What changed in this filing

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Item 7. Management’s Discussion and Analysis

2024-09-30 compared with 2023-09-28 · 528 added, 378 removed, 120 unchanged (88% of the section changed)

1 unchanged sentence

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.

Statements made in this Form 10-K that are not historical

or current facts, which represent the Company's expectations or beliefs including, but not limited to, statements concerning the Company's

operations, performance, financial condition, business strategies, and other information, involve substantial risks and uncertainties.

The Company's actual results of operations, most of which are beyond the Company's control, could differ materially.

We wish to caution readers not to place undue reliance on any such forward looking statements, which speak only as of the date made.

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

These statements

often can be identified by the use of terms such as "may," "will," "expect," "believe," anticipate,"

"estimate," or "continue" or the negative thereof.

We wish to caution readers not to place undue reliance on any such

forward-looking statements, which speak only as of the date made.

Any forward-looking statements represent management's best judgment

as to what may occur in the future.

However, forward looking statements are subject to risks, uncertainties and important factors beyond

our control that could cause actual results and events to differ materially from historical results of operations and events and those

presently anticipated or projected.

Bion disclaims any obligation subsequently to revise

4 unchanged sentences

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.

The Company has been under substantial financial and

management stress over the past eighteen (18) months.

Covid-related delays during technology pilot development at Buflovak in New York,

followed by post-Covid supply chain disruptions during construction of our demonstration facility at Fair Oaks, have led to extreme difficulties

in raising needed funds.

These delays prevented us from meeting our project development and related capital timelines, and were further

compounded by the death (following extended illness) of Dominic Bassani, who most recently served as our COO from May 2022 after serving

as our CEO for the prior decade, the subsequent resignation of Bill O’Neill, Dominic’s replacement at the CEO position, effective

May 31, 2024, followed by the anticipated retirement of Mark A.

Smith, the Company’s President, General Counsel and Chief Financial

Officer, effective July 31, 2024.

Since the end of May 2024, a new core leadership team

has been installed (see H and I, below) and a short-term funding facility has been implemented (see J, below) while longer term capital

solutions are evaluated.

Our new leadership team believes the financial and management difficulties Bion has faced are outweighed by the

success of our technology demonstration and optimization initiatives at our Fair Oaks facility.

This success coincides with clear and

growing trends in both sustainable agriculture and clean fuels technology and policy that favor Bion’s technology and business opportunities.

Bion leadership believes this confluence of events positions the Company, assuming it aligns with appropriate strategic partners and obtains

sufficient financing, to exploit a unique opportunity to participate in transformational change at the intersection of agriculture, renewable

energy and clean fuels, clean air and water, and evolving consumer demand.

The Company is not currently generating

any significant revenues.

Further, the Company’s anticipated revenues, if any, from existing Projects, JVs and proposed Projects

will not be sufficient to meet the Company’s anticipated operational and capital expenditure needs for many years.

Current liabilities

were approximately $5.8 million at June 30, 2024 which represents an increase of approximately $4.2 million from June 30, 2023 (largely

due to an increase in ‘accounts payable and accrued expenses’ totaling approximately $2.1 million and an increase in ‘current

debt’ of approximately $2.1 million as a result of the Company’s limited success in raising new financing (equity and/or debt)

and existing debt terms becoming current during the recent period combined with continued expenses (including those related to the Initial

Similarly, the Company’s cash on hand decreased from approximately $626,000 to approximately $52,000 over the same period.

The Company extreme difficulty is obtaining needed funds during the entire 2023 fiscal year has continued throughout the first quarter

of the current fiscal year to date.

Going Concern and Management’s Plans, Plan of Operations and Outlook and ITEM 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations and Note 11 Subsequent Events (below).

Previous management believed that

the Initial Project had reached the point where it could be appropriately deemed ‘placed in service’ at January 1, 2024.

discussions with the key technical and engineering personnel involved at the Initial Project during the recently concluded quarter convinced

management that such a characterization was premature as some key modules had not yet been completed and/or fully tested at that date.

