding the history and background of the Kreider 2 Project,
please review our Forms 10-K for the years from 2008 through 2021. 

 The Company believes that Pennsylvania is potentially
‘ground zero’ in the long-standing clean water battle between agriculture and the further regulation of agriculture relative
to nutrient impacts. The ability of Bion and other technology providers to achieve verified reductions from agricultural non-point sources
can resolve the current stalemate and enable implementation of constructive solutions that benefit all stakeholders, providing a mechanism
that ensures that taxpayer funds will be used to achieve the most beneficial result at the lowest cost, regardless of source. All sources,
point and non-point, rural and urban, will be able to compete for tax payer-funded nitrogen reductions in a fair and transparent process;
and since payment from the tax and rate payers would now be performance-based, these providers will be held financially accountable.

 See the extended additional discussion regarding these
matters in our Annual Reports on Form 10-K for the year ended June 30, 2021 and prior years.

 RECENT FINANCINGS 

 Sales of Common Stock
during 2023 and 2022 Fiscal Years 

 During the year
ended June 30, 2023 the Company entered into subscription agreements to sell units for $1.00 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 $1.25 per share with an expiry date of 12/31/2023, and pursuant thereto, the Company issued 346,230 units for total proceeds of $346,230. 

 During the year
ended June 30, 2023 the Company entered into subscription agreements to sell shares for $1.00 per share and pursuant thereto, the Company
issued 2,000,000 of the Company’s restricted common stock for total proceeds of $2,000,000. 

 During the year
ended June 30, 2023 the Company entered into subscription agreements to sell units for $1.60 per unit, with each unit consisting of one
share of the Company’s restricted common stock and one-half warrant to purchase shares of the Company’s restricted common
stock for $2.40 per share with an expiry date of 6/30/2024 and pursuant thereto, the Company issued 975,000 units for total proceeds of
$1,560,000, net proceeds of $1,473,600 after commissions of $86,400. 

 During the year
ended June 30, 2023, 175,114 warrants were exercised to purchase 175,114 shares of the Company’s common stock at $0.75 per share
for total proceeds of $131,335. 

 During the year
ended June 30, 2023 Mark Smith elected to convert $50,000 of his 2020 Convertible Obligation into 100,000 units at $0.50 per unit (pursuant
to the 2006 Consolidated Incentive Plan) with each unit consisting of one share of common stock and one warrant to purchase one share
of the Company’s stock for $0.75 per share until 12/31/2024. 

During the year ended June 30, 2023 Mark Smith elected to convert $99,889 of his Adjusted 2020 Convertible Obligation into 1,055,906 units
at $0.0946 per unit (pursuant to the 2006 Consolidated Incentive Plan) with each unit consisting of one share of common stock and one
warrant to purchase one share of the Company’s stock for $0.75 per share until March 2026. 

 32 

During the year ended June 30, 2023 Mark Smith elected to convert $36,573 of his Adjusted 2020 Convertible Obligation into 386,608 
units at $0.0946 per unit (pursuant to the 2006 Consolidated Incentive Plan) with each unit consisting of one share of common stock and
one warrant to purchase one share of the Company’s stock for $0.75 per share until March 2026. 

 D uring
the year ended June 30, 2023 the Company issued 82,259 shares for services of $130,000.

 During the year ended June
30, 2022, 2,315,550 warrants were exercised to purchase 2,315,550 shares of the Company’s common stock at $0.75 per share for total
proceeds of $1,736,662, net proceeds of $1,718,061 after commissions of $18,601.

 During the year
ended June 30, 2022, Smith elected to convert accounts payable of $17,711 into an aggregate of 35,424 units at $0.50 per unit (pursuant
to the 2006 Consolidated Incentive Plan) with each unit consisting of one share of the common stock and one warrant to purchase one share
of the Company’s stock for $0.75 per share until December 31, 2024. 

 During the year
ended June 30, 2022, the Company issued 25,000 units at $1.10 per until for services of $27,500. 

 COMPETITION: 

 There are a significant number of potential competitors
in the industries in which Bion is working, including livestock waste treatment, renewable energy production, and the production of sustainable
beef products.

 There are a host of competitors working in the livestock
waste treatment space. One efficient way to assess competition in these spaces is to review the Newtrient, LLC catalogue which is produced
by an organization created by the dairy industry to help farmers, technology providers, manure-based product developers and other stakeholders
assess manure related challenges and opportunities. Many of the technologies reviewed by and organized by Newtrient in their catalog,
such as Bion, address manure streams in addition to dairy. The potential competition has increased with the growing governmental and public
concern focused on pollution due to CAFO wastes. Waste treatment lagoons which depend on anaerobic microorganisms ("anaerobic
lagoons" or “ADs”) are the most common traditional treatment process for animal waste on large farms within the swine
and dairy industries. Additionally, many beef feedlots, poultry facilities and dairy farms simply scrape and accumulate manure for
later field application. Both lagoon and scrape/pile manure storage approaches are coming under increasing regulatory pressure due to
associated odor, nutrient management and water quality issues and are facing possible phase-out in some states.

 Although we believe that Bion’s comprehensive
solution is the most economically and technologically viable solution for the current problems, other alternative (though partial) solutions
do exist, including, for example, synthetic lagoon covers (which are placed on the top of the water in the lagoon to trap the gases),
stand-alone ADs (a tank which uses anaerobic microorganisms to break down the waste to produce methane), multistage and solids separators
(processes which separate large solids from fine solids), as well as various thermal waste-to-energy technologies. Additionally,
many efforts are underway to develop and test new technologies.

 There is a growing industry associated with the production
of fertilizer products produced from nutrients captured in CAFO manure streams. Many technology firms, including Bion, have figured out
how to generate nonsynthetic products which are certified for organic production, which enables a higher valuation. Bion and its competitors
are working hard to improve the production efficiency of these products while reducing production costs. Bion, as documented in its patents,
has invented a non-synthetic process to produce ammonium nitrogen fertilizer in solid and liquid forms. To our understanding, no other
manure nutrient technology firm has figured out a way to match our development of a solid ammonium nitrogen fertilizer.

 Competition in the renewable energy generation space
is growing in the agricultural sector, predominantly from the growth in anaerobic digestion (AD) projects designed to reduce odors and
generate revenues from captured energy and reduced carbon footprints. AD projects are primarily associated with the dairy sector as the
manure is mostly already captured and therefore there are minimal infrastructure projects required to add on AD technology. We intend
to evaluate the use of our technology as a ‘bolt-on’ behind dairy ADs once we have complete date from our Initial Project.
Therefore, such ‘competitors may be turned into customers for Bion. W We are predominantly focused on generating AD projects at
beef cattle finishing operations, an area in which very few ADs have been implemented. There is not much competition in that space as
most current beef feedlots do not engage in the type of efficient manure collection which is a required prerequisite for AD economics.
Bion has also engaged with solar photovoltaic (PV) developers to install PV panels on barn roofs, and there is some competition in that
space, but again not much in the beef cattle finishing sector.

 Third there is competition in the space of production
of sustainable beef products. A number of ranches and beef producers are working with various third-party certification organizations
to document the sustainable practices that are being implemented. Bion is working in a similar manner. All investments in this area are
subject to competition and decisions made by consumers---including ‘how much will a consumer pay for truly sustainable beef products
vs. standard conventional feedlot produced beef?’

 Our ability to compete is dependent upon favorable
regulatory conditions, our ability to obtain required approvals and permits from regulatory and other authorities and upon our ability
to introduce and market our Systems in the appropriate industry and geographic segments.

 There are many companies that are already selling
products to satisfy demand in the sectors of these markets we are trying to enter. Many of these companies have established marketing
and sales organizations and customer commitments, are supporting their products with advertising, sometimes on a national basis, and have
developed brand name recognition and customer loyalty in many cases.

 Because Bion systems offer a comprehensive waste treatment
solution that is designed to produce/augment up to four separate and distinct revenue streams, the Company believes that it has the ability
to be competitive in each of the sectors from which it derives revenue.

 33 

 DEPENDENCE ON ONE OR A FEW MAJOR CUSTOMERS 

 In our JVs/Projects (including Integrated Projects)
business segment, we will most likely be dependent upon one or a few major customers/partners/joint venturers since a relatively limited
number of JVs and/or Projects (including Integrated Projects) will be developed by the Company. We anticipate initially developing, owning
interests in, and operating only one or a small number of Projects commencing during 2023 and, thereafter, developing a limited number
of Projects at a time. Thus, at least for the near future, our revenues will be dependent on a relatively small number of major Projects,
participants and/or customers.

 PATENTS 

 We are the sole owner of five United States patents.
Additionally, Bion has two United States patent applications pending and has three International patent applications currently pending.

 Patent Numbers and date of issue:

 United States Currently Issued:

 (1) 
 
 8,287,734: Method for Treating Nitrogen in Waste Streams: (OCN) Jere Northrop & James W. Morris (Exp 3/20/31) 

 (2) 
 
 10,106,447: Process to Recover Ammonium Bicarbonate from Wastewater: Morton Orentlicher & Mark M. Simon. (Exp. 9/14/2035) 

 (3) 
 
 10,604,432: Process to Recover Ammonium Bicarbonate from Wastewater; Dominic Bassani, Steve Pagano, Morton Orentlicher & Mark M. Simon. (Exp 6/29/2037) 

 (4) 
 
 10,793,458: Process to Recover Ammonium Bicarbonate from Wastewater; Dominic Bassani, Steve Pagano, Morton Orentlicher & Mark M. Simon. (Exp 9/14/2035) 

 (5) 
 
 11,254,581: Process to Recover Ammonium Bicarbonate from Wastewater; Dominic Bassani, Morton Orentlicher, Mark M. Simon & Steve Pagano. (Exp 9/14/2035) 

 We are also the sole owner of, or possess the contractual
right to acquire exclusive patent rights to, a pending United States provisional patent application, a pending United States utility patent
application and three international applications as set forth below:

 United States Currently Pending:

 (1) 
 
 63/512,361 (provisional): Methods For Recovering Ammonium Compounds From A Waste Stream; Dominic Bassani & Steve Pagano. (Exp 7/07/2024) 

 (2) 
 
 17/589,037: Process to Recover Ammonium Bicarbonate from Wastewater; Dominic Bassani, Steve Pagano, Morton Orentlicher & Mark M. Simon. 

 International Applications Currently Pending:

 (1) 
 
 EP 18943551.4: Process to recover ammonium bicarbonate from wastewater; Dominic Bassani, Steve Pagano, Morton Orentlicher & Mark M. Simon. 

 (2) 
 
 CA3123802A1: Process to recover ammonium bicarbonate from wastewater; Dominic Bassani, Steve Pagano, Morton Orentlicher & Mark M. Simon. 

 (3) 
 
 MX/a/2021/007358: Process to recover ammonium bicarbonate from wastewater; Dominic Bassani, Steve Pagano, Morton Orentlicher & Mark M. Simon. 

 In addition to such factors as innovation, technological
expertise and experienced personnel, we believe that a strong patent position is increasingly important to compete effectively in the
businesses on which we are focused. It is likely that we will file applications for additional patents in the future. There is,
however, no assurance that any such patents will be granted.

 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.

 It may become necessary or desirable in the future
for us to obtain patent and technology licenses from other companies relating to technologies that may be employed in future products
or processes. To date, we have not received notices of claimed infringement of patents based on our existing processes or products,
but due to the nature of the industry, we may receive such claims in the future.

 We generally require all of our employees and consultants,
including our management, to sign a non-disclosure and invention assignment agreements upon employment with us.

 34 

 It may become necessary or desirable in the future
for us to obtain patent and technology licenses from other companies relating to technologies that may be employed in future products
or processes. To date, we have not received notices of claimed infringement of patents based on our existing processes or products,
but due to the nature of the industry, we may receive such claims in the future.

 We generally require all of our employees and consultants,
including our management, to sign a non-disclosure and invention assignment agreements upon employment with us.

 RESEARCH AND DEVELOPMENT 

 Current research and development work is focused on
completion of the development and ongoing improvement of our Gen3Tech (the initial version of which is ready for implementation in an
appropriate Project) with emphasis on increased recovery of valuable by-products (including nutrients in organic and/or non-organic
forms, production of renewable energy from by-products together with related renewable energy and/or environmental credits). Bion believes
its Gen3Tech will produce significantly greater value from the CAFO waste stream through the recovery of a concentrated natural
nitrogen fertilizer and pipeline-quality natural gas. See discussion of Initial Project above.

 During the years ended June 30, 2023 and June 30,
2022, respectively, we expended approximately $79,000 and $178,000 (excluding non-cash stock-based compensation) on research and development
activities related to our technology platform applications in support of large-scale, economically and environmentally sustainable Projects
and Retrofits. Since the 2018 fiscal year, Bion’s research and development has been primarily focused on development work to complete
and further refine development of our Gen3Tech which will have the capacity to process dry, poultry CAFO waste streams in addition to
wet dairy/beef/swine CAFO waste streams and increase our ability to recover marketable by-products from the waste stream remediation including
renewable natural gas and nitrogen products (organic and non-organic). Some work has also involved modifying and adding unit processes
to our Gen3Tech platform with the objective of reducing capital costs and operating costs, while generating commercial equivalent by-products
(and therefore, potential revenue streams) and significantly increasing environmental efficiency. As a result of these efforts (including
their continuation during the current period), Bion made new (and supplemental) patent filing(s) during the 2019-2021 fiscal years related
to our Gen3Tech. The Company anticipates completion of its pilot system and pre-commercial testing for its Gen3Tech by end of the current
calendar year to support design finalization for our initial Gen3Tech systems. Our technology focus is to separate and aggregate the various
“assets” in the waste stream and then to re-assemble them to maximize their economic value. Our current research and development
efforts have been focused on developments that will minimize water removal requirements thereby significantly reducing the associated
energy costs. In addition, current efforts are focused on fertilizer and soil amendment products (organic and inorganic), water reuse,
environmental and reduction credits (including but not limited to nutrient, carbon, sediment, water and pathogen reduction) while reducing
capital costs and operating costs. Bion continues to focus on “normalizing” its technology platform for use on multiple species.
This effort has required significant work and resource allocation on research regarding balancing the activities of each unit process
so that its output enables the subsequent unit processes to maximize efficiency and discharge to the subsequent unit process in order
to produce a feedstock cost effectively. The by-products of this series of unit processes (which include certain Bion proprietary elements)
are then “reassembled” into products to maximize their economic value. To date, research and development results have supported
our objectives.

 Environmental Protection/Regulation and Public
Policy 

 In regards to Retrofits and development of Projects,
we will be subject to extensive environmental (and other) regulations related to CAFO's, biofuel production and end product (e.g. fertilizer)
producers. To the extent that we are a provider of systems and services to others that result in the reduction of pollution, we
are not under direct enforcement or regulatory pressure. However, we are involved in the business of CAFO waste treatment and are
impacted by environmental regulations in at least four different ways:

 • 
Our marketing and sales success depends, to a substantial degree, on the pollution clean-up requirements of various governmental agencies,
from the Environmental Protection Agency (EPA) at the federal level to state and local agencies;

 • 
Our System design and performance criteria must be responsive to the changes in federal, state and local environmental agencies' effluent
and emission standards and other requirements;

 • 
Our System installations and operations require governmental permits and/or other approvals in many jurisdictions; and

 • 
To the extent we own or operate Projects (including Integrated Projects with CAFO facilities and ethanol plants), those facilities will
be subject to environmental regulations.

 Additionally, our activities are affected by many
public policies and regulations (federal, state and local) related to other industries such as agriculture, food, energy, municipal waste
and storm water treatment, watershed-wide mandates, and others. For example, the existing differences in the regulatory requirements for
agriculture versus municipal wastewater clean-up currently in place have negatively impaired the development of viable markets for nutrient
reduction credits.

 35 

 Bion system installations and operations may require
verification and compliance with an assortment of voluntary regulatory programs, such as the USDA Organic and USDA Process Verified branding
programs. Each of these programs has a series of compliance verification steps that need to be met in order to maintain proper standing
for use of the USDA shield on packaging.

 EMPLOYEES 

 As of September 1, 2023, we had 8 employees and primary
consultants, all of whom are performing services for the Company on a full-time basis. The Company utilizes other consultants and professionals
on an ‘as needed’ basis. Our future success depends in significant part on the continued service of our key personnel and
the ability to hire additional qualified personnel. The competition for highly qualified personnel is intense, and there can be no assurance
that we will be able to retain our key managerial and technical employees or that we will be able to attract and retain additional highly
qualified technical and managerial personnel in the future. None of our employees is represented by a labor union, and we consider our
relations with our employees to be good. None of our employees is covered by "key person" life insurance.

 ITEM 1A. RISK FACTORS. 

 Not applicable.

 ITEM 1B. UNRESOLVED STAFF COMMENTS. 

 Not applicable.

 ITEM 2. PROPERTIES. 

 The Company maintains its corporate offices at 9 East
Park Court, Old Bethpage, New York 11804, the home of its office manager/bookkeeper, and its main corporate telephone number is (516)
586-5643.

 We are the sole owner of five United States patents.
Additionally, Bion has two United States patent applications pending and has three international patent applications currently pending.
(See Item 1, “Patents” above).

 ITEM 3. LEGAL PROCEEDINGS. 

 The Company is currently involved in no litigation
matters except:

 A: Website: Domain Sale/Resolved Litigation/Hacking/Theft 

 On March 23, 2022 the Company entered into an
agreement to sell domain name <biontech.com> and other related assets to BioNTech SE (“BNTX”) for the sum of $950,000
(before expenses related to the transaction) which sale was closed/completed on April 2, 2022 with a one-time gain of $902,490. The Company
has been using www.bionenviro.com as its primary website (and domain) since July 2021 due to the events described below. The
Company has not been using biontech.com as its primary website since July 2021 so domain name <biontech.com> no longer
represented a core asset of the Company.

 As previously reported, 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 was 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’ (Case
No. 1:21-cv-01034), seeking recovery of the domain name and other relief as set forth therein.

 On November 19, 2021, the United States District Court
for the Eastern District of Virginia, Alexandria Division issued an order stating that “… ORDERED, ADJUDGED and Decreed that
plaintiff Bion Environmental Technologies, Inc. (‘plaintiff) Is the lawful owner of domain name <biontech.com> ….”
under the heading ‘Bion Environmental Technologies, Inc., Plaintiff, vs John Doe and <biontech.com>, Defendants’ (Case
No. 1:21-cv-01034). The Company has moved the domain name <biontech.com> to a new registrar and reactivated it for the Company’s
use (paired currently with its current bionenviro.com website).