Additionally, due to some equipment break-downs, the Initial Project was in maintenance mode rather than conducting operations, while

the Company awaited required replacement parts and subsequent repairs.

This process was slowed by the Company’s ongoing difficulties

in raising needed funds for its activities.

The Company’s Board of Directors re-evaluated the classification/status of the Initial

Project as part of the Company’s annual review process and determined that the Initial Project should have been ‘placed in

service’ at the June 30, 2024, fiscal year end.

Further, after extensive discussion between previous

management and the Board, it was determined that the ‘carrying value’ of the Initial Project, as of that date, be reduced

to $0 on the Company balance sheet, in order to conform with accepted accounting practices.

Bion’s technology demonstration system

was always planned as a small scale integrated Gen3Tech beef project.

Due to covid-related delays and increased capital constraints, it

was decided to move quickly to initially construct Phase 1, which was the standalone ARS at Fair Oaks.

As matters progressed, including

cost overruns, management and financial crises, etc., Bion was unable to proceed further at Fair Oaks.

It was anticipated that the ARS

would be relocated to another site (potential locations included Ribbonwire Ranch or University of Nebraska-Lincoln) after providing the

final design data, where it would be integrated with a small scale Gen3Tech beef facility as originally planned.

We recently learned it

would not be economically feasible to decommission and disassemble the ARS, then transport, reassemble, and recommission it at another

Therefore, since the Initial Project is now:

i) largely a research & development facility and ii) is located on land subject

to a short-term lease, it no longer has commercial value and was written down to $0.

As a result, a large ‘one time/non-recurring’

‘non-cash’ charge of $9,460,425 has been taken by the Company, at that date, which charge reduced the Company shareholders’

equity to ($5,808,501) and resulted in a loss of $11,691,115 for the 2024 fiscal year.

On September 28, 2023, in order to partially

mitigate the problems discussed above, the Company entered into an agreement for a $1,500,000 bridge loan and executed documents including

a convertible promissory note (“Note”) and a binding subscription agreement (“Subscription”) (collectively the

Note and the Subscription are the “Bridge Loan Agreements”) with SEB LLC, a non-affiliated party (“Lender”).

Bridge Loan Agreements require the Lender to loan the Company $1,500,000 in six monthly tranches of $250,000 commencing October 2023.

All sums advanced under the Bridge Loan Agreements (and accrued interest thereon) would be due and payable (with interest accrued at 9%

per annum) on October 1, 2024, if not previously converted into securities of the Company.

The Note is convertible at $1.00 per unit,

at the sole election of the Lender, into units consisting of one share of the Company’s common stock and a warrant to purchase one

The initial $250,000 tranche was received by the Company on October 5, 2023.

However, no further funds were received by the

Company from the Lender.

During early November 2023 the Lender informed the Company verbally that it did not intend to fulfill its obligations

pursuant to the Bridge Loan Agreements and since such time the Lender has been in default (“Default”).

On May 10, 2024, the

Company received $150,000 from affiliates of the Bridge Loan Lender on terms not yet finalized and included in an agreement.

were received in the context of negotiations/discussions regarding a potential larger investment by affiliates and/or associates of the

Lender, but no further funds were received, and the larger transaction was never completed.

The funds were used primarily to re-initiate

operations at the Initial Project.

The Default (which is continuing) has created substantial problems for and materially damaged the Company

and rendered the Company unable to meet its current creditor obligations on a timely basis.

The Company is currently evaluating its rights

regarding the Default by the Lender.

See Notes 5 and 8 re Convertible Bridge Loan/Default and Note 11, Subsequent Events.

This situation

has contributed to the substantial increase in the Company’s ‘Current Liabilities’ including ‘accounts payable’

over recent periods.

See Consolidated Financial Statements and ‘Management’s Discussion and Analysis’.

The Company has

engaged in discussion/negotiation with its larger creditors (including its largest creditor--- the primary contractor on the Initial Project)

but has been unable to reach agreements regarding payments due to the uncertainty as to if, when and how much funding the Company will

be able to raise in future periods.

As a result, the Company’s largest creditor---the general contractor for the Initial Project

--- has filed a mechanics lien in Indiana (and its largest sub-contractor has sent notices related to its intention to file a mechanics

lien) and other creditors are threatening to commence litigation and/or repossess/remove leased equipment).

At the end of December 2023, Bion achieved

key objectives in the optimization of the Ammonia Recovery System at our commercial-scale demonstration facility in Fair Oaks, Indiana.

delayed by supply chain issues, the demonstration at Fair Oaks confirmed the system's state-of-the-art capabilities.

In managements’

opinion, the wide applicability of the ARS and its environmental benefits cannot be overstated, as livestock-related and other nutrient

issues continue to grow, both in the U.S.

and globally.

On January 2, 2024, Bion received a new

(continuation) patent that broadened the claims related to its Ammonia Recovery System (ARS) to include industrial and municipal wastewater

sources, in addition to animal waste streams that were previously covered.

Since that time, Bion has focused a portion of its limited

resources on understanding and evaluating opportunities to apply its ARS as a ‘standalone’ ammonia control solution in these

In such cases, the ARS would be deployed as a bolt-on ammonia solution (vs integrated into a Bion Gen3Tech livestock platform)

for facilities that produce biogas from organic waste streams, such as food, food processing, and livestock packing/slaughter, that are

subject to EPA-mandated discharge limits that require ammonia control.

We believe at this time there is potentially a robust opportunity

to provide ammonia control solutions to others and we intend to pursue this opportunity in the coming year.

Effective April 1, 2024, the Company entered

into two material definitive agreements regarding voluntary surrender for cancellation of securities of the Company (and related matters)

a) members of the family of Dominic Bassani, recently deceased former Chief Executive Officer and (with his family) the Company’s

largest shareholder (collectively “Bassani Family”), and b) Mark A.

Smith, President of the Company and a director (“MAS”).

The Bassani Family and MAS entered into these agreements with the intention of mitigating dilution to shareholders as new, successor management

is added to the Company’s management team.

The Bassani Family has agreed to surrender not less than approximately 20% of its Company

holdings (as of December 2023) which surrender will increase to approximately 30% based on certain financing performances (see Form 8-K

dated April 3, 2024, Exhibit 10.1).

The Bassani Family will elect exactly which Company securities it will surrender for cancellation

on or before June 30, 2024, the Company’s fiscal year end.

The Bassani Family Agreement also sets forth requirements regarding conversion

of convertible notes held by members of the Bassani Family after the security surrender.

See Exhibit 10.1 for the material terms of the

contemplated transactions.

MAS has agreed to surrender approximately 30% of his Company holdings (as of December 2023).

Immediately upon

the effectiveness of the MAS Agreement, he cancelled all Company options held by him (2,425,000, in aggregate) and waived $56,250 of accrued

deferred compensation (convertible into 75,000 shares of the Company’s common stock).

The MAS Agreement also sets forth requirements

regarding conversion of convertible notes held by MAS after the security surrender and references the planned retirement of MAS on or

before May 15, 2024.

See Exhibit 10.2 for the material terms of the contemplated transactions.

Subsequently, and effective June 27, 2024,

the Board of Directors of the Company agreed to amend the terms of the agreements dated April 1, 2024.

The amendments solely extend any

dates of certain required conversions and/or exercises (and related promissory note maturity dates and warrant expiration dates), if any,

that were earlier than January 15, 2025, to said date.

No changes were made regarding any ‘givebacks’ of securities of the

On June 30, 2024, the Bassani Family provided the Company with their list regarding surrender of 20% of its Company holdings

(as of December 2023) (See Exhibit 10.1).

As previously reported, MAS has previously completed 100% of his ‘give backs’.

On May 13, 2024, the Board of Directors

commenced a Board-led review of potential strategic alternatives to ensure the Company’s survival and to enhance Bion’s potential

growth and maximize shareholder value.

The review will include assessing approaches to optimize the Company’s multiple business

opportunities through alternative capital return strategies, potential strategic or financial transactions, and developing strategic initiatives

best applicable to each opportunity created by our technology in order to consider all possible paths towards maximizing value creation.