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

 The Company created ‘work-arounds’
as a result. These issues have been resolved and the Company 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)
is cscott@bionenviro.com and mas@biontech.com (no longer functional) is now mas@bionenviro.com.

 36 

 B: Pennvest Loan and Dissolution of Bion PA1, LLC (“PA1”) 

 PA1, the Company’s wholly-owned subsidiary,
was dissolved on December 29, 2021 on which date it owed approximately $10,010,000 under the terms of the Pennvest Loan related to the
construction of the Kreider 1 System including accrued interest and late charges totaling $2,255,802 as of that date. Through the date
of the dissolution, PA1 was a wholly-owned subsidiary of the Company and its assets and liabilities were included on the Company’s
consolidated balance sheets. At September 30, 2021, PA1’s total assets were $297 and its total liabilities were $10,154,334 (including
the Pennvest Loan in the aggregate amount of $9,939,148, accounts payable of $214,235 and accrued liabilities of $950) which sums were
included in the Company’s consolidated balance sheets in its Form 10-Q for the quarter ended September 30, 2021. Subsequent to the
dissolution of PA1, its assets and liabilities are no longer consolidated and included in the Company’s balance sheets. As of December
29, 2021, PA1’s total assets were nil and its total liabilities were $10,234,501 (including the Pennvest Loan in the aggregate amount
of $10,009,802, accounts payable of $212,263 and accrued liabilities of $12,436. The net amount of $10,234,501 was recognized as a gain
on the legal dissolution of a subsidiary in other (income) expense.

 As background, 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 accrued 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 $5,886,000 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 was collateralized by PA1’s
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
was 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 $123,444 and $246,887 for the years ended June 30, 2022 and 2021, respectively. Based
on the limited development of the depth and breadth of the Pennsylvania nutrient reduction credit market, PA1 commenced discussions and
negotiations with Pennvest related to forbearance and/or re-structuring the obligations under the Pennvest Loan during 2013. In the context
of such negotiations, PA1 elected not to make interest payments to Pennvest on the Pennvest Loan since January 2013. Additionally, the
PA1 did not make any principal payments, which were to begin in fiscal 2013, and, therefore, the Company classified the Pennvest Loan
as a current liability through the dissolution of PA1 on December 29, 2021.

 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 solely an obligation of PA1 since that date. Note, however,
the Company’s consolidated balance sheets as of June 30, 2021 reflects the Pennvest Loan as a liability of $9,868,495 despite the
fact that the obligation (if any) was solely an obligation of PA1 . 

 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. PA1 did not
make the payment and did/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 final proposal
to Pennvest during September 2021 which proposal was also rejected by Pennvest. PA1 provided 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.” Pennvest responded favorably to the approach of selling the equipment. 

 On December 29, 2021, the Company approved and executed
a ‘Consent of the Sole Member of Bion PA 1’ (the “Consent to Dissolution”) that authorized the complete liquidation
and dissolution of PA1. A Statement of Dissolution was filed by PA1 with the Colorado Secretary of State on December 29, 2021. The Company
is of the understanding that the liquidation value of Bion PA 1’s property is substantially below the current amount outstanding
under the Funding Agreement dated October 27, 2010 by and between PA1 and Pennvest, the only known secured creditor of PA1. Post-dissolution,
PA1’s activities will be limited entirely to activities required to properly distribute its net assets to creditors and wind down
its business.

 PA1 and Pennvest agreed to have the equipment sold
by a third party auctioneer who arranged for the sale of its property and delivery of all proceeds (net of commissions and customary
costs of sale) to Pennvest. The auction took place during the period between May 13-18, 2022. The Company’s personnel assisted PA1
with this process as needed at no cost to PA1. The net sum of $104,725 was realized from the asset sale, which sum was delivered
to Pennvest on June 15, 2022. The remaining unsold assets will be transferred to Kreider Farms during the next quarter in order to complete
the winding up of the Kreider 1 project.

 37 

 Upon the complete distribution of all assets of PA1,
whether by transfer or sale and distribution of net proceeds as provided above, PA1 will use commercially reasonable efforts to cause
the cessation of all activities. No distributions of PA1’s assets will be made to the Company or its affiliates. The Consent to
Dissolution authorized Mark A. Smith, the Company’s President and the sole manager of PA1, to cause to be delivered for filing the
Statement of Dissolution, to give notice of the dissolution, and to take any other act necessary to wind up and liquidate the business.

 PA1 has made no payments to vendors or other creditors
in connection with the dissolution. No distributions or payments of any kind have ever been made to the Company, the sole member of PA1
since inception and no payment will be made to the Company or any affiliate in connection with the dissolution.

 For more information regarding the history and background
of the Pennvest Loan and PA1, please review our Form’s 10-K for the years from 2008 through 2021 including the Notes to the Financial
Statements included therein.

 The Company currently is not involved in any other material litigation
or similar events.

 ITEM 4. MINE SAFETY DISCLOSURES. 

 None.

 PART II 

 ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY,
RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. 

 (a) Market Information 

 Our common stock is quoted on the Over-The-Counter
Electronic Bulletin Board under the symbol "BNET." The following quotations reflect inter dealer prices, without
retail mark up, markdown or commissions and may not represent actual transactions.

 2023 
 
 2022 
 
 Fiscal
 Year Ended June 30, 
 
 High 
 
 Low 
 
 High 
 
 Low 
 
 First Fiscal Quarter 
 
 $ 
 1.68 
 
 $ 
 0.93 
 
 $ 
 1.80 
 
 $ 
 1.15 
 
 Second Fiscal Quarter 
 
 $ 
 1.36 
 
 $ 
 0.85 
 
 $ 
 1.66 
 
 $ 
 0.81 
 
 Third Fiscal Quarter 
 
 $ 
 2.20 
 
 $ 
 1.25 
 
 $ 
 1.40 
 
 $ 
 0.80 
 
 Fourth Fiscal Quarter 
 
 $ 
 1.64 
 
 $ 
 1.125 
 
 $ 
 1.27 
 
 $ 
 0.80 
 
 (b) Holders 
 
 1.40 
 
 The number of holders of record of our common stock
at September 1, 2023 was approximately 1,300. Many of our shares of common stock are held by brokers and other institutions on behalf
of stockholders, so we are unable to estimate the number of stockholders represented by these record holders.

 The transfer agent for our common stock is Equiniti,
3200 Cherry Creek Drive South, Suite 430, Denver, Colorado 80209.

 (c) Dividends 

 We have never paid any cash dividends on our common
stock. Our board of directors does not intend to declare any cash dividends in the foreseeable future, but instead intends to retain earnings,
if any, for use in our business operations. The payment of dividends, if any, in the future is within the discretion of the board of directors
and will depend on our future earnings, if any, our capital requirements and financial condition, and other relevant factors.

 No preferred shares are outstanding at this time.
During fiscal year 2023 the Company paid an aggregate dividend of $0 cash, respectively, on shares of Series B Preferred Stock and Series
C Preferred Stock which were outstanding during the year. A dividend of $1,000 was accrued on Series B Preferred Stock during the 2022
fiscal year. From July 1, 2014, the Company had 200 shares of Series B redeemable convertible Preferred stock outstanding with a par value
of $0.01 per share, convertible at the option of the holder at $2.00 per share, with dividends accrued and payable at 2.5% per quarter.
The Series B Preferred stock was mandatorily redeemable at $100 per share by the Company three years after issuance and accordingly was
classified as a liability. The 200 shares have reached their maturity date and the Company approved the redemption of the Series B preferred
stock during the quarter ended December 31, 2021 and the final 200 shares of Series B redeemable convertible Preferred stock were redeemed
for $41,000, which included the $21,000 in accrued dividend payable.

 38 

 (d) Securities Authorized for Issuance Under
Equity Compensation Plans 

 In June 2006 the Company adopted its 2006 Consolidated
Incentive Plan, as amended ("Plan"), which terminated all prior plans and merged them into the Plan. The Plan was ratified
by the Company's shareholders in October 2006 (and has been amended multiple times since initial ratification). Under the Plan,
Directors may grant Shares, Options, Stand Alone Stock Appreciation Rights ("SAR's"), shares of Restricted Stock, shares of
Phantom Stock and Stock Bonuses and other items with respect to a number of Common Shares that in the aggregate does not exceed 36,000,000
shares. The maximum number of Common Shares for which Incentive Awards, including Incentive Stock Options, may be granted to any one Participant
shall not exceed 2,000,000 shares in any one calendar year; and the total of all cash payments to any one participant pursuant to the
Plan in any calendar year shall not exceed $1,500,000. As of June 30, 2023 12,006,600 options have been granted and outstanding under
the Plan (as amended), including all options granted under prior merged plans, and were merged into the 2021 Equity Incentive Plan. As
of June 30, 2023, the Company had no outstanding contingent Stock Bonuses. 

 In December 2021 the Company adopted its 2021 Equity
Incentive Plan, as amended ("2021 Equity Plan"). The 2021 Equity Plan was ratified by the Company's shareholders in April
2022. Under the 2021 Equity Plan, Directors may grant Shares, Options, Stand Alone Stock Appreciation Rights ("SAR's"),
shares of Restricted Stock, shares of Phantom Stock and Stock Bonuses and other items with respect to a number of Common Shares that in
the aggregate does not exceed 30,000,000 shares. The maximum number of Common Shares for which Incentive Awards, including Incentive Stock
Options, may be granted to any one Participant shall not exceed 2,500,000 shares in any one calendar year. As of June 30, 2022 nil options
have been granted and outstanding under the 2021 Equity Plan. As of June 30, 2023, the Company had no outstanding contingent Stock
Bonuses. 

 Equity Compensation Plan Information 

 The following table summarizes share and exercise
price information about the Company’s 2006 equity compensation plans as of June 30, 2023:

 2006 Equity Compensation Plan table

 Plan category 
 
 Number of securities to be issued upon the exercise
 of outstanding options, warrants 

 and rights 
 
 Weighted average exercise price of outstanding options, warrants and rights 
 
 Number of Securities remaining available for future issuance under equity compensation plans 
 
 Equity compensation plans 

approved by security holders 
 
 29,078,033 
 
 0.58 
 
 6,921,967 
 
 Equity compensation plans not 

approved by security holders 
 
 — 
 
 — 
 
 — 
 
 Total 
 
 29,078,033 
 
 0.58 
 
 6,921,967 
 
 (e) Recent Sales of Unregister Securities 

 During the year
ended June 30, 2023 the Company entered into subscription agreements to sell units for $1.00 per unit, with each unit consisting of one
share of the Company’s restricted common stock and one warrant to purchase on share of the Company’s restricted common stock
for $1.25 per share with an expiry date of 12/31/2023, and pursuant thereto, the Company issued 346,230 units for total proceeds of $346,230. 

 During the year
ended June 30, 2023 the Company entered into subscription agreements to sell shares for $1.00 per share and pursuant thereto, the Company
issued 2,000,000 of the Company’s restricted common stock for total proceeds of $2,000,000. 

 During the year
ended June 30, 2023 the Company entered into subscription agreements to sell units for $1.60 per unit, with each unit consisting of one
share of the Company’s restricted common stock and one-half warrant to purchase shares of the Company’s restricted common
stock for $2.40 per share with an expiry date of 6/30/2024 and pursuant thereto, the Company issued 975,000 units for total proceeds of
$1,560,000, net proceeds of $1,473,600 after commissions of $86,400. 

 39 

 During the year
ended June 30, 2023, 175,114 warrants wee exercised to purchase 175,114 shares of the Company’s common stock at $0.75 per share
for total proceeds of $131,335. 

 During the year
ended June 30, 2023 Mark Smith elected to convert $50,000 of his 2020 Convertible Obligation into 100,000 units at $0.50 per unit (pursuant
to the 2006 Consolidated Incentive Plan) with each unit consisting of one share of common stock and one warrant to purchase one share
of the Company’s stock for $0.75 per share until 12/31/2024. 

During the year ended June 30, 2023 Mark Smith elected to convert $99,889 of his Adjusted 2020 Convertible Obligation into 1,055,906 units
at $0.0946 per unit (pursuant to the 2006 Consolidated Incentive Plan) with each unit consisting of one share of common stock and one
warrant to purchase one share of the Company’s stock for $0.75 per share until March 2026. 

During the year ended June 30, 2023 Mark Smith elected to convert $36,573 of his Adjusted 2020 Convertible Obligation into 386,608 
units at $0.0946 per unit (pursuant to the 2006 Consolidated Incentive Plan) with each unit consisting of one share of common stock and
one warrant to purchase one share of the Company’s stock for $0.75 per share until March 2026. 

 D uring
the year ended June 30, 2023 the Company issued 82,259 shares for services of $130,000.

 During the year ended June
30, 2022, 2,315,550 warrants were exercised to purchase 2,315,550 shares of the Company’s common stock at $0.75 per share for total
proceeds of $1,736,662, net proceeds of $1,718,061 after commissions of $18,601.

 During the year
ended June 30, 2022, Smith elected to convert accounts payable of $17,711 into an aggregate of 35,424 units at $0.50 per unit (pursuant
to the 2006 Consolidated Incentive Plan) with each unit consisting of one share of the common stock and one warrant to purchase one share
of the Company’s stock for $0.75 per share until December 31, 2024. 

 During the year
ended June 30, 2022, the Company issued 25,000 units at $1.10 per until for services of $27,500. 

 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.

 During the year ended June 30, 2021 300,000 shares
of the Company’s restricted company stock were sold to an investor for $300,000. 

 During the year ended June 30, 2021, 129,364 shares
of its unregistered common stock were issued as commissions.

 During the year ended June 30, 2021, the company issued
1,186,824 units to various employees/consultants upon the conversion of debt pursuant to the 2006 Consolidated Incentive Plan with
each unit consisting of one share of the common stock and one warrant to purchase one share of the Company’s stock for $0.75 per
share until June 30, 2023.

 During the year ended June 30, 2021, Mark Smith elected
to convert deferred compensation, accrued interest and accounts payable of $124,698, $3,342 and $52,360 respectively into an aggregate
of 360,805 units at $0.50 per unit, pursuant to the 2006 Consolidated Incentive Plan with each unit consisting of one share of the common
stock and one warrant to purchase one share of the Company’s stock for $0.75 per share until December 31, 2024.

 During the year ended June 30, 2021, the Company issued
144,000 units to Mr. Smith for salary of $72,000, pursuant to the 2006 Consolidated Incentive Plan with each unit consisting of one share
of the common stock and one warrant to purchase one share of the Company’s stock for $0.75 per share until December 31, 2024.

 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 $3,049,491.

 40 

 TEM 6. SELECTED FINANCIAL DATA. 

 N/A

 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS. 

 This Annual Report on Form 10-K (and the documents
incorporated herein by reference) contain forward-looking statements, within the meaning of Section 27A of the Securities Act and Section
21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), that involve substantial risks and uncertainties.
Forward-looking statements generally can be identified by the use of forward-looking terminology such as "may," "will,"
"expect," "intend," "estimate," "anticipate," "project," "predict," "plan,"
"believe," or "continue," or the negative thereof or variations thereon and/or references to “goals”,
“targets”, “projections” or similar terminology. The expectations reflected in forward-looking statements may
prove to be incorrect. The Company's actual results of operations, most of which are beyond the Company's control, could differ materially.
We wish to caution readers not to place undue reliance on any such forward looking statements, which speak only as of the date made. Any
forward-looking statements represent management's best judgment as to what may occur in the future. However, forward looking statements
are subject to risks, uncertainties and important factors beyond our control that could cause actual results and events to differ materially
from historical results of operations and events and those presently anticipated or projected.

 These factors include adverse economic conditions,
entry of new and stronger competitors, inadequate capital and limited ability to obtain financing, needed personnel (including entire
team related to project development and project operations in coming years) and equipment, unexpected costs, failure (or delay) to gain
product certifications and/or regulatory approvals in the United States (or particular states) or foreign countries, loss (permanently
or for any extended period of time) of the services of members of the Company’s small core management team (many of whom are age
70 or older) and failure to capitalize upon access to new markets. Additional risks and uncertainties that may affect forward looking
statements about Bion's business and prospects include: i) the possibility that markets for nutrient reduction credits (discussed below)
and/or other ways to monetize nutrient reductions and other environmental benefits will be slow to develop (or not develop at all), ii)
PA1’s dissolution and its effect on how the Company is viewed, (if any), iii) the possibility that competitors will develop more
comprehensive and/or less expensive environmental solutions, iv) delays in market awareness of Bion and our Systems, v) uncertainties
and costs increases related to research and development efforts to update and improve Bion’s technologies and applications thereof,
and/or vi) delays and/or costs exceeding expectations relating to Bion's development of the Initial Project, JVs and/or Projects and vii)
failure of marketing strategies, each of which could have both immediate and long term material adverse effects by placing us behind our
competitors and requiring expenditures of our limited resources.

 THESE RISKS, UNCERTAINTIES AND FACTORS BEYOND OUR
CONTROL ARE MAGNIFIED DURING THE CURRENT UNCERTAIN PERIOD RELATED TO THE COVID-19 PANDEMIC AND THE UNIQUE ECONOMIC, FINANCIAL, GOVERNMENTAL
AND HEALTH-RELATED CONDITIONS IN WHICH THE COMPANY, THE ENTIRE COUNTRY AND THE ENTIRE WORLD NOW RESIDE. TO DATE THE COMPANY HAS
EXPERIENCED DIRECT IMPACTS IN VARIOUS AREAS INCLUDING 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 GOVERNMENT WHICH IS
LIKELY TO NEGATIVELY IMPACT THE COMPANY’S LEGISLATIVE INITIATIVES IN PENNSYLVANIA AND WASHINGTON DC, III) STRAINS AND UNCERTAINTIES
IN BOTH THE EQUITY AND DEBT MARKETS 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 OF FUNDING OF THE COMPANY AND ITS INITIATIVES AND PROJECTS MORE DIFFICULT AS FUTURE INDUSTRY
CONDITIONS ARE NOW MORE DIFFICULT TO ASSESS/PREDICT, V) CONSTRAINTS DUE TO PROBLEMS EXPERIENCED IN THE GLOBAL INDUSTRIAL SUPPLY CHAIN
WHICH HAVE INCREASED ANTICIPATED PROJECT DEVELOPMENT COSTS, VI) DUE TO THE AGE AND HEALTH OF OUR CORE MANAGEMENT TEAM, MOST 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.