No timetable has been established for the conclusion of this review and no decisions related to any further actions or potential strategic

alternatives have been made at this time.

There can be no assurance that the review will result in any transaction or other strategic

change or outcome.

Effective May 31, 2024, Bion accepted the

resignation of Bill O’Neill, both as CEO and Director.

O’Neill had previously informed the Board that he believed he was

not being adequately compensated or incentivized and the job was too difficult.

On May 21, 204, Bion received a letter from Mr.

that expressed his dissatisfaction with the Board’s refusal to address his demands and stated he was resigning to pursue other opportunities,

despite the fact he had not yet completed the last year+ of a three-year agreement.

Bion chose to accept his resignation in the belief

the Company needed a change in leadership and approach.

On June 1, 2024, Craig Scott joined the

Company's Board of Directors.

Scott has served Bion in several senior positions, dating back to 1996.

Scott also agreed to assume

a broader management role for Bion and subsequently accepted the role of interim Chief Executive Officer.

Also in June, Greg Schoener

assumed the role of Chief Operating Officer on an interim basis.

He also joined Bion's Board of Directors.

Schoener is a successful

business owner and operator, serving the construction industry in Houston, Texas.

He brings broad business management experience, with

an emphasis on mission-focused execution and accountability.

He has been a Bion shareholder since late-2020.

Bob Weerts, another Bion

shareholder and a successful serial entrepreneur from Winnebago, Minnesota, also accepted a position on Bion’s Board of Directors.

On June 18, 2024, Bion formed a strategic

relationship with Turk Stovall and Stovall Ranching Companies with the goal of developing a 15,000-head sustainable beef project at Stovall’s

Yellowstone Cattle Feeders (YCF) location in Shepherd, Montana.

The YCF feedyard is a traditional outdoor dirt feedlot that today is permitted

to feed up to 25,000 head.

Stovall also agreed to join Bion's Board of Directors and lead a joint venture between Stovall Ranching

Companies and Bion to develop the project.

The facility is envisioned to produce premium quality Montana beef that we believe will be

the 'cleanest', most eco-friendly finished beef in the marketplace.

On August 23, 2024, Bion announced that

three affiliates of the Company (Greg Schoener, Interim COO & Director;

Turk Stovall, Director;

Bob Weerts, Director) and two shareholders

(one of whom is the brother of Greg Schoener) have agreed to advance to the Company, through a newly formed LLC, up to $500,000 in consideration

of a secured convertible promissory note.

It is anticipated that others will join the LLC, although there can be no assurance they will.

The note instrument and agreements have not been executed at this time because terms and other details have not been finalized yet;

the group has begun advancing money to the Company.

As of the date of the filing of this report, the aggregate sum of $201,564 has been

advanced to the Company, together with express directions on what items were to be paid with such funds.

When a final agreement is executed,

it will be attached as an exhibit to a Form 8-K.

Change in Approach

Through the end of calendar 2022, Bion’s strategy

to exploit the beef opportunity was focused on developing an initial sustainable beef project as ‘proof of concept’.

beginning of 2023, under the guidance of our last CEO, Bion’s strategy shifted to executing multiple letters of intent and agreements

for sustainable beef JV projects and moving forward with development of those projects in quick succession.

During our 2023 fiscal year,

Bion entered into three (3) letters of intent (“LOIs”):

a) July 2022 letter of intent to develop a large-scale commercial

project - a 15,000-head sustainable beef cattle feeding operation together with the Ribbonwire Ranch (“Ribbonwire LOI”), in

Dalhart, Texas (with a provision to expand to 60,000 head) (“Dalhart Project”), b) January 2023 letter of intent to develop

a large-scale commercial project - a 15,000-head sustainable beef cattle feeding operation together with the Olson Feeders and TD Angus

(“Olson LOI”), near North Platte, Nebraska (with a provision to expand to 45,000 head or more) (“Olson Project”),

c) April 2023 letter of intent to develop a large-scale commercial project - a 15,000-head sustainable beef cattle feeding operation together

with Dakota Valley Growers (“DVG LOI”) near Bathgate, North Dakota (“DVG Project”).

Based on our experience, we

believe it will not be difficult to secure participation in our Projects from additional feeders/cattlemen, especially once project financing

and offtake agreements for both protein and co-products, are in place.

Bion’s new leadership team has returned the

company to its earlier approach, focusing on building a ‘flagship’ first project to prove concept feasibility and to provide

a development and finance model for future projects.

Leadership made this decision after determining that a) a large addressable market

for sustainable beef does exist and consumers have demonstrated a ‘willingness to pay’ a premium for sustainable food products;

however, since such products cannot be supplied today at scale, it is not a ‘ready’ market and will take time to develop),

b) an entrenched industry is never eager for change and it will only occur through enlightened/ proven self-interest, and c) investment

capital of the magnitude needed for large scale conversion to sustainable production will first require proof of concept.

Leadership believes for several reasons that the best

opportunity for the Company to prove its sustainable beef concept at this time is with the Stovall Ranch JV in Montana.

In June 2024,

Bion formed a strategic relationship with Turk Stovall and Stovall Ranching Companies.

Turk Stovall is a fifth-generation Montana cattleman,

with an extensive graduate-level education in cattle husbandry and an MBA in agribusiness, and he is the largest custom cattle feeder

He also has broad experience and relationships with both the U.S.

and Montana’s beef industry and important state leaders,

resources, and agencies.

Bion and Stovall have agreed to establish a JV, to be led by Mr.

Stovall, with the goal of developing a 15,000-head

sustainable beef project at Stovall’s Yellowstone Cattle Feeders (‘YCF’) location in Shepherd, Montana.

We anticipate

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.

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).

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”).

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”).

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.

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

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

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).

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).

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.

establishing the Stovall-Bion JV and creating related distribution agreements with key value chain partners during the current calendar

year, with the intent to begin construction before the end of 2024.

____________________________________

The Company’s on-going difficulties raising

needed funds over the past two years have rendered the Company unable to meet its current creditor obligations on a timely basis.

Company has engaged in discussion/negotiation with its larger creditors (including its largest creditor--- the primary contractor on the

Initial Project) but has been unable to reach agreements regarding payments due to the uncertainty as to if, when, and how much funding

the Company will be able to raise in future periods.

As a result, the Company’s largest creditor---the general contractor for the

Initial Project --- has filed a mechanics in Indiana (and its largest sub-contractor has sent notices related to its intention to file

a mechanics lien), other creditors are threatening to commence litigation and/or repossess/remove leased equipment and the Company is

behind on its Lease payments related to the site of the Initial Project.

On September 5, 2024, three members of the LLC (Subsequent Events,

Aug 23, 2024, below) met with representatives of two of the largest creditors:

the primary contractor and the property lessor.

and ultimate resolution are ongoing and subject to Bion’s ability to raise capital in a timely manner.

We have implemented extreme

cost savings measures:

maintaining only mission-critical operations and funding, on a weekly basis, only those expenses needed to maintain

those operations.

These measures will continue until we can execute a larger financing or obtain other sources of capital, such as a potential

strategic investor/partner or license agreement.

Bion is currently (and has been for some time) in

discussions with several companies related to potential strategic partnerships in renewable energy – RNG and solar – and clean

fuels, as well as reducing the carbon footprint of livestock production, especially beef.

With today’s U.S, and global emphasis

on decarbonizing energy and the food supply chain, the sectors have become closely intertwined, they are evolving quickly, and integrated

solutions have become increasingly desired, but complex.

Bion is now evaluating both European and U.S.

renewable energy developers, operators,

and investors to determine the best fit for moving forward with AD/RNG development for its own beef project(s), animal waste treatment

for others, both here and in the EU, as well as a development partner in industrial and municipal opportunities.

Bion believes that such

a relationship would entail a direct investment in Bion, licensing fee, or some other ‘up front’ financial benefit to Bion.

Bion’s new leadership team is strongly committed

to Bion’s continuation, its future success, and its shareholders.

We have returned the company to its earlier approach of focusing

on building a ‘flagship’ first project to prove the concept and markets and provide a development and finance model for future

projects, instead of attempting to move forward on multiple projects simultaneously or in rapid succession.