 41 

 Bion disclaims any obligation subsequently to revise
any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated
or unanticipated events.

 The following discussion and analysis should be read
in conjunction with the Consolidated Financial Statements and Notes to Consolidated Financial Statements filed with this Report. 

 BUSINESS OVERVIEW AND PLAN 

 Bion Environmental Technologies, Inc.'s ("Bion," "Company,"
"We," "Us," or "Our") was incorporated in 1987 in the State of Colorado. Bion’s mission is to make
livestock production more sustainable, profitable and transparent. We intend to accomplish this by deploying our Gen3Tech platform/business
model (discussed below) in ventures focused on the ‘feeder’ space of the livestock production/value chain to provide the consumer
with verifiably sustainable premium meat products (together with environmentally friendly, sustainable and/or organic co-products from
the production process). Bion believes this approach can create extraordinary value for our shareholders and employees (all of whom
own securities in the Company) and for livestock/agriculture industry ‘partners’ who join us in our ventures. We anticipate
pursuing the opportunity created by our third generation technology (“Gen3Tech”) and business/technology platform in conjunction
with other industry practices (“Gen3Tech Platform” or “Platform”).

 Our patented and proprietary technology provides advanced
waste treatment and resource recovery for large-scale livestock production facilities (also known as “Concentrated Animal Feeding
Operations” or “CAFOs"). Livestock production and its waste, particularly from CAFOs, has been identified as one of the
greatest soil, air, and water quality problems in the U.S. today. Application of our Gen3Tech can largely mitigate these environmental
problems, while simultaneously improving operational/ resource efficiencies by recovering high-value co-products from the CAFOs’
waste stream. These waste ‘assets’ – nutrients and methane – have traditionally been wasted or underutilized and
are the same ‘pollutants’ that today fuel harmful algae blooms, contaminate surface groundwater, and exacerbate climate change.

 We anticipate this will result in substantial long-term
value for Bion. In the context of such JVs, we believe that the verifiable sustainable branding opportunities (conventional and organic)
in meat will represent one of the largest enhanced revenue contributors 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.

 Bion’s Gen3Tech was designed to capture and
stabilize these assets and produce renewable energy, fertilizer products, and clean water as part of the process of raising verifiably
sustainable livestock. All steps and stages in the animal raising and waste treatment process will be third-party verified, providing
the basis for additional revenues, including carbon and/or renewable energy-related credits and, eventually, payment for a range of ecosystem
services, including nutrient credits as described below. The same verified data will be used to substantiate the claims of a USDA-certified
sustainable brand that will support premium pricing for the meat/ animal protein products that are produced in Bion facilities.

 42 

 During the first half of 2022 Bion
began pre-marketing our sustainable beef to retailers, food service distributors and the meat industry in the U.S. In general, the
response has been favorable. During July 2022, Bion announced a letter of intent (“Ribbonwire LOI”) to develop a large-scale
commercial project - a 15,000-head sustainable beef cattle feeding operation together with the Ribbonwire Ranch, in Dalhart, Texas (with
a provision to expand to 60,000 head) (“Dalhart Project”). During January 2023 Bion announced a letter of intent (“Olson
LOI”) to develop a large-scale commercial project - a 15,000-head sustainable beef cattle feeding operation together with the Olson
Feeders and TD Angus, near North Platte, Nebraska (with a provision to expand to 45,000 head or more) (“Olson Project”). During
April 2023 Bion announced a letter of intent (“DVG LOI”) to develop a large-scale commercial project - a 15,000-head sustainable
beef cattle feeding operation together with Dakota Valley Growers near Bathgate, North Dakota (“DVG Project”). Based on our
experience to date, we believe we will not have difficulty in securing participation in our Projects from additional feeders/cattlemen.
The Olson, Dalhart and DVG Projects (and subsequent Projects) will be developed to produce blockchain-verified, sustainable beef in customized
covered barns (resulting in reduced stress on cattle caused by extreme weather and temperatures and resulting higher feed/weight gain
efficiency) with ongoing manure transfer (through slatted floors) to anaerobic digesters (AD) to capture nitrogen from the manure stream
before loss to the atmosphere and generate renewable natural gas (RNG) for sale while remediating the environmental/carbon impacts usually
associated with cattle feedlots and CAFOs. Bion’s patented Gen3Tech platform will refine the waste stream into valuable coproducts
that include clean water, RNG, photovoltaic solar electricity and fertilizer (‘climate smart’ and/or organic) products. We
anticipate converting these LOIs into definitive JV agreements and creating related distribution agreements with key retailers and food
service distributors during the current fiscal year.

 Bion’s business model and technology platform can create
the opportunity for joint ventures (in various contractual forms)(“JVs”) between the Company and large livestock/food/fertilizer
industry participants based upon the supplemental cash flow generated by implementation of our Gen3Tech business model, which cash flows
will support the costs of technology implementation (including servicing related debt). We anticipate this will result in substantial
long-term value for Bion.. To accomplish Bion’s goals, we anticipate the we will ‘partner’ with other technology companies
who provide solutions for different links of the beef (and other livestock) value chain and with strategic partners up and down the supply
chain.In the context of such JVs, we believe that the verifiable sustainable branding opportunities (conventional and organic) in meat
will represent one of the single largest enhanced revenue contributor provided by Bion to the JVs (and, in some cases, 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.

 During the next three to six months, the Company intends
to fully complete construction of the Initial Project’s phase 1 (including the crystalizer module) and continue the optimization
operations. Bion expects the Initial Project data will document the effectiveness of our Gen3Tech in a commercial-scale setting during
the current fiscal year and support development of the LOI Projects (and/or other Gen3Tech beef JV projects) commencing later this fiscal
year. We do not presently know the order in which these JV Projects will be developed as that decision will be made based on many
factors not yet in place. We believe the Initial Project data will also provide additional potential stakeholders (cattle producers, cattle
feeders, packers, food distributors and retailers and financial institutions) with the information they need to proceed with confidence
in collaborating with Bion on multiple new projects (see below). 

 Bion is now focused primarily on: i) completion of
development/construction and operation of the Initial Project, our initial commercial-scale Gen3Tech installation, and optimization of
its operational parameters, ii) pre-development planning of the LOI Projects (and/or other Gen3Tech beef JV projects) including steps
toward distribution agreements, iii) developing applications and markets for its low carbon ‘ClimateSmart’ and organic fertilizer
products (including listings/certifications of multiple liquid and solid products) and its sustainable (conventional and organic) animal
protein products, and iv) discussions regarding initiation and development of agreements and joint ventures (“JVs” as discussed
herein) (and related Projects) based on the augmented capabilities of our Gen3Tech business platform (in the sustainable beef and other
livestock segments), while (v) continuing to pursue business opportunities related to large retrofit projects (such as the Kreider poultry
project JV described below) and vi) ongoing R&D activities.

 At present, there is essentially no traceable and
verifiable ‘sustainable beef’ available to the US market except for niche products. In response to consumer demand for transparency
and sustainability, Bion expects the meat industry in general, and beef specifically, to evolve towards using new technologies to deliver
these attributes in their products. While we anticipate a faster adoption of tracking, verification and sustainability technologies in
other perishable food categories like produce and dairy due to their shorter product cycles (and related harvest and production techniques),
meat industry leaders have also announced their willingness to move forward with initiatives in this area. Many companies have announced
‘sustainability’ initiatives but most appear to consist largely of ‘greenwashing’ marketing commitments rather
than substantive undertakings at this date. Note, however, that Tyson’s Brazen beef initiative (which was announced during March
2023) may develop into a substantive competitive factor in the sustainable beef marketplace. Bion predicts that within approximately five
years, consumers will be able to track and verify claims including sustainability on 25% (or more) of the products merchandised in the
meat department. Bion believes that the retail market share of verifiably sustainable beef in the US will approach 7-10 % within three
(3) years (end of 2026) and 25% in five (5) years (end of 2028) (approximately 6-7,000,000 cattle annually) (and more thereafter). If Bion
can successfully execute on its sustainable beef business plan (which is subject to many contingencies), we believe that JV facilities
utilizing Bion’s Gen3Tech platform will supply one-third (1/3) or more of that of the premium market segment (and a higher portion
of meat that is actually traceable and verifiably sustainable). Our goal is to have multiple sustainable beef projects under development
(within 3-5 distinct JVs) by the end of our 2025 fiscal year. Our first commercial project is likely to be one of our current LOI Projects
but we anticipate commencing development of additional sustainable beef projects during the current fiscal year as well. Our current target
is to have at least three (3) facility modules (15,000 head per module)(“Modules”) in development and/or under construction
during 2024 in three (3) different JVs with the initial barns being populated with livestock during 2025. Further expansion in the number
of distinct JVs is projected through 2026-7 aiming at 5-10 JVs in process --- each of which JVs will be pursuing development of multiple
Modules with targets of 12-15 populated Modules by the end of 2026 (approximately 2%-3% of the US beef market) and 30-45 Modules constructed
and being populated by 2029 (approximately 6%-8% of the US beef market) with further expansion thereafter. Bion’s current goal is
that its Gen3Tech platform will be utilized to produce 33% of the verifiable “sustainable beef” category at the end of the
period (which will equal approximately 2 million cattle annually)(45 Modules).

 43 

 During this five (5) year period, the Company also
anticipates having additional Gen3Tech projects underway in the pork/dairy/egg sectors of the US animal protein market.

 There is no assurance that the Company will reach
or approach the goals/targets set forth above. Reaching such goals/targets will require access to very large amounts of capital (equity
and debt) as each module is projected to cost in excess of $50 million (debt/equity/grants) to construct and require mobilization of substantial
personnel, technical resources and management skills. The Company does not possess either the financial or personnel resources required
internally and will need to source such resources from outside itself.

 For additional information regarding our ‘HISTORY,
BACKGROUND AND CURRENT ACTIVITIES’, see discussion in Part I, Item 1 above and Notes to the Financial Statements (particularly
Notes 1, 3, 5 and 9) included in this report . 

 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) constraints due to problems experienced
in the global industrial supply chain since the onset of the Covid-19 pandemic, which have delayed certain research and development testing
and have delayed and/or increased the cost of construction of the Company’s initial 3G Tech installation as equipment/services remain
difficult to acquire in a timely manner, vi) due to the age and health of our core management team, many of whom are age 70 or older and
have had one or more existing health issues (including brief periods of Covid-19 infection), 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.

 44 

 CRITICAL ACCOUNTING POLICIES 

 Revenue Recognition 

 The Company currently does not generate revenue
and if and when the Company begins to generate revenue the Company will comply with the provisions of Accounting Standards Codification
(“ASC”) 606 “Revenue from Contracts with Customers”.

 Stock-based compensation 

 The Company follows the provisions of ASC 718,
which generally requires that share-based compensation transactions be accounted and recognized in the statement of income based upon
their grant date fair values.

 Pursuant to ASC Topic 815 “Derivatives and Hedging”
(“Topic 815”), the Company reviews all financial instruments for the existence of features which may require fair value accounting
and a related mark-to-market adjustment at each reporting period end. Once determined, the Company assesses these instruments as derivative
liabilities. The fair value of these instruments is adjusted to reflect the fair value at each reporting period end, with any increase
or decrease in the fair value being recorded in results of operations as an adjustment to fair value of derivatives. As of March 31, 2023
and 2022, there are no derivative financial instruments.

 Options: 

 The Company has issued options to employees and consultants
under its 2006 Plan to purchase common shares of the Company. Options are valued on the grant date using the Black-Scholes option-pricing
model. The expected volatility is based on the historical price volatility of the Company’s common stock. The dividend yield represents
the Company’s anticipated cash dividend on common stock over the expected term of the stock options. The U.S. Treasury bill rate
for the expected term of the stock options was utilized to determine the risk-free interest rate. The expected term of stock options represents
the period of time the stock options granted are expected to be outstanding based upon management’s estimates.

 Warrants: 

 The Company has issued warrants to purchase common
shares of the Company. Warrants are valued using a fair value based method, whereby the fair value of the warrant is determined at the
warrant issue date using a market-based option valuation model based on factors including an evaluation of the Company’s value as
of the date of the issuance, consideration of the Company’s limited liquid resources and business prospects, the market price of
the Company’s stock in its mostly inactive public market and the historical valuations and purchases of the Company’s warrants.
When warrants are issued in combination with debt or equity securities, the warrants are valued and accounted for based on the relative
fair value of the warrants in relation to the total value assigned to the debt or equity securities and warrants combined.

 Lease Accounting: 

 The Company accounts for leases under ASC 842, Leases (“ASC
842”). Accordingly, the Company will determine whether an arrangement contains a lease at the inception of the arrangement. If a
lease is determined to exist, the term of such lease is assessed based on the date on which the underlying asset is made available for
the Company’s use by the lessor. The Company’s assessment of the lease term reflects the non-cancelable term of the lease,
inclusive of any rent-free periods and/or periods covered by early-termination options which the Company is reasonably certain of not
exercising, as well as periods covered by renewal options which the Company is reasonably certain of exercising. The Company also determines
lease classification as either operating or finance at lease commencement, which governs the pattern of expense recognition and the presentation
reflected in the consolidated statements of operations over the lease term.

 For leases with a term exceeding 12 months,
a lease liability is recorded on the Company’s consolidated balance sheet at lease commencement reflecting the present value of
its fixed minimum payment obligations over the lease term. A corresponding right-of-use (“ROU”) asset equal to the initial
lease liability is also recorded, adjusted for any prepaid rent and/or initial direct costs incurred in connection with execution of
the lease and reduced by any lease incentives received. For purposes of measuring the present value of its fixed payment obligations
for a given lease, the Company uses its incremental borrowing rate, determined based on information available at lease commencement,
as rates implicit in its leasing arrangements are typically not readily determinable. The Company's incremental borrowing rate reflects
the rate it would pay to borrow on a secured basis and incorporates the term and economic environment of the associated lease. 

 45 

 YEAR ENDED JUNE 30, 2023 COMPARED TO THE
YEAR ENDED JUNE 30, 2022 

 Revenue 

 Total revenues were nil for both the years ended June 30, 2023 and 2022.

 General and Administrative 

 Total general and administrative expenses
were $3,072,000 and $2,348,000 for the year ended June 30, 2023 and 2022, respectively.

 Salaries and related payroll tax expenses were
$730,000 and $340,000 for the years ended June 30, 2023 and 2022, respectively, representing a $390,000 increase. The increase is largely
due to the addition of Bill O’Neill (and administrative initiatives he has commenced), pay increases, and lower percentage of total
salaries capitalized to the Initial Project. Consulting costs were $485,000 and $561,000 for the years ended June 30, 2023 and 2022, respectively.
The $76,000 decrease in consulting costs is due to the capitalization of a larger portion of Brightcap’s consulting expense to the
Initial Project in fiscal year 2023. Investor relations expenses were $697,000 and $395,000 for the years ended June 30, 2023 and 2022,
respectively, and the $302,000 increase is due to a new contract with an investor relations firm and increased activity during the year
ended June 30, 2023 due to the resumption of investor conferences and other matters. Legal costs were $83,000 and $291,000 for the years
ended June 30, 2023 and 2022, respectively, and the $208,000 decrease is due to less outside legal activities in the year 2023 compared
to the year 2022 in which legal fees surrounding the hack and theft of the Company’s domain name and the dissolution of PA-1 were
incurred.

 Stock-based compensation for the years ended June
30, 2023 and 2022 were $442,000 and $269,000, respectively.

 Depreciation 

 Total depreciation expense was $1,645 and $1,161
for the year ended June 30, 2023 and 2022, respectively.

 Research and Development 

 Total research and development expenses were $83,000
and $201,000 for the years ended June 30, 2023 and 2022, respectively, representing a $118,000 decrease due to less legal and salary expense
allocated to research and development and greater allocation to the Initial Project.

 Salaries and related payroll tax expenses were
$9,000 and $32,000 for the years ended June 30, 2023 and 2022, respectively, as more salary expense was allocated to administrative expense
than research and development expense for the year ended June 30, 2023. Consulting costs were $43,000 and $80,000 for the years ended
June 30, 2023 and 2022, respectively. The Company also incurred $14,000 and $55,000 for the years ended June 30, 2023 and 2022, respectively
in legal costs related to patent applications and renewals.

 Stock-based compensation allocated to research
and development for the years ended June 30, 2023 and 2022 were $4,000 and $22,000, respectively.

 Loss from Operations 

 As a result of the factors described above, the
loss from operations was $3,157,000 and $2,550,000 for the years ended June 30, 2023 and 2022 respectively.

 Other Income/(Expense) 

 Other income/(expense) was $(33,000) and $10,841,000
for the years ended June 30, 2023 and 2022, respectively. The difference was due to the gains recognized in 2022 consisting of $10,200,000
on the dissolution of PA1 and $902,000 from the sale of a domain name.

 Interest expense related to deferred compensation,
loan payable and convertible notes for the year ended June 30, 2023 was $218,000 prior to capitalization of $180,000. Interest expense
related to deferred compensation, loan payable and convertible notes for the year ended June 30, 2022 was $334,000 prior to capitalization
of $32,000. The decrease is due to more interest being capitalized to the 3G1 project.

 Net Loss Attributable to the Noncontrolling
Interest 

 The net loss attributable to the noncontrolling
interest was nil and $1,500 for the years ended June 30, 2023 and 2022, respectively.

 Net Income/(Loss) Attributable to Bion’s
Common Stockholders 

 As a result of the factors described above, the
net income/loss attributable to Bion’s stockholders was $(3,189,000) and $8,292,000 for the years ended June 30, 2023 and 2022, respectively,
and the net income/(loss) per basic common share was $(.07) and $.20 for the years ended June 30, 2023 and 2022, respectively.

 46 

 LIQUIDITY AND CAPITAL RESOURCES 

 The Company's consolidated financial statements for
the year ended June 30, 2023 have been prepared on a going concern basis, which contemplates the realization of assets and the settlement
of liabilities and commitments in the normal course of business. The Report of our Independent Registered Public Accounting Firm on the
Company's consolidated financial statements as of and for the year ended June 30, 2023 includes a "going concern" explanatory
paragraph which means that the auditors stated that conditions exist that raise substantial doubt about the Company's ability to continue
as a going concern.

 Operating Activities 

 As of June 30, 2023, the Company had cash of approximately
$626,000. During the year ended June 30, 2023, net cash used in operating activities was $2,929,000, primarily consisting of cash operating
expenses related to salaries and benefits, and other general and administrative costs such as insurance, legal, accounting, consulting
and investor relations expenses as well as the purchase of property and equipment. Cash expenditures were offset by proceeds from financing
activities, primarily the exercise of warrants and sale of common shares. As previously noted, the Company is currently not generating
significant revenue and accordingly has not generated cash flows from operations. The Company does not anticipate generating sufficient
revenues to offset operating and capital costs for a minimum of two to five years. While there are no assurances that the Company will
be successful in its efforts to develop and construct its Projects and market its Systems, it is certain that the Company will require
substantial funding from external sources. Given the unsettled state of the current credit and capital markets for companies such as Bion,
there is no assurance the Company will be able to raise the funds it needs on reasonable terms. 

 Investing Activities 

 During the year ended June 30, 2023, the Company
invested $3,557,000 in the purchase of property and equipment, primarily related to the Initial Project construction in process.

 Financing Activities 

 During the year ended June 30, 2023, the Company
received gross cash proceeds of $131,335 from the exercise of 175,114 warrants into shares of the Company’s common stock.

 During the year ended June 30, 2023, the Company entered into subscription
agreements to sell units for $1.00 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,
2024, and pursuant thereto, the Company issued 346,230 units for total proceeds of $346,230.

 During the year ended June 30, 2023, the Company entered
into a subscription agreement to sell 2,000,000 shares of restricted common stock of which 1,800,000 shares were purchased
on January 10, 2023 (the other 200,000 shares were purchased on December 31, 2022) for total proceeds during year ending June 30, 2023
of $2,000,000.

 During the year ended June 30, 2023, the Company entered
into subscription agreements to sell 575,000 units at a price of $1.60, with each unit consisting of one share of the Company’s
restricted common stock and one half warrant to purchase one share of the Company’s restricted common stock for $2.40 per share
with an expiry date of June 30, 2024, and, pursuant thereto, the Company issued 575,000 units for total proceeds of $920,000, in aggregate.
The Company paid commissions of $86,000 on the sale of units.

 As of June 30, 2023, the Company has debt obligations
consisting of: a) deferred compensation of $865,000 and b) convertible notes payable – affiliates of $1,716,000.

 47 

 Plan of Operations and Outlook 

 As of June 30, 2023, the Company had cash of approximately
$626,000.

 The Company continues to explore sources of additional financing
to satisfy its current operating requirements as it is not currently generating any significant revenues. 

 During fiscal years 2023 and 2022, the Company faced less difficulty
in raising equity funding (but was subject to substantial equity dilution from the larger amounts of equity financing during the periods)
than was experienced in the prior 3 years. However, this positive trend did not continue during the last quarter of the 2023 fiscal
year and first quarter of the current fiscal year (to date). The Company raised only raised very limited equity funds during such periods
to meet its some of its immediate needs, therefore, the Company needs to raise additional funds in the upcoming periods. The Company currently
faces substantial increases in demand for capital and operating expenditures for the fiscal year 2024 to date (and we anticipate such
increased demands will continue during the remainder of the 2024 fiscal year and periods thereafter) as it moves toward commercial implementation
of its 3G Tech and development of JVs (including costs associated with additions of personnel to carry out the business activities of
the Company) and, therefore, is likely to continue to face, significant cash flow management issues due to limited capital resources and
working capital constraints which had only recently begun to be alleviated. As a result, the Company has faced, and continues to face,
significant cash flow management challenges due to material working capital constraints. To partially mitigate these working capital
constraints, the Company's core senior management and some key employees and consultants have been deferring most of their cash compensation
and/or are accepting compensation in the form of securities of the Company (Notes 5 and 7 to Financial Statements) and members of the
Company's senior management have from time to time made loans to the Company and may need to do so in future periods. Note that, to deal
with earlier capital constraints, 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. As set forth
in detail elsewhere herein, during the year ended June 30, 2023 senior management (and family members) who held convertible obligations
of the Company adjusted the terms of their outstanding notes and agreed to debt modifications that reduced of the Company’s debt
by $3,522,000 and increased shareholders equity by the same amount. The constraints on available resources have had, and continue 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 raise
needed funds during the remainder of the current fiscal year (and subsequent periods), of which there is no assurance, management will
not need to consider deeper cuts (including additional personnel cuts) and/or curtailment of ongoing activities including research and
development activities. 

 The Company will need to obtain additional capital
to fund its operations and technology development, to satisfy existing creditors, to develop the Initial Project, JVs, Projects and CAFO
Retrofit waste remediation systems (potentially including the Kreider 2 facility. The Company anticipates that it will seek to raise from
$20,000,000 to $80,000,000 or more (debt and equity) during the next twelve months. However, as discussed above, there is no guarantee
that we will be able to raise sufficient funds or further capital for the operations planned in the near future. 

 The Company is not currently generating any significant
revenues. Further, the Company’s anticipated revenues, if any, from existing projects, JVs and proposed projects will not be sufficient
to meet the Company’s anticipated operational and capital expenditure needs for many years. During the year ended June 30, 2023
the Company raised gross proceeds of approximately $4,038,000 through the sale of its securities and paid commissions of approximately
$86,000. During the year ended June 30, 2022 the Company raised gross proceeds for approximately $1,737,000 and paid commissions of approximately
$19,000. The Company anticipates raising additional funds from such sales and transactions in the coming periods. However, there is
no guarantee that we will be able to raise sufficient funds or further capital for the operations planned in the near future. 

 Because the Company is not currently generating
significant revenues, the Company will need to obtain additional capital to fund its operations and technology development, to satisfy
existing creditors, to develop the Initial Project and subsequent Projects. 

 As indicated above, the Company anticipates that it
will seek to raise from $20,000,000 to $80,000,000 or more (from debt, equity, joint venture, strategic partnering, etc.) during the next
twelve months, some of which may be in the context of joint ventures for the development of one or more large scale projects. We reiterate
that there is no assurance, especially in the extremely unsettled capital markets that presently exist for companies such as Bion, that
the Company will be able to obtain the funds that it needs to stay in business, finance its Projects and other activities, continue its
technology development and/or to successfully develop its business. 

 48 

 See Item 2 below and Note 5 (“Pennvest Loan and Bion PA1 LLC (“PA1”)
Dissolution”) to the Financial Statements included in this report and the Company’s Forms 10-K for the year ended June
30, 2022 (and the years 2009-2021) for discussion and more details related to the dissolution of PA1, the Pennvest Loan and the

 Kreider 1 project.

 There is extremely limited likelihood that funds
required during the next twelve months or in the periods immediately thereafter will be generated from operations and there is no assurance
that those funds will be available from external sources such as debt or equity financings or other potential sources. The lack of 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 companies such as 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) constraints due to problems experienced
in the global industrial supply chain since the onset of the Covid-19 pandemic, which have delayed certain research and development testing
and have delayed and/or increased the cost of construction of the Company’s initial 3G Tech installation as equipment/services remain
difficult to acquire in a timely manner, vi) due to the age and health of our core management team, many of whom are age 70 or older and
have had one or more existing health issues (including brief periods of Covid-19 infection), 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.

 49 

 CONTRACTUAL OBLIGATIONS 

 We have the following material contractual obligations
(in addition to employment and consulting agreements with management and employees):

 The Company entered into an agreement on September
23, 2021, to lease approximately four acres of land near Fair Oaks, Indiana, for the development site of its Initial Project.

 The future minimum lease payment under noncancelable operating lease with
terms greater than one year as of June 30, 2023:

 Year ended June 30, 2023 to June 2024 
 $ 75,000 

 Year ended June 30, 2024 to December 2024 
 37,500 

 Undiscounted cash flow 
 112,500 

 Less imputed interest 
 (8,432 ) 

 Total 
 $ 104,068 

 Less current portion 
 (75,000 ) 

 Long tern lease liability 
 29,068 

 The weighted average remaining lease term and discounted
rate related to the Company’s lease liability as of June 30, 2023 were 1.58 years and 10%, respectively. The Company’s lease
discount rate is generally based on the estimates of its incremental borrowing rate as the discount rates implicit in the Company’s
lease cannot be readily determined.

 OFF-BALANCE SHEET ARRANGEMENTS 

 The Company does not have any off-balance sheet arrangements
(as that term is defined in Item 303 of Regulation S-K) that are reasonably likely to have a current or future material effect on our
financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources.

 Item 7A. Quantitative and Qualitative Disclosures About Market Risk. 

 Not applicable.

 Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA 

 The consolidated financial statements are set forth on pages F-1 through
F-41 hereto.

 50 

 Item 9A. Controls and Procedures. 

 Disclosure Controls and Procedures 

 As of June 30, 2023, 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 Office concluded that the Company’s disclosure controls and procedures were not effective as of June 30, 2023 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, 2022. 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 and a second condition is the a lack of timely
review and approval of capitalized internal costs and interest. 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. 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. In December of 2021, there was a change made to a new
outside accounting and consulting firm. 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. 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.

 51 

 Website: Domain Sale/Resolved Litigation/Hacking/Theft 

 On March 23, 2022 the Company entered into an agreement
to sell domain name <biontech.com> and other related assets to BioNTech SE (“BNTX”) for the sum of $950,000 (before
expenses related to the transaction) which sale was closed/completed on April 2, 2022 with a one-time gain of $902,490. The Company has
been using www.bionenviro.com as its primary website (and domain) since July 2021 due to the events described below. The Company
has not been using biontech.com as its primary website since July 2021 so domain name <biontech.com> no longer represented
a core asset of the Company.

 As previously reported, 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 was 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’ (Case
No. 1:21-cv-01034), seeking recovery of the domain name and other relief as set forth therein.

 On November 19, 2021, the United States District Court
for the Eastern District of Virginia, Alexandria Division issued an order stating that “… ORDERED, ADJUDGED and Decreed that
plaintiff Bion Environmental Technologies, Inc. (‘plaintiff) Is the lawful owner of domain name <biontech.com> ….”
under the heading ‘Bion Environmental Technologies, Inc., Plaintiff, vs John Doe and <biontech.com>, Defendants’ (Case
No. 1:21-cv-01034). The Company has moved the domain name <biontech.com> to a new registrar and reactivated it for the Company’s
use (paired currently with its current bionenviro.com website).

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

 The Company created ‘work-arounds’ as
a result. These issues have been resolved and the Company 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)
is cscott@bionenviro.com and mas@biontech.com (no longer functional) is now mas@bionenviro.com.

 Bank account
hacking 

 On June 23, 2023, an officer of the Company
with personal accounts with Signature Bank was hacked and $75,000 was transferred from the Company’s accounts at Signature Bank
to the officer’s personal accounts. The bank was notified and all Company accounts were placed on hold. Subsequently, the funds
were released and transferred back to the Company prior to June 30, 2023 the end of the fiscal year and there were no losses incurred.

 The Company has reviewed the authorized individuals
on all accounts and further limited access to its bank accounts after the hacking incident. 

 ITEM 9B. OTHER INFORMATION 

 None.

 52 

 PART III 

 ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE. 

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

 Name 
 
 Age 
 
 Position 

 Directors and Officers: 
 
 Mark A. Smith 
 
 73 
 
 Executive Chairman, President, General Counsel, Chief Financial Officer and Director 

 Jon Northrop 
 
 80 
 
 Secretary and Director 

 William O’Neill 
 
 64 
 
 Chief Executive Officer 

 Dominic Bassani 
 
 76 
 
 Chief Operating Officer 

 William Rupp 
 
 62 
 
 Director 

 Salvatore Zizza 
 
 77 
 
 Director 

 Edward T. Schafer 
 
 77 
 
 Director 

 Mark A. Smith (73) 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. Mr. 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, Mr. Smith was the president of RSTS Corporation prior to its acquisition of Bion
Technologies, Inc. in 1992. Mr. 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). Mr. Smith has engaged in the private practice of law in Colorado
since 1980. In addition, Mr. Smith has been active in running private family companies, Stonehenge Corporation (until 1994), LoTayLingKyur,
Inc. (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. 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.

 Jon Northrop (80) 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. Mr. 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. Mr. 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.

 53 

 William O’Neill (64) has served
as Chief Executive officer since May 1, 2022 (he previously held the same position for the period from November 2010 through May 2011).
Mr. O’Neill currently also serves as a director of Wise Up Food, LLC, a privately-held company that provides a transparent supply
chain and real sustainability information for food retailers (including restaurants) enabling consumers to make informed purchase decisions.
He founded Wise Up Food during 2020 and served as its President until May 1, 2022 when his wife assumed that position. From February 2018
through May 2020 he was employed as Vice President Retail & Value-Added Business Teys, USA, as subsidiary of Teys, a large Australian
beef packer. From April 2015 through February 2018 Mr. O’Neill served as Vice President Retail of Colorado Premium Foods. From 1990
through 2015 he held marketing and executive positions with a varity of companies in the agriculture and food service businesses with
an emphasis on developing/marketing products in the meat industry. Mr. O’Neill graduated from Gettysburg College in 1981 with a
B.A. in economics.

 Dominic Bassani (76) has served as Chief
Operating Officer of Bion Environmental Technologies, Inc. since May 1, 2022 and served as Chief Executive Officer from April 2011. 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 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.

 William
(Bill) Rupp (62) has served as a director of the company since ___, 2023.He is a ‘meat industry leader’ who served
as President of JBS Beef from 2010-2016 with responsilibity for the leadership of JBS’s North American Beef business. He was CEO
of Meyer Natural Foods from 2009-2010. Mr. Rupp served in various management roles for Cargill Beef from 1983 until 2009 where he was
President from 1998-2008 with responsibility for Cargill’s global beef business with operations in US, Canada, Argentina, and Australia.
He graduated from the University of South Dakota with a B.S. in Business Administration in 1983. Mr Rupp salso serves on the boards of
Sustainable Beef, DecisionNext, Superior Lamb and Lumachain. 

 Salvatore J. Zizza (77) Salvatore Zizza
has served as a director of Bion since 2023. He is presently President of Zizza & Associates
Corp. a private holding company which invests in various industries and retired Chairman of BAM (Bethlehem Advanced Materials), which
designs and manufactures high-temperature furnaces for sale and for its own use in the processing of specialty carbon, graphite and ceramic
materials for semiconductor and aerospace applications, and Chairman of Bergen Cove Realty Inc., with substantial holdings in residential
real estate. Mr. Zizza serves as Director & Chairman of Trans-Lux Corporation, a full service provider of integrated multimedia systems
for today’s communications environments (since 2018) and served on board since 2009. Mr. Zizza bought NICO Construction Company,
Inc., in 1978 and was President and CFO until 1985 when NICO merged with The LVI Group Inc., a (NYSE), listed company. Prior to joining
The LVI Group Inc., Mr. Zizza was an independent financial consultant and had been a lending officer of Chemical Bank. Mr. Zizza is also
an investor in numerous private companies and real estate holdings. Mr. Zizza currently holds directorship positions at nineteen
(19) Gabelli/GAMCO funds and trusts. He has been associated with this family of investment funds for over thirty (30) years. He received
a Baccalaureate/Political Science, St. John’s University (1967) and a Master of Business Administration, St. John’s University
(1972). In 2007 Mr. Zizza received a Doctor of Commercial Sciences (Honorary) from St. John’s
University. 

 Edward T. Schafer (77) 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. Mr. Schafer had served as a consultant to Bion since July 2010. Mr. Schafer served as a director of
Continental Resources (NYSE-CLR) 2011-2016. He also chairs the Board of Directors of Dynamic Food Ingredients. In addition he has served
on the Board of Governors of Amity Technology LLP since 2009. Mr. 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. Department of Agriculture under President George W. Bush. Mr. 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: CBMG) and is Chairman of its Audit Committee. Mr.
Schafer serves as a board member of the Center for Innovation at the University of North Dakota and is an adjunct professor at North Dakota
State University. Mr. Schafer is a past chair of the Republican Governors Association, the Midwestern Governors’ Association, the
Interstate Oil and Gas Compact, the Western Governors’ Association and served as the 29 th United States Secretary of
Agricultural from 2008 to 2009. Mr. Schafer holds a Master’s degree in Business Administration from the University of Denver. Mr.
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.

 54 

 Family Relationships 

 There are currently no family relationships among
our Directors and Executive Officers.

 Compliance 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. 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:

 (1) 
 
 any 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; 

 (2) 
 
 any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); 

 (3) 
 
 being 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; and 

 (4) 
 
 being found by a court of competent jurisdiction, the SEC or the CFTC to have violated Federal or state securities or commodities laws. 

 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.

 55 

 Advisory Group 

 The Company, which has only 7 full-time employees/consultants
(all of whom are effectively ‘department heads’), has utilized many outside parties as consultants and contract workers for
various roles to augment our management capabilities and expertise. Over the last year the Company has begun to establish a more formal
‘advisory’ relationship with some of these people to insure their availability for consultation by our senior management (separate
from specific consulting engagements). At present, a) William Rupp (meat and beef industry), b) Matthew Lamb (agriculture/animal husbandry/dairy),
c) Stanley Rapp (government affairs), d) Dennis Tristao (agricultural tech, engineering and agricultural/environmental policy) and e)
Dennis Bracht (organic seed, corn/feed grain cultivation and related matters) have accepted roles as members of our Advisory Group. The
Company anticipates that additional persons will be added to this group over time.

 ITEM 11. 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 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.

 Non-Equity 
 
 Nonqualified 
 
 Incentive 
 
 Deferred 
 
 Option 
 
 Plan 
 
 Compen- 
 
 Other 
 
 Name and Principal 
 
 Fiscal 
 
 Salary 
 
 Stock 
 
 Awards 
 
 Compen- 
 
 sation 
 
 Compen- 
 
 Position 
 
 Year 
 
 (1) 
 
 Bonus 
 
 Awards 
 
 (2) 
 
 sation 
 
 Earnings 
 
 sation 
 
 Total 
 
 Mark A. Smith (3) 
 
 2023 
 
 $ 
 300,000 
 
 $ 
 — 
 
 $ 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 $ 
 300,000 
 
 President and Chief 
 
 2022 
 
 $ 
 230,000 
 
 $ 
 — 
 
 $ 
 — 
 
 115,200 
 
 — 
 
 — 
 
 — 
 
 $ 
 345,200 
 
 Financial Officer Since March 25, 2003, 
 
 Director 
 
 Brightcap/Dominic Bassani (4) 
 
 2023 
 
 $ 
 372,000 
 
 $ 
 — 
 
 $ 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 $ 
 372,000 
 
 VP - Special Projects & Strategic 
 
 2022 
 
 $ 
 372,000 
 
 $ 
 — 
 
 $ 
 — 
 
 115,200 
 
 — 
 
 — 
 
 — 
 
 $ 
 487,200 
 
 Planning and Chief Operating Officer 
 
 William O'Neill 
 
 2023 
 
 $ 
 270,000 
 
 $ 
 — 
 
 $ 
 — 
 
 191,500 
 
 — 
 
 — 
 
 — 
 
 $ 
 461,500 
 
 Chief Executive Officer (5) 
 
 2022 
 
 $ 
 45,000 
 
 $ 
 — 
 
 $ 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 $ 
 45,000 
 
 (1) 
 
 Includes compensation paid by Bion Environmental Technologies, Inc. and our wholly owned subsidiaries. 

 (2) 
 
 Reflects the dollar amount expensed by the Company during the applicable fiscal year for financial statement reporting purposes pursuant to ASC 718. 

 (3) 
 
 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 sole election, at $0.75 per share until December 31, 2022 (which date was extended to July 1, 2024). 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. During fiscal year 2021 the Company paid Smith $13,460 for payroll taxes on his deferred compensation conversions which was treated as salary. 

 (4) 
 
 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 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. Bassani's annual salary will remain at $372,000 and 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% exercise price adjustment and the options
 may be extended for an additional 5 years at $0.01 per share per extension year. 

 (5) 
 
 On May 1, 2022 William O'Neill joined the Company with an annual salary of $420,000 which includes $10,000 monthly deferred compensation to be paid at the discretion of the Board. There is an additional $1,500 per month health insurance allowance. Terms of the contract are thirty-seven months. William O'Neill was previously paid as a contractor through Identifoods. Total payments for the years ended June 30, 2023 and June 2022, respectively were $318,000 and $165,000. 

 56 

 Employment Agreements: 

 Mark A. Smith (“Smith”) has held the positions
of Executive Chairman, 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. As part of the extension agreement, 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 were
originally to 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). Mr. 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, 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) was granted 150,000 new options which vested immediately and iv) outstanding options and
warrants owned by Smith (and his donees) were 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. On April 29, 2022, Smith’s
monthly salary was increased to $25,000, of which $5,000 is deferred each month.

 57 

 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
deferred). The Board appointed Bassani as the Company's CEO effective May 13, 2011 in which position he served until May 2022. 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 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 Notes 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) was
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 were 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. 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’ price
adjustment (subsequently increased to 75%) 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. Currently Bassani receives $25,000 per month in cash and $6,000 per month of deferred compensation.

 58 

 William O’Neill
(“O’Neill”) joined as the Company’s Chief Executive Officer (“CEO”) effective May 1, 2022. 
O’Neill had previously been working with the Company as a consultant and had been employed by the Company as its CEO during
2010-2011. Bassani, CEO of the Company since 2011, has assumed the position of COO while retaining existing operational
management responsibilities and working with O’Neill on ‘commercialization’ of the Company’s technology and
work related to JVs (and other transactions) based on the Company’s Gen3Technology and related matters. Bassani’s
compensation arrangements with the Company have not been altered in the context of the change of positions. The Company and
O’Neill have entered into a thirty-seven (37) month employment agreement (subject to Board renewal for the final two (2) years
during the 13th month) with compensation of $25,000 cash and $10,000 deferred compensation per month. An entity affiliated with
O’Neill was issued 1,000,000 Incentive Warrants exercisable at $1.00 per share until April 30, 2026 of which up to 700,000
Incentive Warrants were cancellable until O’Neill’s agreement was re-affirmed at 13 months and/or fails to serve the
entire contract term thereafter. These warrants each have a 75% exercise price adjustment if the terms set forth therein are
met. As set forth in the Employment Agreement, the Company and Wise Up Foods LLC (an entity founded by O’Neill with
which he continues to serve as a Director and of which O’Neill and his family members are majority owners) sets forth the
intent to form “… a strategic alliance and committed to collaborate on projects each company has in their
respective pipelines. WUF and Bion will work together to use/create technology that will deliver the consumer verified
sustainable results produced by Bion’s technology and technology platform. The key to the strategic relationship is each
company’s commitment to deliver real and verified results to the consumer – free of marketing hype and
greenwashing…”.

 Bassani, Smith and Schafer have each agreed (multiple
times) to extend the maturity date of the outstanding 2020 Convertible Obligations and 2015 Convertible Notes (“CVObligations”)
set forth in the paragraphs above from December 31, 2017 (initial maturity date) to July 1, 2024 (current maturity date) which is also
the maturity date of all CV Obligations after adjustment. 

 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. Subsequently,
it was agreed that if any of the CVObligations are converted, the warrants in units received will be exercisable through a date 3 years
after conversion date with exercise price adjustment provision effective two years after the date on which the converted portion of the
CVObligations (as adjusted, if applicable) was accrued.

 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).

 59 

 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, 2023.

 Outstanding Equity Awards at Fiscal Year-End 

 Option Awards 
 
 Stock Awards 
 
 Name 
 
 Number of 

 Securities 

 Underlying Unexercised 

 Options (#) Exercisable 
 
 Number of 

 Securities 

 Underlying 

 Unexercised 

 Options (#)Unexercisable 
 
 Equity 

 Incentive Plan 

 Awards: 

 Number of 

 Securities 

 Underlying 

 Unexercised 

 Unearned 

 Options (#) 
 
 Option 

 Exercise 

 Price ($) 
 
 Option 

 Expiration 

 Date 
 
 Number of 

 Shares or 

 Units of 

 Stock That 

 Have Not 

 Vested (#) 
 
 Market 

 Value of 

 Shares or 

 Units of 

 Stock That 

 Have Not 

 Vested 
 
 Equity 

 Incentive Plan 

 Awards: 

 Number of 

 Unearned Shares, 

 Units or Other 

 Rights That Have 

 Not Vested 
 
 Equity 

 Incentive Plan 

 Awards: 

 Market or 

 Payout Value of 

 Unearned Shares, 

 Units or Other 

 Rights That Have 

 Not Vested 
 
 Mark A. Smith (1) 
 
 100,000 
 
 — 
 
 — 
 
 0.60 
 
 2024 
 
 — 
 
 — 
 
 — 
 
 — 
 
 Mark A. Smith (1) 
 
 1,675,000 
 
 — 
 
 — 
 
 0.75 
 
 2024 
 
 — 
 
 — 
 
 — 
 
 — 
 
 Mark A. Smith (2) 
 
 200,000 
 
 — 
 
 — 
 
 0.75 
 
 2024 
 
 — 
 
 — 
 
 — 
 
 — 
 
 Mark A. Smith (1) 
 
 250,000 
 
 — 
 
 — 
 
 1.20 
 
 2026 
 
 — 
 
 — 
 
 — 
 
 — 
 
 Mark A. Smith (1) 
 
 200,000 
 
 — 
 
 — 
 
 1.00 
 
 2025 
 
 — 
 
 — 
 
 — 
 
 — 
 
 Brightcap/ Dominic Bassani (1) 
 
 1,675,000 
 
 — 
 
 — 
 
 0.75 
 
 2024 
 
 — 
 
 — 
 
 — 
 
 — 
 
 Brightcap/ Dominic Bassani (2) 
 
 2,000,000 
 
 — 
 
 — 
 
 0.75 
 
 2024 
 
 — 
 
 — 
 
 — 
 
 — 
 
 Brightcap/ Dominic Bassani (1) 
 
 250,000 
 
 — 
 
 — 
 
 1.20 
 
 2026 
 
 — 
 
 — 
 
 — 
 
 — 
 
 Brightcap/ Dominic Bassani (1) 
 
 200,000 
 
 — 
 
 — 
 
 1.00 
 
 2025 
 
 — 
 
 — 
 
 — 
 
 — 
 
 Edward Schafer (3) 
 
 25,000 
 
 — 
 
 — 
 
 0.60 
 
 2024 
 
 — 
 
 — 
 
 — 
 
 — 
 
 Edward Schafer (3) 
 
 300,000 
 
 — 
 
 — 
 
 0.75 
 
 2024 
 
 — 
 
 — 
 
 — 
 
 — 
 
 Edward Schafer (1) 
 
 600,000 
 
 — 
 
 — 
 
 0.75 
 
 2024 
 
 — 
 
 — 
 
 — 
 
 — 
 
 Edward Schafer (2) 
 
 190,000 
 
 — 
 
 — 
 
 0.75 
 
 2024 
 
 — 
 
 — 
 
 — 
 
 — 
 
 Edward Schafer (1) 
 
 50,000 
 
 — 
 
 — 
 
 1.20 
 
 2026 
 
 — 
 
 — 
 
 — 
 
 — 
 
 Edward Schafer (1) 
 
 50,000 
 
 — 
 
 — 
 
 1.00 
 
 2025 
 
 — 
 
 — 
 
 — 
 
 — 
 
 William O’Neill (3) 
 
 250,000 
 
 — 
 
 — 
 
 1.60 
 
 2026 
 
 250,000 
 
 95,750 
 
 William O’Neill (3) 
 
 250,000 
 
 — 
 
 — 
 
 1.60 
 
 2026 
 
 250,000 
 
 95,750 
 
 (1) 
 
 Options are subject to a 75% execution/exercise price adjustment upon notice of intent to exercise under certain conditions. 

 (2) 
 
 Options are subject to a 90% execution/exercise price adjustment upon notice of intent to exercise under certain conditions. 

 (3) 
 
 Options are subject to a 50% execution/exercise price adjustment upon notice of intent to exercise under certain conditions. 

 60 

 Director Compensation 

 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 (probably
during the current fiscal year).

 DIRECTOR COMPENSATION 

 The following table sets forth certain information
regarding the compensation paid to directors during the fiscal year ended June 30, 2023:

 Director Compensation 

 Name 
 
 Fees
 earned or paid in Cash ($) 
 
 Stock
 Awards ($) 
 
 Option
 Awards ($)(1) 
 
 Non-equity
 incentive plan compensation ($) 
 
 Nonqualified deferred 

 compensation
 earnings ($) 
 
 All
 other compensation ($) 
 
 Total
 ($) 
 
 Jon Northrop 
 
 — 
 
 — 
 
 19,550 
 
 — 
 
 — 
 
 — 
 
 19,500 
 
 Edward Schafer 
 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 William Rupp 
 
 — 
 
 — 
 
 39,100 
 
 — 
 
 — 
 
 — 
 
 39,100 
 
 Salvatore Zizza 
 
 — 
 
 — 
 
 39,100 
 
 — 
 
 — 
 
 — 
 
 39,100 
 
 (1) 
 Reflects the dollar amount expensed by the Company during the applicable fiscal year for financial statement reporting purposes pursuant to ASC 718. 

 ITEM 12. SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS 

 As of August 1, 2023, the Registrant had 49,408,214 shares
of common stock issued and 48,703,905 shares of common stock outstanding. (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, 2022 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; and 

 ● 
 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 August 1, 2023. 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 ‘Entitled to Vote’ is based upon 48,703,905 shares outstanding as of
August 1, 2023. 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.

 61 

 Name and Address 
 Number 
 Percent of Class Outstanding 
 Entitled
 To Vote 

 Centerpoint Corporation (1) 
 c/o PO Box 323
 Old Bethpage, NY 11604
 
 704,309 
 1.4 % 
 — 

 Dominic Bassani (2) 
 64 Village Hills Drive
 Dix Hills, NY 11746
 
 15,242,691 
 24.3 % 
 24.6 % 

 Mark A. Smith (3) 
 401 N. Riverside Beach #408
 Pompano Beach, FL 33062
 
 8,401,433 
 14.9 % 
 15.1 % 

 Christopher B. Parlow (4) 
 23 Longbow Drive
 Commack, NY 11725
 
 8,754,807 
 15.2 % 
 15.4 % 

 Danielle Lominy (5) 
 c/o Dominic Bassani 
 64 Village Hill Drive 
 Dix Hills, NY 11746 
 8,744,803 
 15.3 % 
 15.5 % 

 Edward Schafer (6) 
 c/o PO Box 323 
 Old Bethpage, NY 11804 
 3,039,138 
 5.8 % 
 5.9 % 

 Anthony Orphanos (7) 
 c/o Blacksmith Advisors, LLC
 320 Park Avenue 18th Floor
 New York, NY 10022
 
 2,285,618 
 4.4 % 
 4.6 % 

 William O’Neill (8) 
 107 12th Street E 
 St. Petersburg, FL 3371 
 1,560,888 
 3.1 % 
 3.1 % 

 Craig Scott (9) 
 3131 North Daffodil Dr. 
 Billings, MT 59102 
 2,663,652 
 5.2 % 
 5.2 % 

 Jon Northrop (10) 
 59 Chestnut Street 
 Westfield, NY 14787 
 636,135 
 1.3 % 
 1.3 % 

 Salvatore Zizza (11) 
 641 Lexington Avenue, 20th Floor
 New York, NY 10022
 
 155,112 
 0.3 % 
 0.3 % 

 William Rupp (12) 
 PO Box 536
 Loveland, CO 80539
 
 125,000 
 0.3 % 
 0.3 % 

 All executive officers and directors as a group (8 persons) 
 31,824,049 
 41.5 % 
 41.6 % 

 (1) 
 
 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. 

 62 

 (2) 
 
 Includes 70,577 shares, 3,025,000 shares underlying options and 965,000 shares underlying warrants held directly by Mr. Bassani; 464,644 shares and 250,000 shares underlying warrants held by Mr. Bassani’s wife; and 909,747 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 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 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) $459,277.02 principal amount of the Company’s Adjusted 2020 Convertible Obligation (“CVObligation”) which is convertible @ $.0953 into 4,819,277 shares and 3,214,458 warrants and, as a result, Danielle Lominy is the beneficial owner of 2,409,639 shares underlying conversion of the Adjusted CVObligation and 1,607,229 shares underlying the warrants issuable on conversion of the Adjusted CVObligation. The total also includes: a) 724,754 shares of common stock and 483,411 underlying warrants that could be issued on the conversion (at the election of Bassani) by Mr. Bassani of a convertible note in the amount of $362,376, (convertible @ $0.50 price) and b) 265,693 shares of common stock that could be issued on the conversion (at the election of Bassani) by Mr. Bassani of a convertible note in the amount of $159,416 (convertible @ $0.60 price) and c) 222,962 shares of common stock that could be issued on the conversion (at the election of Bassani) of Adjusted Convertible Note in the amount of $25,641 (convertible @$.115 price) and d) 627,577 shares of common stock that could be issued on the conversion (at the election of Bassani) of deferred compensation in the amount of $548,057. Mr. Bassani disclaims ownership of 1,511,477 shares underlying warrants held by the Danielle Christine Bassani Trust, which is separately itemized herein. Mr. 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. Mr. 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 752,268 shares, 2,425,000 shares underlying options, 1,806,987 warrants held directly by Mr. Smith, and 62,535 shares held by Mr. Smith in an IRA. Also includes 575,000 shares and 370,948 underlying warrants held by Mr. Smith’s wife and 53,756 shares held in his wife’s IRA. Also includes 12,681 shares of common stock held by held by LoTayLingKyur Foundation and 100,001 shares of common stock and 100,001 underlying warrants held by LoTayLingKyur LLC which is controlled by Mr. Smith and his wife. Also includes 971,492 shares and 971,492 warrants underlying units that could be issued on the conversion (at the election of Mr. Smith) by Mr. Smith of his Adjusted 2020 Convertible Obligation in the aggregate amount of $91,903.05. Mr. 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 $.0946 per unit. Also includes 72,858 shares and 72,858 warrants underlying units that could be issued on the conversion (at the election of Mr. Smith) by Mr. Smith of his 2020 Convertible Obligation in the aggregate amount of $36,428.77. Mr. 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 $.50 per unit. Also includes 53,556 shares of common stock that could be issued on the conversion (at the election of Mr. Smith) of deferred compensation in the amount of $40,167. Does not include shares and warrants owned by various other family members of which Mr. Smith disclaims beneficial ownership. Mr. Smith is also the President of Centerpoint, although shares owned by Centerpoint are not entitled to a vote while held by Centerpoint 

 63 

 (4) 
 
 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 $459,277.02 principal amount of the Company’s Adjusted 2020 Convertible Obligations (“CVObligation”) which is convertible @$.0953 into 4,819,277 shares and 3,214,458 warrants. As a result, Christopher Parlow is the beneficial owner of 2,409,639 shares underlying conversion of the CVObligation and 1,607,229 shares underlying the warrants issuable on conversion of the CVObligation. 

 (5) 
 
 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, 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 $459,277.02 principal amount of the Company’s Adjusted 2020 Convertible Obligation (“CVObligation”) which is convertible @ $.0953 into 4,819,277 shares and 3,214,458 warrants. As a result, Danielle Lominy is the beneficial owner of 2,409,639 shares underlying conversion of the CVObligation and 1,607,229 shares underlying the warrants issuable on conversion of the CVObligation. 

 (6) 
 
 Includes 158,254 shares held directly by Mr. Schafer, options to purchase 1,215,000 shares and warrants to purchase 23,934 shares. Also includes 1,070,021 shares and 535,011 warrants underlying units that could be issued on the conversion by Mr. Schafer of his Adjusted Convertible Obligation in the amount of $101,973. Mr. 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 $.0953 per unit. Also includes 36,918 shares of common stock that could be issued on the conversion (at the election of Mr. Schafer) by Mr. Schafer of his Adjusted September 2015 convertible note in the amount of $4,245.47. The conversion price will be $.115 per share. 

 (7) 
 
 Includes 94,927 shares held directly by Mr. Orphanos; 156,750 shares underlying warrants held directly by Mr. Orphanos; 945 shares held jointly with his wife; 1,262,774 shares held in IRA accounts; and 770,222 shares of common stock that could be issued on conversion of $462,133 convertible notes ($.60 conversion price). Not included are 1,021,303 common shares owned by certain clients of Blacksmith Advisors, over which Mr. Orphanos exercises discretionary authority (which shares include: 68,000 shares owned by Danielle Lominy (formerly Danielle Bassani). Mr. Orphanos disclaims beneficial ownership of the shares listed in the preceding sentences because he has no pecuniary interest in the shares. 

 64 

 (8) 
 
 Includes 50,000 underlying warrants held directly by Mr. O’Neill, 500,000 shares underlying options held directly by Mr. O’Neill and 10,888 shares held by Mr. O’Neill’s wife, and 1,000,000 shares underlying warrants held by Identifoods, LLC which is owned by Mr. O’Neill and his wife. 

 (9) 
 
 Includes 504,894 shares, 1,545,000 shares underlying options and 573,747 shares underlying warrants held directly by Mr. Scott. The total also includes 40,011 shares of common stock that could be issued on the conversion (at the election of Mr. Scott) of deferred compensation in the amount of $43,612.11. 

 (10) 
 
 Includes 120,635 shares held directly by Mr. Northrop and options to purchase 515,500 shares held by Mr. Northrop. Does not include shares or options owned by the adult children of Mr. Northrop nor his former wife. 

 (11) 
 
 Includes 105,112 shares of common stock and 50,000 shares of common stock underlying options held directly by Mr. Zizza. 

 (12) 
 
 Includes 50,000 shares of common stock underlying options and 75,000 shares of common stock underlying warrants held directly by Mr. Rupp. 

 ITEM 13. 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.

 Four directors of the Company (Jon Northrop, Ed Schaefer,
Salvatore Zizza and William Rupp) are considered to be independent directors.

 ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.
 
 Audit Fees 

 In January 2017 the Company engaged Eide Bailly LLP
as its independent registered public accounting firm. The aggregate fees billed for the fiscal year ended June 30, 2022 and June 30,
2023 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 $10,600 and $54,325,
respectively.

 In December 2022 the Company engaged Haynie &
Company as its independent registered public accounting firm. The aggregate fees billed for the fiscal year ended June 30, 2023 by Haynie
& Company for professional services rendered for the audit of the Company’s annual financial statements and reviews of the interim
financial statements included in the Company’s quarterly reports on Form 10-Q (and related matters) were $71, 000.

 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, 2022 and June 30, 2021.

 There were no fees billed by Haynie & Company
for audit-related fees in the last fiscal year ended June 30, 2023.

 Tax Fees 

 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, 2023 and June 30, 2022 were nil and nil, respectively.

 The aggregate fees billed for tax services rendered
by Haynie & Company for tax compliance and related services for the year ended June 30, 2023 were nil.

 All Other Fees 

 None.

 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.

 65 

 PART IV 

 ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES. 

 (a) Exhibits 

 Exhibit 

Number 
 Description and Location 

 3.1 
 Amended and Restated Articles of Incorporation of Bion Environmental Technologies, Inc., filed with the Secretary of State of the State of Colorado on April 11, 2022. (Incorporated by reference to Exhibit 3.1 filed with Form 8-K filed on April 12, 2022). 

 3.2 
 Amended and Restated Bylaws. (Incorporated by reference to Exhibit 3.2 filed with Form 8-K filed on January 4, 2022). 

 10.1 
 Subscription Agreement dated January 10, 2002 between Bion Environmental Technologies, Inc. and Centerpoint Corporation regarding issuance of stock in exchange for cash and claims regarding Aprilia (Incorporated by reference to Exhibit 10.1 filed with Form 10SB12G on November 14, 2006). 

 10.2 
 Agreement dated March 15, 2002 and effective January 15, 2002 between Bion Environmental Technologies, Inc. and Centerpoint Corporation regarding purchase of warrant and management agreement (Incorporated by reference to Exhibit 10.2 filed with Form 10SB12G on November 14, 2006). 

 10.3 
 Agreement 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 (Incorporated by reference to Exhibit 10.3 filed with Form 10SB12G on November 14, 2006). 

 10.4 
 Promissory Note and Security Agreement between Bion Environmental Technologies, Inc. and Bright Capital, LLC (Incorporated by reference to Exhibit 10.4 filed with Form 10SB12G on November 14, 2006). 

 10.5 
 Letter Agreement with Bright Capital, Ltd. (Incorporated by reference to Exhibit 10.8 filed with Form 10SB12G on November 14, 2006). 

 10.6 
 Amended Agreement with Centerpoint Corporation dated April 23, 2003 (Incorporated by reference to Exhibit 10.10 filed with Form 10SB12G on November 14, 2006). 

 10.7 
 Promissory Note and Conversion Agreement between Bion Environmental Technologies, Inc. and Mark A. Smith related to deferred compensation (Incorporated by reference to Exhibit 10.21 filed with Form 10SB12G on November 14, 2006). 

 10.8 
 Promissory Note and Conversion Agreement between Bion Environmental Technologies, Inc. and Bright Capital, Ltd. related to deferred compensation (Incorporated by reference to Exhibit 10.22 filed with Form 10SB12G on November 14, 2006). 

 10.9 
 Employment agreement with Mark A. Smith (Incorporated by reference to Exhibit 10.23 filed with Form 10SB12G on November 14, 2006). 

 10.10 
 Employment agreement with Bright Capital, Ltd. (Incorporated by reference to Exhibit 10.25 filed with Form 10SB12G on November 14, 2006). 

 10.11 
 Employment agreement with Jeff Kapell (Incorporated by reference to Exhibit 10.26 filed with Form 10SB12G on November 14, 2006). 

 10.12 
 Employment agreement with Jeremy Rowland (Incorporated by reference to Exhibit 10.27 filed with Form 10SB12G on November 14, 2006). 

 10.13 
 Office lease at 641 Lexington Avenue, 17th Floor, New York (Incorporated by reference to Exhibit 10.28 filed with Form 10SB12G on November 14, 2006). 

 10.14 
 2006 Consolidated Incentive Plan (Incorporated by reference to Exhibit 10.29 filed with Form 10SB12G on November 14, 2006). 

 10.15 
 Memo to Dominic Bassani & Bright Capital, Ltd. dated October 16, 2006 regarding Change in Title/Status of DB/Amendment to Brightcap Agreement (Incorporated by reference to Exhibit 10.30 filed with Form 10SB12G on November 14, 2006). 

 10.16 
 Promissory Note and Conversion Agreement for Mark Smith, dated January 1, 2007 (Incorporated by reference to Exhibit 10.31 filed with Form 10SB12G/A on February 1, 2007). 

 10.17 
 Promissory Note and Conversion Agreement for Bright Capital, Ltd., dated January 1, 2007 (Incorporated by reference to Exhibit 10.35 filed with Form 10SB12G/A on February 1, 2007). 

 10.18 
 Extension Agreement dated March 31, 2007 between the Company and Mark A Smith (Incorporated by reference to Exhibit 10.1 filed with Form 8-K filed on April 3, 2007) 

 10.19 
 Form of Note dated March 31, 2007 in the amount of $151,645.89 in favor of Mark A. Smith (Incorporated by reference to Exhibit 10. 2 filed with Form 8-K filed on April 3, 2007) 

 10.20 
 Form of Note dated March 31, 2007 in the amount of $455.486.30 in favor of Bright Capital, Ltd. (Incorporated by reference to Exhibit 10.4 filed with Form 8-K filed on April 3, 2007) 

 10.21 
 Memorandum of Understanding with Kreider Farms (Incorporated by reference to Exhibit 99.1 filed with Form 8-K filed on February 27, 2008) 

 10.22 
 Subscription Agreement from Bright Capital, Ltd. (Incorporated by reference to Exhibit 99.1 filed with Form 8-K filed on June 3, 2008) 

 66 

 10.23 
 Amendment to 2006 Consolidated Incentive Plan (Incorporated by reference to Exhibit 99.2 filed with Form 8-K filed on June 3, 2008) 

 10.24 
 Agreement between the Company and Mark A. Smith dated May 31, 2008 (Incorporated by reference to Exhibit 99.3 filed with Form 8-K filed on June 3, 2008). 

 10.25 
 2007 Series AB Convertible Promissory Note (Incorporated by reference to Exhibit 99.1 filed with Form 8-K filed on June 19, 2008). 

 10.26 
 Promissory Note between Bion Environmental Technologies, Inc. and Dominic Bassani (Incorporated by reference to Exhibit 10.2 filed with Form 8-K filed on September 30, 2008). 

 10.27 
 Promissory Note between Anthony Orphanos and Bion dated October 30, 2008, Guaranteed by Dominic Bassani (Incorporated by reference to Exhibit 10.3 filed with Form 8-K filed on November 13, 2008). 

 10.28 
 Addendum to Settlement Agreement and Release Stipulation from Bion, Bion Dairy and Mark Smith dated October 31, 2008 (Incorporated by reference to Exhibit 10.4 filed with Form 8-K filed on November 13, 2008). 

 10.29 
 Kreider Farms Agreement (September 25, 2008): REDACTED (Incorporated by reference to Exhibit 10.1 filed with Form 10-Q filed on November 14, 2008). 

 10.30 
 Amendment #3 to 2006 Consolidated Incentive Plan (Incorporated by reference to Exhibit 10.2 filed with Form 8-K filed on January 6, 2009). 

 10.31 
 Agreement between Bright Capital, Ltd. and Dominic Bassani and Bion effective January 11, 2009 (Incorporated by reference to Exhibit 10.1 filed with Form 8-K filed on January 15, 2009). 

 10.32 
 Agreement between Mark A. Smith and Bion effective January 12, 2009 (Incorporated by reference to Exhibit 10.2 filed with Form 8-K filed on January 15, 2009). 

 10.33 
 Orphanos Extension Agreement dated January 13, 2009 (Incorporated by reference to Exhibit 10.3 filed with Form 8-K filed on January 15, 2009). 

 10.34 
 Lease Agreement between Ronald Kreider and Kreider Farms and Bion PA 1 LLC dated June 26, 2009 (Incorporated by reference to Exhibit 10.1 filed with Form 8-K filed on July 2, 2009). 

 10.35 
 Capitalization Agreement between Bion Companies and Bion PA 1 LLC dated June 30, 2009 (Incorporated by reference to Exhibit 10.2 filed with Form 8-K filed on July 2, 2009). 

 10.36 
 Extension Agreement with Mark A. Smith. (Incorporated by reference to Exhibit 10.1 filed with Form 8-K filed on August 18, 2010). 

 10.37 
 Agreement with Edward Schafer (Incorporated by reference to Exhibit 10.2 filed with Form 8-K filed on August 18, 2010). 

 10.38 
 Accepted Funding Offer (base loan agreement) (without exhibits) with PENNVEST for Kreider Farms Project Loan -- effective November 3, 2010 (Incorporated by reference to Exhibit 10.1 filed with Form 8-K filed on November 3, 2010). 

 10.39 
 Short Form Agreement (Incorporated by reference to Exhibit 10.1 filed with Form 8-K filed on November 22, 2010). 

 10.40 
 Resume of William O’Neill. (Incorporated by reference to Exhibit 10.2 filed with Form 8-K filed on November 22, 2010). 

 10.41 
 Loan & Security Agreement with Milestone Bank (Incorporated by reference to Exhibit 10.2 filed with Form 8-K filed on December 6, 2010). 

 10.42 
 O'Neill Employment Agreement (dated December 22, 2010) (Incorporated by reference to Exhibit 10.1 filed with Form 8-K filed on December 6, 2010). 

 10.43 
 Schafer Employment Agreement (dated December 21, 2010) (Incorporated by reference to Exhibit 10.2 filed with Form 8-K filed on December 6, 2010). 

 10.44 
 Biography of Edward T. Schafer (Incorporated by reference to Exhibit 10.3 filed with Form 8-K filed on December 6, 2010). 

 10.45 
 Kreider Farms Clarification Agreement (Incorporated by reference to Exhibit 10.3 filed with Form 8-K filed on March 16, 2011). 

 10.46 
 Resignation of William O’Neill (effective May 13, 2011) (Incorporated by reference to Exhibit 10.1 filed with Form 8-K filed on May 13, 2011). 

 10.47 
 PADEP Certification of Kreider Poultry Credits (Incorporated by reference to Exhibit 10.1 filed with Form 8-K filed on June 1, 2011). 

 10.48 
 Bassani/Bright Capital Extension Agreement (executed August 31, 2011) (Incorporated by reference to Exhibit 10.2 filed with Form 8-K filed on September 2, 2011). 

 10.49 
 Smith Extension Agreement (executed August 31, 2011) (Incorporated by reference to Exhibit 10.1 filed with Form 8-K filed on September 2, 2011). 

 10.50 
 Bloom Employment Agreement (executed September 30, 2011) (Incorporated by reference to Exhibit 10.1 filed with Form 8-K filed on October 4, 2011). 

 67 

 10.51 
 Extension/Conversion Agreement with Smith and Bassani (dated March 31, 2012) (Incorporated by reference to Exhibit 10.1 filed with Form 8-K filed on April 4, 2012). 

 10.52 
 Memorialization of extension of Maturity of Bassani convertible deferred compensation (dated July 31, 2012) (Incorporated by reference to Exhibit 10.1 filed with Form 8-K filed on August 3, 2012). 

 10.53 
 Memorialization of Smith Extension Agreement (dated August 14, 2012) (Incorporated by reference to Exhibit 10.1 filed with Form 8-K filed on August 21, 2012). 

 10.54 
 Memorialization of Bassani Extension Agreement (dated August 14, 2012) (Incorporated by reference to Exhibit 10.2 filed with Form 8-K filed on August 21, 2012). 

 10.55 
 Memorialization of Schafer Agreement (dated August 21, 2012) (Incorporated by reference to Exhibit 10.3 filed with Form 8-K filed on August 21, 2012). 

 10.56 
 Board Ratification dated May 5, 2013 (Incorporated by reference to Exhibit 10.1 filed with Form 10-Q filed on May 14, 2013). 

 10.57 
 Demand Promissory Note dated May 13, 2013 (Incorporated by reference to Exhibit 10.2 filed with Form 10-Q filed on May 14, 2013). 

 10.58 
 Pennvest Demand Letter (dated September 25, 2014) (Incorporated by reference to Exhibit 10.92 filed with Form 10-K filed on September 26, 2014). 

 10.59 
 Extension Agreement with Mark A. Smith (w/o exhibits) (February 10, 2015) (Incorporated by reference to Exhibit 10.1 filed with Form 10-Q filed on February 11, 2015). 

 10.60 
 Extension Agreement with Dominic Bassani (w/o exhibits) (February 10, 2015) (Incorporated by reference to Exhibit 10.2 filed with Form 10-Q filed on February 11, 2015). 

 10.61 
 Agreement with Edward Schafer (w/o exhibits) (February 10, 2015) (Incorporated by reference to Exhibit 10.3 filed with Form 10-Q filed on February 11, 2015). 

 10.62 
 Convertible Promissory Note between the Company and Dominic Bassani dated September 8, 2015 (Incorporated by reference to Exhibit 10.96 filed with Form 10-K filed on September 22, 2015). 

 10.63 
 Convertible Promissory Note between the Company and Edward Schafer dated September 8, 2015 (Incorporated by reference to Exhibit 10.97 filed with Form 10-K filed on September 22, 2015). 

 10.64 
 Convertible Promissory Note between the Company and Anthony Orphanos dated September 8, 2015 (Incorporated by reference to Exhibit 10.98 filed with Form 10-K filed on September 22, 2015). 

 10.65 
 Kreider Poultry Joint Venture Agreement (May 5, 2016) (Incorporated by reference to Exhibit 10.1 filed with Form 10-Q filed on May 9, 2016). 

 10.66 
 Bassani Warrant Purchase effective August 1, 2018 (Incorporated by reference to Exhibit 10.100 filed with Form 10-K filed on September 24, 2019). 

 10.67 
 Smith Warrant Purchase effective August 1, 2018 (Incorporated by reference to Exhibit 10.101 filed with Form 10-K filed on September 24, 2019). 

 10.68 
 Amendment #9 to 2006 Consolidated Incentive Plan, as amended (Incorporated by reference to Exhibit 10.102 filed with Form 10-K filed on September 24, 2019). 

 10.69 
 Lease (executed September 23, 2021) (Incorporated by reference to Exhibit 10.1 filed with Form 8-K filed on September 29, 2021). 

 10.70 
 Subsidiaries of the Registrant (Incorporated by reference to Exhibit 21 filed with Form 10SB12G on November 14, 2006). 

 10.71 
 Buflovak/Hebeler Purchase Order (January 28, 2022)(without Technical Details and Standard Terms and Conditions) (Incorporated by reference to Exhibit 10.1 filed with Form 8-K filed on February 1, 2022) 

 10.72 
 Agreement with BioNTech SE re sale/purchase of domain name <biontech.com> (Incorporated by reference to Exhibit 10.1 filed with Form 8-K filed on March 25, 2022) 

 10.73 
 Bion Environmental Technologies, Inc. 2021 Equity Incentive Award Plan. (Incorporated by reference to Exhibit 10.1 filed with Form 8-K filed on January 4, 2022). 

 10.74 
 William O’Neill Employment Agreement (effective May 1, 2022) (without exhibits). (Incorporated by reference to Exhibit 10.1 filed with Form 8-K filed on May 3, 2022). 

 10.75 
 
 Letter
of Intent with Ribbonwire Ranch (July 20, 2022). (Incorporated by reference to Exhibit 10.1 filed with Form 8-K filed on July 27,
2022). 
 
 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. Furnished* 

 32.2 
 Certification of Principal Financial Officer Pursuant to Section 18 U.S.C. Section 1350. Furnished* 

 101.INS 
 Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) 

 101.SCH 
 Inline XBRL Taxonomy Extension Schema Document 

 101.CAL 
 Inline XBRL Taxonomy Extension Calculation Linkbase Document 

 101.DEF 
 Inline XBRL Taxonomy Extension Definition Linkbase Document 

 101.LAB 
 Inline XBRL Taxonomy Extension Label Linkbase Document 

 101.PRE 
 Inline XBRL Taxonomy Extension Presentation Linkbase Document 

 104 
 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) 

 *This exhibit is being furnished rather than filed
and shall not be deemed incorporated by reference into any filing, in accordance with Item 601 of Regulation S-K.

 68 

 Report of
 Independent Registered Public Accounting Firm (Haynie & Company, PCAOB ID:
 457 ) 
 F-2 

 Report of Independent Registered Public Accounting Firm ( Eide Baily LLP ; Denver, CO, PCAOB ID: 286 ) 
 F-4 

 Consolidated balance sheets 
 F-6 

 Consolidated statements of operations 
 F-7 

 Consolidated statements of changes in stockholders’ equity (deficit) 
 F-8 

 Consolidated statements of cash flows 
 F-9 

 Notes to consolidated financial statements 
 F-10 - F-42 

 F- 1 

 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM

 To the Board of Directors and

Stockholders of Bion Environmental Technologies, Inc.

 Opinion on the Financial Statements 

 We have audited the accompanying consolidated balance
sheet of Bion Environmental Technologies, Inc. (the Company) as of June 30, 2023 and the related consolidated statements of operations,
changes in stockholders’ equity (deficit), and cash flow for the year then ended June 30, 2023, 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 the Company as of June 30, 2023 and the results of its operations and its cash flow for the year then ended June 30, 2023,
in conformity with accounting principles generally accepted in the United States of America.

 Going Concern 

 The accompanying financial statements have been prepared
assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has yet to
generate any revenue and has suffered recurring losses from operations. 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.

 Basis for Opinion 

 These financial statements are the responsibility
of the Company’s management. Our responsibility is to express an opinion on the Company’s 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.

 We 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 or fraud. The Company 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 Company’s internal
control over financial reporting. Accordingly, we express no such opinion.

 Our audits included performing procedures to assess
the risks 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.

 F- 2 

 Critical Audit Matters 

 The 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 our 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 matter below, providing separate opinions
on the critical audit matter or on the accounts or disclosures to which they relate.

 Equity Transactions 

 As discussed in Note 6 and Note 7 to the financial
statements, the Company has numerous equity-based agreements, including stock options and warrants issued for services and debt convertible
into units (which include common stock and warrants). These agreements require management to estimate the value of options and warrants
issued for services on the measurement date or include complicated calculations when debt is converted to equity. During the year ended
June 30, 2023, the Company recorded stock-based compensation expense of $249,744, warrants issued for services of $62,563, warrant modifications
of $154,932, and a $186,462 of debt converted to common stock.

 Our audit procedures required a significant amount
of time performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial
statements. Those procedures included gaining an overall understanding of the Company’s process for estimating fair value and the
related calculations. We read the related equity-based agreements verifying the terms of each agreement to the Company’s calculations
and ensuring the mathematical accuracy. We evaluated the assumptions used by management to develop their estimates and considered the
relevant accounting guidance.

 /s/ Haynie & Company 
 
 We have served as the Company’s auditor since 2023. 

 Salt Lake City, Utah 

 September 28, 2023 
 
 F- 3 

 Report of Independent Registered Public Accounting
Firm 

 To the Board of Directors and Stockholders

Bion Environmental Technologies, Inc.

 Old Bethpage, New York

 Opinion on the
Financial Statements 

 We have audited
the accompanying consolidated balance sheets of Bion Environmental Technologies, Inc. (the “Company”) as of June 30, 2022,
and the related consolidated statements of operations , changes in stockholders’ equity
(deficit), and cash flows, for the year 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, 2022, 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. 

 Going Concern 

 The accompanying
financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial
statements, the Company has not generated significant revenue and has suffered recurring losses from operations. 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. 

 Basis for Opinion 

 These financial
statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements
based on our audit. 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. 

 We conducted our
audit 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 or fraud. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit 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. 

 F- 4 

 Our audit 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 audit 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 audit provides a reasonable basis for
our opinion. 

 Critical Audit Matter 

 The 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.

 Equity Transactions
 
 As discussed 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 $419,370, modification of options of $-0-, warrant issuances of $30,000,
and warrant modifications of $8,337 for the year ended June 30, 2022.

 The 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.

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

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

 · We examined agreements and agreed terms utilized
in calculations 

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

 · We recalculated the amounts and compared to management’s
calculation 

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

 We have served as Bion
Environmental Technologies, Inc. auditor since 2017.

 Denver, Colorado 

 September 27, 2022

 F- 5 

 BION ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARIES 

 CONSOLIDATED BALANCE SHEETS 

 June 30, 
 June 30, 

 2023 
 2022 

 ASSETS 
 
 Current assets: 
 
 Cash 
 $ 625,964 
 $ 3,160,442 

 Prepaid expenses 
 16,785 
 157,550 

 Deposits and other assets 
 6,000 
 1,000 

 Total current assets 
 648,749 
 3,318,992 

 Operating lease right-of-use asset 
 93,875 
 145,787 

 Property and equipment, net (Note 3) 
 6,851,009 
 2,895,558 

 Total assets 
 $ 7,593,633 
 $ 6,360,337 

 LIABILITIES AND EQUITY (DEFICIT) 
 
 Current liabilities: 
 
 Accounts payable and accrued expenses 
 $ 677,137 
 $ 1,360,644 

 Deferred compensation (Note 4) 
 864,781 
 594,798 

 Operating lease liability, current (Note 9) 
 75,000 
 — 

 Total current liabilities 
 1,616,916 
 1,955,442 

 Operating lease liability, long term (Note 9) 
 29,068 
 128,864 

 Convertible notes payable - affiliates (Note 6) 
 1,715,970 
 5,170,610 

 Total liabilities 
 3,361,954 
 7,254,916 

 Equity (deficit): 
 
 Common stock, no 
 par value, 250,000,000 
 shares authorized, 48,044,790 
 and 43,758,820 
 shares issued, respectively; 47,340,480 
 and 43,054,511 
 shares outstanding, respectively 
 — 
 — 

 Additional paid-in capital 
 131,935,418 
 123,620,046 

 Subscription receivable - affiliates (Note 8) 
 ( 504,650 ) 
 ( 504,650 ) 

 Accumulated deficit 
 ( 127,236,663 ) 
 ( 124,047,548 ) 

 Total Bion's stockholders’ equity (deficit) 
 4,194,105 
 ( 932,152 ) 

 Noncontrolling interest 
 37,573 
 37,573 

 Total equity (deficit) 
 4,231,678 
 ( 894,579 ) 

 Total liabilities and deficit 
 $ 7,593,633 
 $ 6,360,337 

 See notes to consolidated financial statements

 F- 6 

 BION ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARIES 

 CONSOLIDATED STATEMENTS OF OPERATIONS 

 YEARS ENDED JUNE 30, 2023 AND 2022 

 2023 
 2022 

 Revenue 
 $ 
 — 
 $ 
 — 

 Operating expenses: 
 
 General and administrative (including stock-based compensation) 
 3,072,163 
 2,348,324 

 Depreciation 
 1,645 
 1,161 

 Research and development (including stock-based compensation) 
 82,759 
 200,691 

 Total operating expenses 
 3,156,567 
 2,550,176 

 Loss from operations 
 ( 3,156,567 ) 
 ( 2,550,176 ) 

 Other (income) expense: 
 
 Interest income 
 ( 5,836 ) 
 ( 5,625 ) 

 Interest expense 
 38,384 
 301,659 

 Gain on sale of domain 
 — 
 ( 902,490 ) 

 Gain on legal dissolution of subsidiary 
 — 
 ( 10,234,501 ) 

 Total other expense 
 32,548 
 ( 10,840,957 ) 

 Net income (loss) 
 ( 3,189,115 ) 
 8,290,781 

 Net loss attributable to the noncontrolling interest 
 — 
 1,544 

 Net income (loss) applicable to Bion's common stockholders 
 $ ( 3,189,115 ) 
 $ 8,292,325 

 Net income (loss) applicable to Bion's common stockholders 
 
 per basic and diluted common share 
 $ ( 0.07 ) 
 $ 0.20 

 Weighted-average number of common shares outstanding: 
 
 Basic and diluted 
 45,038,479 
 41,962,302 

 See notes to consolidated financial statements

 F- 7 

 BION ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARIES 

 CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS'
EQUITY (DEFICIT) 

 YEARS ENDED JUNE 30, 2022 AND 2021 

 Bion's Stockholders' 
 
 Series A Preferred Stock 
 
 Series C Preferred Stock 
 
 Common Stock 
 
 Additional paid-in 
 
 Subscription Rec- 

 -eivables for 
 
 Accumulated 
 
 Noncontrolling 
 
 Total 
 
 Shares 
 
 Amount 
 
 Shares 
 
 Amount 
 
 Shares 
 
 Amount 
 
 capital 
 
 Shares 
 
 deficit 
 
 interest 
 
 equity/(deficit) 
 
 Balances, July 1, 2021 
 
 — 
 
 $ 
 — 
 
 — 
 
 $ 
 — 
 
 41,315,986 
 
 $ 
 — 
 
 121,399,067 
 
 $ 
 ( 504,650 
 ) 
 
 $ 
 ( 132,339,873 
 ) 
 
 $ 
 39,117 
 
 $ 
 ( 11,406,339 
 ) 

 Warrants exercised for common shares 
 
 — 
 
 — 
 
 — 
 
 — 
 
 2,315,550 
 
 — 
 
 1,736,662 
 
 — 
 
 — 
 
 — 
 
 1,736,662 
 
 Commissions on warrant exercises 
 
 — 
 
 — 
 
 — 
 
 — 
 
 66,860 
 
 — 
 
 ( 18,601 
 ) 
 
 — 
 
 — 
 
 — 
 
 ( 18,601 
 ) 

 Conversion of debt and liabilities 
 
 — 
 
 — 
 
 — 
 
 — 
 
 35,424 
 
 — 
 
 17,711 
 
 — 
 
 — 
 
 — 
 
 17,711 
 
 Issuance of units for services 
 
 — 
 
 — 
 
 — 
 
 — 
 
 25,000 
 
 — 
 
 27,500 
 
 — 
 
 — 
 
 — 
 
 27,500 
 
 Modification of warrants 
 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 8,337 
 
 — 
 
 — 
 
 — 
 
 8,337 
 
 Issuance of warrants 
 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 30,000 
 
 — 
 
 — 
 
 — 
 
 30,000 
 
 Vesting of options for services 
 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 419,370 
 
 — 
 
 — 
 
 — 
 
 419,370 
 
 Net income (loss) 
 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 8,292,325 
 
 ( 1,544 
 ) 
 
 8,290,781 
 
 Balances, June 30, 2022 
 
 — 
 
 $ 
 — 
 
 — 
 
 $ 
 — 
 
 43,758,820 
 
 $ 
 — 
 
 $ 
 123,620,046 
 
 $ 
 ( 504,650 
 ) 
 
 $ 
 ( 124,047,548 
 ) 
 
 $ 
 37,573 
 
 $ 
 ( 894,579 
 ) 

 Sale of units 
 
 — 
 
 — 
 
 — 
 
 — 
 
 1,321,530 
 
 — 
 
 1,906,230 
 
 — 
 
 — 
 
 — 
 
 1,906,230 
 
 Sales of common stock 
 
 — 
 
 — 
 
 — 
 
 — 
 
 2,000,000 
 
 — 
 
 2,000,000 
 
 — 
 
 — 
 
 — 
 
 2,000,000 
 
 Warrants exercised for common shares 
 
 — 
 
 — 
 
 — 
 
 — 
 
 175,114 
 
 — 
 
 131,335 
 
 — 
 
 — 
 
 — 
 
 131,335 
 
 Issuance of units for services 
 
 — 
 
 — 
 
 — 
 
 — 
 
 82,259 
 
 — 
 
 130,000 
 
 — 
 
 — 
 
 — 
 
 130,000 
 
 Issuance of warrants for services 
 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 62,563 
 
 — 
 
 — 
 
 — 
 
 62,563 
 
 Conversion of debt and liabilities 
 
 — 
 
 — 
 
 — 
 
 — 
 
 1,542,514 
 
 — 
 
 186,462 
 
 — 
 
 — 
 
 — 
 
 186,462 
 
 Vesting of options for employees and services 
 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 249,744 
 
 — 
 
 — 
 
 — 
 
 249,744 
 
 Commissions on sale of units 
 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 ( 86,400 
 ) 
 
 — 
 
 — 
 
 — 
 
 ( 86,400 
 ) 

 Modification of warrants - non-cash comp 
 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 154,932 
 
 — 
 
 — 
 
 — 
 
 154,932 
 
 Modification of warrants - interest 
 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 72,589 
 
 — 
 
 — 
 
 — 
 
 72,589 
 
 Debt modification 
 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 3,507,917 
 
 — 
 
 — 
 
 — 
 
 3,507,917 
 
 Net loss 
 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 ( 3,189,115 
 ) 
 
 — 
 
 ( 3,189,115 
 ) 

 Balances, June 30, 2023 
 
 — 
 
 $ 
 — 
 
 — 
 
 $ 
 — 
 
 48,880,237 
 
 $ 
 — 
 
 $ 
 131,935,418 
 
 $ 
 ( 504,650 
 ) 
 
 $ 
 ( 127,236,663 
 ) 
 
 $ 
 37,573 
 
 $ 
 4,231,678 
 
 See notes to consolidated financial statements

 F- 8 

 BION ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARIES 

 CONSOLIDATED STATEMENTS OF CASH FLOWS 

 YEARS ENDED JUNE 30, 2023 AND 2022 

 2023 
 2022 

 CASH FLOWS FROM OPERATING ACTIVITIES 
 
 Net income (loss) 
 $ ( 3,189,115 ) 
 $ 8,290,781 

 Adjustments to reconcile net loss to net cash used in operating activities: 
 
 Gain on legal dissolution of subsidiary 
 — 
 ( 10,234,501 ) 

 Depreciation expense 
 1,645 
 1,161 

 Accrued interest on loans payable, deferred compensation and other 
 38,384 
 319,523 

 Stock- based compensation 
 249,744 
 346,846 

 Stock-based compensation for services 
 130,000 
 — 

 Modification of warrants 
 154,932 
 — 

 Warrants issued for compensation for services 
 62,563 
 — 

 Decrease (increase) in prepaid expenses 
 140,765 
 ( 33,501 ) 

 Increase (decrease) in deposits in other assets 
 ( 5,000 ) 
 — 

 Increase (decrease) in accounts payable and accrued expenses 
 ( 879,618 ) 
 366,629 

 Decrease (increase) in operating lease assets and liabilities 
 27,116 
 ( 16,923 ) 

 Increase in deferred compensation 
 340,000 
 289,200 

 Net cash used in operating activities 
 ( 2,928,584 ) 
 ( 670,785 ) 

 CASH FLOWS FROM INVESTING ACTIVITIES 
 
 Purchase of property and equipment 
 ( 3,557,059 ) 
 ( 2,062,155 ) 

 Net cash used in investing activities 
 ( 3,557,059 ) 
 ( 2,062,155 ) 

 CASH FLOWS FROM FINANCING ACTIVITIES 
 
 Proceeds from sale of units 
 3,906,230 
 — 

 Proceeds from sale of warrants 
 131,335 
 1,736,662 

 Commissions on sale of warrants 
 ( 86,400 ) 
 ( 18,601 ) 

 Commissions on sale of units 
 — 
 — 

 Redemption of Preferred Series B shares and interest 
 — 
 ( 41,000 ) 

 Net cash provided by financing activities 
 3,951,165 
 1,677,061 

 Net increase (decrease) in cash 
 ( 2,534,478 ) 
 ( 1,055,879 ) 

 Cash at beginning of year 
 3,160,442 
 4,216,321 

 Cash at end of year 
 $ 625,964 
 $ 3,160,442 

 Supplemental disclosure of cash flow information: 
 
 Cash paid for interest 
 $ — 
 $ — 

 Non-cash investing and financing transactions: 
 
 Adjustment for debt modification 
 $ 3,507,917 
 $ — 

 Conversion of debt and liabilities into common units 
 $ 186,462 
 $ 17,711 

 Conversion of debt and liabilities into notes payable 
 $ 23,943 
 $ — 

 Conversion of deferred compensation to notes payable 
 $ 90,000 
 $ 190,000 

 Capitalized interest in property and equipment 
 $ 179,984 
 $ 32,000 

 Shares issued for warrant exercise commissions 
 $ — 
 $ 50,145 

 Purchase of property and equipment for accounts payable 
 $ 220,052 
 $ 666,375 

 See notes to consolidated financial statements

 F- 9 

 BION ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARIES 

 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

 YEARS ENDED JUNE 30, 2023 AND 2022 

 1. ORGANIZATION,
NATURE OF BUSINESS, GOING CONCERN AND MANAGEMENT’S PLANS : 

 Organization and nature of business: 

 Bion Environmental Technologies, Inc.'s ("Bion," "Company,"
"We," "Us," or "Our") was incorporated in 1987 in the State of Colorado. Bion’s mission is to make
livestock production more sustainable, profitable and transparent. We intend to accomplish this by deploying our Gen3Tech platform/business
model (discussed below) in ventures focused on the ‘feeder’ space of the livestock production/value chain to provide the consumer
with verifiably sustainable premium meat products (together with environmentally friendly, sustainable and/or organic co-products from
the production process). Bion believes this approach can create extraordinary value for our shareholders and employees (all of whom
own securities in the Company) and for livestock/agriculture industry ‘partners’ who join us in our ventures. We anticipate
pursuing the opportunity created by our third generation technology (“Gen3Tech”) and business/technology platform in conjunction
with other industry practices (“Gen3Tech Platform” or “Platform”) utilizing a joint venture/strategic partner
model. We believe our approach will improve the well-being of farmers, ranchers, feeders, etc. we work with and create value for our shareholders
while improving the environment. 

 Our patented and proprietary technology provides advanced
waste treatment and resource recovery for large-scale livestock production facilities (also known as “Concentrated Animal Feeding
Operations” or “CAFOs"). Livestock production and its waste, particularly from CAFOs, has been identified as one of the
greatest soil, air, and water quality problems in the U.S. today. Application of our Gen3Tech”) can largely mitigate these
environmental problems, while simultaneously improving operational/ resource efficiencies by recovering high-value co-products from the
CAFOs’ waste stream. These waste ‘assets’ – nutrients and methane – have traditionally been wasted or underutilized
and are the same ‘pollutants’ that today fuel harmful algae blooms, contaminate surface groundwater, and exacerbate climate
change.

 Bion’s business model and technology
platform can create the opportunity for joint ventures (in various contractual forms) (“JVs”) between the Company and large
livestock/food/fertilizer industry participants based upon the supplemental cash flow generated by implementation of our Gen3Tech business
model, which cash flows will support the costs of technology implementation (including servicing related debt). To accomplish Bion’s
goals, we anticipate the we will ‘partner’ with other technology companies who provide solutions for different links of the
beef (and other livestock) value chain and with strategic partners up and down the supply chain . 

 We anticipate this will result in substantial long-term
value for Bion. In the context of such JVs, we believe that the verifiable sustainable branding opportunities (conventional and organic)
in meat will represent one of the largest enhanced revenue contributors 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.

 Bion’s Gen3Tech was designed to capture and
stabilize these assets and produce renewable energy, fertilizer products, and clean water as part of the process of raising verifiably
sustainable livestock. All steps and stages in the animal raising and waste treatment process will be third-party verified, providing
the basis for additional revenues, including carbon and/or renewable energy-related credits and, eventually, payment for a range of ecosystem
services, including nutrient credits as described below. The same verified data will be used to substantiate the claims of a USDA-certified
sustainable brand that will support premium pricing for the meat/ animal protein products that are produced in Bion facilities.

 During the first half of 2022 Bion
began pre-marketing our sustainable beef to retailers, food service distributors and the meat industry in the U.S. In general, the
response has been favorable. During July 2022, Bion announced a letter of intent (“Ribbonwire LOI”) to develop a large-scale
commercial project - a 15,000-head sustainable beef cattle feeding operation together with the Ribbonwire Ranch, in Dalhart, Texas (with
a provision to expand to 60,000 head) (“Dalhart Project”). During January 2023 Bion announced a letter of intent (“Olson
LOI”) to develop a large-scale commercial project - a 15,000-head sustainable beef cattle feeding operation together with the Olson
Feeders and TD Angus, near North Platte, Nebraska (with a provision to expand to 45,000 head or more) (“Olson Project”). During
April 2023 Bion announced a letter of intent (“DVG LOI”) to develop a large-scale commercial project - a 15,000-head sustainable
beef cattle feeding operation together with Dakota Valley Growers near Bathgate, North Dakota (“DVG Project”). Based on our
experience to date, we believe we will not have difficulty in securing participation in our Projects from additional feeders/cattlemen.
The Olson, Dalhart and DVG Projects (and subsequent Projects) will be developed to produce blockchain-verified, sustainable beef in customized
covered barns (resulting in reduced stress on cattle caused by extreme weather and temperatures and resulting higher feed/weight gain
efficiency) with ongoing manure transfer (through slatted floors) to anaerobic digesters (AD) to capture nitrogen from the manure stream
before loss to the atmosphere and generate renewable natural gas (RNG) for sale while remediating the environmental/carbon impacts usually
associated with cattle feedlots and CAFOs. Bion’s patented Gen3Tech platform will refine the waste stream into valuable coproducts
that include clean water, RNG, photovoltaic solar electricity and fertilizer (‘climate smart’ and/or organic) products. We
anticipate converting these LOIs into definitive JV agreements and creating related distribution agreements with key retailers and food
service distributors during the current fiscal year.

 F- 10 

 Our business plan is focused on executing
multiple agreements and letters of intent related to additional sustainable beef JV projects over the next twenty-four (24) months while
moving forward with the Initial Project (see below) and commencing development of one or more of the Dalhart/Olson/DVG Projects (“LOI
Projects”)(and/or other Gen3Tech beef JV projects) while pursuing other opportunities in the livestock industry enabled by our Gen3Tech
business model. The LOI announcements have generated significant interest within the livestock industry (among ranchers, feedlot
operators, farmers and other AG industry parties) and has led to and assisted our discussions with many major of the larger agriculture/livestock
industry companies (including those involved with distribution and/or sales of meat products) in the country which are ongoing at this
date. We believe that this interest, combined with consumer interest in ‘sustainable products’ and growing enthusiasm among
some livestock industry parties for environmental/sustainable/regenerative practices, may provide Bion (and its partners/venturers) with
an opportunity to move forward with a truly sustainable solution in this industry segment at a rapid pace.

 During the past nine months, the Company has constructed
(construction is largely completed) our 3GTech Ammonia Recovery System (‘ARS’) located near Fair Oaks, Indiana and begun operations
of phase 1 of our Initial Project (our commercial scale demonstration facility) located near Fair Oaks, Indiana. We recently announced
that announced the ARS has achieved and maintained controlled steady-state operations under a variety of conditions. When operated at
steady state, the system produces an ammonium distillate (solution), the base of Bion’s nitrogen fertilizer products. Bion has begun
optimizing the ARS’s operating parameters with the goal of meeting and/or exceeding the results needed for Bion’s economic
models for large-scale commercial projects. The Company expects the current optimization phase will continue during the next quarter (or
longer) and provide data required to support final design/engineering for commercial project modules. We believe this data will also provide
additional potential stakeholders (cattle producers, cattle feeders, packers, distributors, retailers and financial institutions) with
the information they need to proceed with confidence in collaborating with Bion on multiple new projects (see below).

 The patented ARS is the core of Bion’s Gen3Tech
platform. It recovers and upcycles problem ammonia contained in the effluent from anaerobic digestion (where methane is captured
and more ammonia is released) of the livestock manure waste stream. The ARS captures the ammonia, minimizing its environmental impacts
and creating low-carbon and/or organic nitrogen fertilizer products with it. Over during the next quarter, the Company intends to produce
ammonium distillate at Fair Oaks in several concentrations and initiate the application process for organic certification for each concentration
of liquid fertilizer product. Bion will produce a solid/granular nitrogen fertilizer product at the Initial Project (when the
crystalizer module is ready for operation) which we believe will be both ‘Climate-Smart’ and ‘Water-Smart’ –
a pure nitrogen fertilizer with a low carbon footprint, that is water soluble and readily available to plants. Samples of the granular
product will also be utilized to support organic certification applications. See Fertilizer---Organic and ‘ClimateSmart’
 below. 

 During the next three - six/ months, the Company intends
to fully complete construction of the Initial Project’s phase 1, including the crystalizer module, and continue the optimization
operations. Bion expects the Initial Project data will document the effectiveness of our Gen3Tech in a commercial-scale setting during
the current fiscal year and support development of the LOI Projects (and/or other Gen3Tech beef JV projects) commencing later this fiscal
year. We do not presently know the order in which these JV Projects will be developed as that decision will be made based on many
factors not yet in place. We believe the Initial Project data will also provide additional potential stakeholders (cattle producers, cattle
feeders, packers, food distributors and retailers and financial institutions) with the information they need to proceed with confidence
in collaborating with Bion on multiple new projects (see below). 

 Bion is now focused primarily on: i) completion of
development/construction and operation of the Initial Project, our initial commercial-scale Gen3Tech installation, and optimization of
its operational parameters, ii) pre-development plan of the LOI Projects (and/or other Gen3Tech beef JV projects) including steps
toward distribution agreements, iii) developing applications and markets for its low carbon ‘ClimateSmart’ and organic fertilizer
products (including listings/certifications of multiple liquid and solid products) and its sustainable (conventional and organic) animal
protein products, and iv) discussions regarding initiation and development of agreements and joint ventures (“JVs” as discussed
herein) (and related Projects) based on the augmented capabilities of our Gen3Tech business platform (in the sustainable beef and other
livestock segments), while (v) continuing to pursue business opportunities related to large retrofit projects (such as the Kreider poultry
project JV described below) and vi) ongoing R&D activities.

 F- 11 

 HISTORY, BACKGROUND AND CURRENT ACTIVITIES 

 Since the Company’s inception, Bion has
designed and developed advanced waste treatment systems for livestock. The first and second generations of Bion’s technology platform
were biological systems, primarily focused on nutrient control. Over 30 of these systems were deployed at New York dairies, Florida food
processing facilities and dairies, North Carolina hog farms, a Texas dairy and a Pennsylvania dairy (“Kreider 1 Project”).
The systems were highly effective at their intended purpose: capturing nitrogen and phosphorus. They produced BionSoil as a byproduct,
which was a remarkably effective soil amendment/ fertilizer product, but whose value was not enough to support a viable business model.
As such, these early technology iterations were entirely dependent on either implementation of new regulations requiring waste treatment,
or subsidy/ incentive programs that would provide ‘payment for ecosystem services’. By the mid-2010’s, it became apparent
that neither of these options were imminent or even assured, so the Company initiated the steps to reimagine and redesign its technology.

 From 2016 to 2021 fiscal years, the Company focused
most of its activities and resources on developing, testing and demonstrating the third generation of its technology and technology platform
(“Gen3Tech”) that was developed with an emphasis producing more valuable co-products from the waste treatment process, including
renewable natural gas and ammonium bicarbonate, a low-carbon, organic ’pure’ nitrogen fertilizer product, while raising sustainable
livestock.

 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 limitations
and impacts) which threaten its ‘economic sustainability’. Its failure to adequately respond to consumer concerns including
food safety, environmental impacts, and inhumane 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 (despite the lack of verifiably sustainable attributes).

 The Company believes that its Gen3Tech, in addition
to providing superior environmental remediation, creates opportunities for large scale production of i) verifiably sustainable-branded
conventional livestock products and ii) verifiably sustainable organic-branded livestock products, both of which 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 production/marketing opportunity for Bion (but the former is far larger). Our Gen3Tech will also produce (as co-products) biogas,
solar photovoltaic electricity in appropriate locations, and valuable low carbon/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 2022-23, the Company entered into 3 LOIs setting
forth the parties’ intention to negotiate joint venture agreement (“JVA”) and enter into joint ventures (“JV”)
to develop and operate 15,000 head integrated, sustainable beef facilities (with future expansion under consideration) including:

 a) 
 innovative cattle barns (with slatted floors to facilitate movement of manure to the anaerobic digester and potentially solar PV generation on the rooftops which barns will improve the living conditions of the animals while increasing feeding/weight gain efficiency, 

 b) 
 ‘customized’ anaerobic digestion systems (including pretreatment to increase renewable natural gas (‘RNG’) production and an RNG cleaning system (which will include capture/recycling of the CO2) to allow pipeline sales and monetization of related environmental credits, 

 c) 
 a Bion Gen3Tech module (which will utilize the recycled CO2 to increase ammonia nitrogen/ammonium bicarbonate recovery) for the production of ammonia nitrogen fertilizer for use in organic and/or ‘ClimateSmart’ low carbon crop production (plus residual organic solids and clean water), 

 d) 
 which will produce verifiably sustainable beef products with USDA certified branding. 

 F- 12 

 The opportunity presented by the LOIs to
commercialize the Company’s Gen3Tech and business model matured more quickly than anticipated (reflecting strong industry and public
momentum in favor of verifiably sustainable food ventures). As a result, we have shifted our plans to focus resources and make our initial
 15,000 head operation a reality as soon as possible.

 To place the LOI Projects in the context of Company’s
business plan (and our prior public disclosure), if the contemplated ventures moves forward on the timelines currently contemplated, active
development of the the initial LOI Project will commence during 2024.

 Prior to such activity, the Company has constructed
and commenced operate of the initial phase of our previously discussed Gen3Tech demonstration project near Fair Oaks, Indiana (“Initial
Project”): i) to validate our existing data and modeling at commercial scale and ii) to optimize the Bion Gen3Tech module for finalization
of design parameters and fabrication details of our planned 15,000 head commercial facilities (including the LOIProjects). For the purposes
of this initial phase, the Company, in order to accelerate the data acquisition phase, is utilizing anaerobic digester effluent from the
nearby/contiguous Fair Oaks dairy. Thereafter, the Company will evaluate what, if any, additional facilities and testing will take place
at that location.

 The Initial 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.

 During late September 2021, Bion entered into a lease
for the development site of the Initial Project, our initial commercial scale Gen3Tech project, which Initial Project will be located
on approximately four (4) acres of leased land near Fair Oaks, Indiana, and a related agreement regarding disposal of certain manure effluent
with the Curtis Creek Dairy unit of Fair Oaks Farms (“FOF”). Design and pre-development work commenced during August 2021
and preliminary surveying, site engineering and other work is now underway along with site-specific engineering and design work. The Initial
Project was initially planned to 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. If all phases of the Initial Project are constructed, the facility will include Bion’s Gen3Tech platform
including: i) covered barns (possibly including roof top 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 Gen3Tech facilities
capable of treating the waste from approximately 1,500 head). The facility is large enough to demonstrate engineering capabilities of
Bion’s Gen3Tech at commercial scale, but small enough that it can be constructed and commissioned relatively quickly. Originally,
construction and onsite assembly operations were targeted to commence sometime late in 2022, however, supply chain backlogs (many pandemic-associated)
delayed delivery dates for core modules of the Bion system to the site until during January 2023. Construction has been substantially
completed related to Phase 1 of the Initial Project, shakedown operations undertaken and the operation is now focused on optimization
of operation parameters. See Note 3 “Property and Equipment” and Note 12 “Subsequent Events” (for activities since
the start of the first quarter of the 2024 fiscal year).

 The Initial 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.

 F- 13 

 Specifically, the Initial Project was designed/developed
to provide and/or accomplish the following:

 i. 
 
 Proof of Gen3Tech platform scalability 

 - 
 Document system efficiency and environmental benefits and enable final engineering modifications to optimize each unit process within the Bion Gen3Technology 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. 

 ii. 
 
 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. 

 iii. 
 
 Produce sufficient ammonium bicarbonate nitrogen fertilizer (“AD Nitrogen”) in liquid and solid forms for commercial testing by potential joint venture partners and/or purchasers, for university growth trials and to provide samples (and related documentation) to support applications for organic and/or ‘ClimateSmart’ certifications. 

 iv. 
 
 Produce sustainable beef products for initial test marketing efforts. 

 On January 28, 2022 Bion
Environmental Technologies, Inc. (‘Bion’), on behalf of Bion 3G1 LLC (‘3G1’), a wholly-owned subsidiary, entered
into a Purchase Order Agreement with Buflovak and Hebeler Process Solutions (collectively ‘Buflovak’) in the amount of $ 2,665,500 
(and made the initial 25 % payment ($ 666,375 ) for the core of the ‘Bion System’ portion (without the crystallization 
modules which will be ordered and fabricated pursuant to subsequent agreements) of the previously announced 3G Tech Initial Project. This
Purchase Order encompasses the core of Bion’s 3G Technology. Subsequent agreements were executed with engineering firms, contractors
and other entities related to the construction of the Initial Project. The Company received progress billing in March 2022 and June 2022
for the second and third 25 % installments, both of which have been paid as of the filing date. On January 17, 2023 the Company received
an invoice from Buflovak for $ 533,100 which was paid on March 1, 2023 and on April 24,203 for $ 83,275 which was paid on May 2, 2023 bringing
the aggregate payments to $ 2,615,500 as of the date of this filing. There remaining $ 50,000 open on the Purchase Order has been billed
on July 26,2023. In addition to the Purchase Order, the Company has incurred additional costs of $ 4,182,260 on the Initial Project for
capitalized interest and costs, non-cash compensation and consulting fees. $ 3,962,207 has been paid and $ 220,053 has been billed and not
yet been paid.

 The Initial Project will be carried out in stages
with phase one focused largely on portions of items i. and iii. set forth above.

 Upon completing the primary goals of phase 1 of the
Initial Project (coupled with obtaining organic certifications(s) for our liquid and/or solid ammonium bicarbonate fertilizer product
lines), Bion expects to be ready to move forward with its plans for development of much larger facilities including the LOI Projects,
including final design of its Gen3Tech modules. The Company anticipates that discussions and negotiations it has begun (together with
additional opportunities that will be generated over the next 12-24 months) regarding potential JVs with strategic partners in the financial,
livestock and food distribution industries to develop large scale projects will continue during the optimization operations of the Initial
Project with a 2024 goal of establishing multiple JV’s for large scale projects that will produce sustainable and/or sustainable-organic
corn-fed beef. These 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 Gen3Tech platform.

 After the basic technology start-up milestones of
the Initial Project (primarily optimization and steady-state operations of the core modules of our Gen3Tech platform) have been met, the
Company will determine whether to complete the entire Initial Project as originally designed at that location or the relocate the core
modules to an alternative permanent location. The Company has engaged in discussion with the University of Nebraska-Lincoln to jointly
develop an integrated beef facility based on Bion’s Gen3Tech and business model at its Klosterman Feedyard Innovation Center (“KFIC”)
(or other mutually agreed upon location) which facility would include innovative barns, an anaerobic digester and a Bion Gen3Tech system
to conduct ongoing research and development related thereto and the KFIC is a possible site for the long-term re-location of the core
modules. This venture, if it moves forward, is anticipated to include joint preparation of applications for grants and other funding from
the USDA (‘climate smart’ program, rural development, etc.) and other sources. The Company will also evaluate re-locating
the core module of the Initial Project to Dalhart, Texas, where it might be integrated into the first phases of the Dalhart Project and/or
other locations. 

 F- 14 

 The Company’s initial ammonium bicarbonate liquid
product completed its Organic Materials Review Institute (“OMRI”) application and review process with approval during May
2020. Applications for our first solid ammonium bicarbonate product line have been filed with OMRI, the California Department of Food
& Agriculture (“CDFA”) and the Iowa Organic Program (“IOP”) and are in the review processes (which is likely
to require an extended period of time and multiple procedural steps, in part due to the novel nature of our Gen3Tech in the context of
organic certifications). See “ Fertilizer– Organic and ‘ClimateSmart’ ” below.

 Additionally, the Company believes there will also
be opportunities to proceed with selected ‘retrofit projects’ of existing facilities (see ‘ Gen3Tech Kreider 2
Poultry Project’ below as an example) in the swine, dairy and poultry industries utilizing our Gen3Tech.

 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 large, but apparently limited, segment of consumers is choosing seemingly sustainable offering, and are
also willing to pay a premium for it. Tyson Foods, in the context of launching its Brazen beef initiative, recently said, “consumers
would be willing to pay at least 24 percent more for environmentally friendly, sustainable options at retail.” 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 on average.

 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 Gen3Tech
platform, along with its business model, will enable the cleanup of one of the ‘dirtiest’ parts of the food supply chain:
animal protein production and creates the opportunity to produce and market verifiably sustainable organic and conventional ‘real
meat’ products that can participate in the growth and premium pricing that appears to be readily available for the ‘right’
products.

 Bion believes that at least a premium segment of the
U.S. 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 wholesale/farmgate value), the beef industry is a fragmented, commodity industry whose practices date back decades. In 1935 inflation-adjusted
terms, beef was 63% more expensive in 2021, while pork and chicken, which are now primarily raised in covered barns at CAFOs with highly
integrated supply chains, were 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. 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 also recently entered the plant protein space. While meat alternatives, especially plant-based protein producers
like Beyond Meat and Impossible Foods, have been heavily promoted (by themselves and the media) and enjoyed remarkable initial sales growth,
recently, sales have flattened and/or declined over the past 18 months. 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---and market growth rates have substantially slowed
and may have already plateaued and/or peaked. 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.

 In terms of changing customer preferences, ‘saving
the planet’ has proven to be a more compelling argument than the traditional animal activism/ welfare pitch. To date, the primary
beef ‘industry response’ to this has been grass-f
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.
BION ENVIRONMENTAL TECHNOLOGIES INC 10-K