We believe this will put us

on a more achievable path.

Further, this strategy will substantially reduce our need for capital, and we believe that a more reasonable

and credible objective will make it easier to raise that capital.

We also believe that the recent changes in leadership, including the

addition of Turk Stovall to that leadership team, will lend validation and credibility to Bion and its business plan, making it easier

to raise capital from potential strategic, institutional, and retail investors.

For several reasons, we think that the best opportunity

to finance a project, and to prove the sustainable beef concept, is with the Stovall Ranch JV in Montana and we are exploring a wide range

of alternatives related to funding both the JV and Bion.

THERE IS NO ASSURANCE THAT THE COMPANY WILL REACH

OR APPROACH THE GOALS/TARGETS SET FORTH ABOVE.

Reaching such goals/targets will require 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.

REACHING SUCH GOALS/TARGETS WILL REQUIRE RESOLUTION OF THE COMPANY’S EXISTING FINANCIAL

DIFFICULTIES AND ACCESS TO VERY LARGE AMOUNTS OF CAPITAL (EQUITY AND DEBT) AS EACH BEEF PROJECT MODULE IS PROJECTED TO COST IN EXCESS

OF $50 MILLION (DEBT/EQUITY/GRANTS) TO CONSTRUCT AND WILL REQUIRE MOBILIZATION OF SUBSTANTIAL PERSONNEL, TECHNICAL RESOURCES AND MANAGEMENT

THE COMPANY DOES NOT POSSESS EITHER THE FINANCIAL OR PERSONNEL RESOURCES INTERNALLY AND WILL NEED TO SOURCE SUCH RESOURCES FROM

OUTSIDE ITSELF.

For expanded information regarding our ‘ HISTORY,

BACKGROUND AND CURRENT ACTIVITIES ’, see discussion within the Notes (particularly Notes 1, 3, 4, and 8) included in this report,

in Forms 8-K and Forms 10-Q filed earlier this year and Item 1 (and other sections) in our Annual Reports on Form 10-K filed in previous

CRITICAL ACCOUNTING POLICIES

13 unchanged sentences

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

As of June 30, 2024

and 2023, there are no derivative financial instruments.

32 unchanged sentences

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.

lease liability is also recorded, adjusted for any prepaid rent and/or initial direct costs incurred in connection with execution of the

lease and reduced by any lease incentives received.

For purposes of measuring the present value of its fixed payment obligations for a

given lease, the Company uses its incremental borrowing rate, determined based on information available at lease commencement, as rates

implicit in its leasing arrangements are typically not readily determinable.

The Company's incremental borrowing rate reflects the rate

it would pay to borrow on a secured basis and incorporates the term and economic environment of the associated lease.

YEAR ENDED JUNE 30, 2024 COMPARED TO THE

YEAR ENDED JUNE 30, 2023

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

Total revenues were nil for both the years

ended June 30, 2024 and 2023.

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.

Total general and administrative expenses were

$2,046,000 and $3,072,000 for the years ended June 30, 2024 and 2023, respectively.

Salaries and related payroll tax expenses were

$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

Stock-based compensation for the years ended June

30, 2023 and 2022 were $442,000 and $269,000, respectively.

$600,000 and $730,000 for the years ended June 30, 2024 and 2023, respectively.

Consulting costs were $488,000 and $485,000 for the years

ended June 30, 2024 and 2023, respectively.

The $130,000 decrease in salary costs is due to Bill O’Neill resigning, Dominic Bassani

passing away and the Company not replacing the position and a reduction in salary for Mark Smith.

Investor relations expenses were $328,000

and $697,000 for the years ended June 30, 2024 and 2023, respectively, and the $367,000 decrease was due to less investor related activity

during the fiscal year in order to conserve cash.

Legal costs were $34,000 and $83,000 for the years ended June 30, 2024 and 2023, respectively.

Stock-based compensation for the years ended

June 30, 2024 and 2023 were ($16,000) and $442,000, respectively.

The $458,000 variance is due to less stock-based compensation issued

in 2024 and the reversal of stock options expense for unvested options for Bill O’Neill.

Total depreciation expense was $1,582 and $1,645

for the year ended June 30, 2023 and 2022, respectively.

for the years ended June 30, 2024 and 2023, respectively.

Research and Development

Total research and development expenses were

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.

$23,000 and $83,000 for the years ended June 30, 2024 and 2023, respectively, representing an $60,000 decrease due to less consulting

and other expenses being allocated to research and development.

Salaries and related payroll tax expenses were

$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.

$6,000 and $9,000 for the years ended June 30, 2024 and 2023, respectively.

Consulting costs were $4,000 and $43,000 for the years ended

June 30, 2024 and 2023, respectively.

The 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.

The decrease of $39,000 was due to none of Brightcap’s consulting cost being allocated to

research and development.

Loss from Operations

As a result of the factors described above, the

loss from operations was $3,157,000 and $2,550,000 for the years ended June 30, 2023 and 2022 respectively.

As a result of the factors described above,

the loss from operations was $2,071,000 and $3,157,000 for the years ended June 30, 2024 and 2023 respectively.

Other (Income)/Expense

Other 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.

Other expense was $9,600,000 and $33,000 for

the years ended June 30, 2024 and 2023, respectively.

The increase in 2024 was due to the impairment of fixed assets taken on the Fair

Oaks project.

Interest expense related to deferred compensation,

loan payable and convertible notes 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

The decrease is due to more interest being capitalized to the 3G1 project.

loan payable and convertible notes prior to capitalization was $222,000 and $218,000 for the years ended June 30, 2024 and 2023, respectively.

Net Loss Attributable to the Noncontrolling

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

interest was nil and nil for the years ended June 30, 2024 and 2023, respectively.

Net Loss Attributable to Bion’s

Common Stockholders

As a result of the factors described above, the

net 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.

As a result of the factors described above,

the net loss attributable to Bion’s stockholders was $11,691,000 and $3,189,000 for the years ended June 30, 2024 and 2023, respectively,

and the net loss per basic common share was $.22 and $.07 for the years ended June 30, 2024 and 2023, respectively.

LIQUIDITY AND CAPITAL RESOURCES

11 unchanged sentences

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

Cash expenditures were offset in part by proceeds from

financing activities, primarily the exercise of warrants and sale of common shares.

As previously noted, the Company is currently not

generating significant revenue and accordingly has not generated cash flows from operations.

The Company does not anticipate generating

sufficient revenues to offset operating and capital costs for a minimum of two to five years.

While there are no assurances that the Company

will be successful in its efforts to develop and construct its Projects and market its Systems, it is certain that the Company will require

substantial funding from external sources.

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.

As stated in multiple places in this report, over the last 12 months the Company has had only

very limited success in raising needed funds which lack of success has had material negative effects on the Company and its business.

Given the unsettled state of the current credit and capital markets for companies such as Bion, there is no assurance the Company will

be able to raise the funds it needs on reasonable terms.

Investing Activities

3 unchanged sentences

During the year ended June 30, 2024, 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.

received net cash proceeds of $590,000 from the sale of units for $611,000 less commissions of $20,000.

During the year ended June 30, 2024, the Company received

gross cash proceeds of $400,000 from a convertible bridge loan and $125,000 from a convertible loan.

As of June 30, 2024, the Company has debt obligations

consisting of:

a) deferred compensation of $865,000 and b) convertible notes payable – affiliates of $1,716,000.

a) deferred compensation of $890,000, b) convertible notes payable – affiliates of $1,709,000, c) current note payable

including accrued interest of $419,000 and d) notes payable including accrued interest of $125,600.

As of June 30, 2023, the Company had

debt obligations of a) deferred compensation of $865,000, b) convertible notes payable – affiliates of $1,716,000, and c) current

note payable including accrued interest of nil.

Plan of Operations and Outlook

As of June 30, 2024, the Company had cash of approximately

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.

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

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

During the year ended June 30, 2022 the Company raised gross proceeds for approximately $1,737,000 and paid commissions of approximately

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.

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.

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: