What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2024-09-30 compared with 2023-09-28 · 1317 added, 2161 removed, 931 unchanged (79% of the section changed)

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

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.

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.

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

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

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

These issues have been resolved and the Company has moved our website (and email) to a new domain:

bionenviro.com.

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

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OTHER INFORMATION

Insider Trading Arrangements and Policies

During the quarter ended June 30, 2024, no director

or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement”

as each term is defined in Item 408(a) of Regulation S-K.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

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Directors and Officers:

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

Secretary and Director

William O’Neill

Chief Executive Officer

Dominic Bassani

Chief Operating Officer

Chief Executive Officer and Director

Greg Schoener

Chief Operating Officer and Director

Salvatore Zizza

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.

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

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

Smith served as a director

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

Smith served in senior

positions with Bion on a consulting basis.

Additionally, Mr.

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

Technologies, Inc.

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

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

Smith has engaged in the private practice of law in Colorado

In addition, Mr.

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

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

Until returning to Bion during March 2003, Mr.

Smith had been in retirement with

focus on charitable work and spiritual retreat.

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.

Robert Weerts

Stephen Craig (Craig) Scott ( 64) has

been associated with Bion since 1993.

Since that time he has been responsible for business and industry intelligence and analysis.

was with Bion full-time from 1996 to 2000, then periodically as a consultant through 2005.

Craig rejoined Bion in 2006 and has held several

senior positions, including Director of Communications, SVP – Capital Markets, and Head of Business Development.

As of June 2024,

he joined Bion’s Board of Directors and was subsequently named Interim Chief Executive Officer.

Craig studied business and communications

at Montana State and Denver-Metro Universities.

Jon Northrop (81) has served as our

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graduate research in low energy particle physics at Case Institute of Technology, Cleveland.

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).

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

From April 2015 through February 2018 Mr.

O’Neill served as Vice President Retail of Colorado Premium Foods.

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.

O’Neill graduated from Gettysburg College in 1981 with 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.

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.

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.

(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.

of Meyer Natural Foods from 2009-2010.

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.

Gregory (Greg) Schoener ( 56) currently

serves as the Chief Operating Officer and as a director of the company since June 1, 2024.He is a successful business owner and

operator, serving the construction industry in Houston, Texas.

Schoener has broad management experience in the medical field

as well as the construction industry.

Schoener is a Bion Shareholder since 2020.

William (Bill) Rupp (63) has served

as a director of the company since February 15, 2023.He is a ‘meat industry leader’ who served as President of JBS Beef from

2010-2016 with responsibility for the leadership of JBS’s North American Beef business.

He was CEO of Meyer Natural Foods from 2009-2010.

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.

Rupp also serves on the boards of Sustainable Beef, DecisionNext, Superior

Lamb and Lumachain.

Zizza (78) Salvatore Zizza

has served as a director of Bion since 2023.

He is presently President of Zizza & Associates

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

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.

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.

Zizza is also

an investor in numerous private companies and real estate holdings.

Zizza currently holds directorship positions at nineteen

(19) Gabelli/GAMCO funds and trusts.

has served as a director of Bion since February 15, 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.

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.

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.

was an independent financial consultant and had been a lending officer of Chemical Bank.

Zizza is also an investor in numerous private

companies and real estate holdings.

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.

a Baccalaureate/Political Science, St.

He received a Baccalaureate/Political Science,

John’s University (1967) and a Master of Business Administration, St.

John’s University (1972).

Zizza received a Doctor of Commercial Sciences (Honorary) from St.

Zizza received

a Doctor of Commercial Sciences (Honorary) from St.

John’s University.

Robert (Bob) Weerts (72) Bob Weerts

has been a member of The Company’s Board of Directors since July currently serves Director of the company since June 27, 2024.He

is a successful entrepreneur from Winnebago, Minnesota where he serves on the City Council.

He founded and operates Erosion Control

Plus, that serves county, state and federal highway projects;

Blue Valley Sod, serving the upper Midwest since 1987;

Green Energy &

Development, active in recycling and composting and Bedrock Ready Mix.

He is actively involved with Umpqua Energy and was a founding

member/Chairman of the Corn Plus Ethanol Plant.

Schafer (78) Edward Schafer

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of the US Department of Agriculture.

Turk Stovall (48) Turk Stovall

has been a member of The Company’s Board of Directors since June 27, 2024.

Stovall is a fifth-generation Montana

rancher and CEO/owner of Stovall Ranching Companies and Yellowstone Cattle Feeders.

Stovall has held management positions

with Certified Angus Beef, and North Platte Feeders.

Stovall serves as Second VP of the Montana Stockgrowers Association and

has served on the Cattleman’s Beef Board by appointment of the US Secretary of Agriculture.

Stovall earned a BS in Animal

Science from Montana State;

an MS in Animal Science from Oklahoma State and an MBA from Purdue.

Family Relationships

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Advisory Group

The Company, which has only 7 full-time employees/consultants

The Company, which has only five full-time employees/consultants

(all of whom are effectively ‘department heads’), has utilized many outside parties as consultants and contract workers for

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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.

Company anticipates that additional persons will be added to this group over time.

c) Stanley Rapp (government affairs), d) Dennis Tristao (agricultural tech, engineering and agricultural/environmental policy), e) Dennis

Bracht (organic seed, corn/feed grain cultivation and related matters), f) Steve Sands (former executive with performance Food Group),

Chris Cook (head of business development for Syngenta), and g) Lily Edwards-Callaway, PhD (animal health and welfare expert), have accepted

roles as members of our Advisory Group.

The Company anticipates that additional persons will be added to this group over time.

EXECUTIVE COMPENSATION.

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

Name and Principal

Name and Principal Position

Option Awards (2)

Non-Equity Incentive Plan Compensation

Nonqualified Deferred Compensation Earnings

Other Compensation

President and Chief

Financial Officer Since March 25, 2003,

Financial Officer

Brightcap/Dominic Bassani (4)

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

Since October 2016, the Company approved a month-to-month contract extension with Smith which included a monthly deferred salary of $18,000 and the right to convert up to $300,000 of deferred compensation, at his 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.

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.

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.

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 January 15, 2025).

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.

During the fiscal year 2024,

Smith’s compensation was reduced to $10,000 per month as of January 1, 2024 and Smith deferred $190,000 due to cash restraints of

Smith retired effective July 31, 2024, and his salary ceased accruing at that time.

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.

Bassani passed away on November

11, 2023, and his salary ceased accruing at that time.

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.

O'Neill was previously

paid as a contractor through Identifoods.

O’Neill resigned as of May 31, 2024.

Total payments for the years ended June 30,

2024 and June 2023, respectively were $20,000 and $318,000.

Employment Agreements:

Stephen Craig Scott (“Scott”)

was appointed interim CEO on June 1, 2024.

Scott has held various positions as employee/consultant with the Company since 1993 including

Director of Communications, SVP – Capital Markets and Head of Business Development.

On October 25, 2023, Scott entered into an agreement

with the Company which included provisions for a monthly salary of $14,000 of which $2,000 is deferred.

During the year ended June 30,

2024, Scott deferred substantial portions of his monthly salary to help the Company conserve cash.

For the year ended June 30, 2024 and

2023, Scott was paid $64,000 and $144,000 respectively.

Gregory (Greg) Schoener (“Schoener”) currently serves as the

interim COO of the company and as a Director since June 1, 2024.

Schoener currently has no agreement with the Company and is not receiving

any compensation.

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

of Executive Chairman, Director, President and General Counsel of Company and its subsidiaries under various agreements and terms from

March 2003 (details regard earlier years and periods between 2003 and 2020 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).

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.

Dominic Bassani (“Bassani”) has served

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

filings with the SEC).

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

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

On September 30, 2009 the Company entered into an extension

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

The Board appointed Bassani as the Company's CEO effective May 13, 2011 in which position he served until May 2022.

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.

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

Currently Bassani receives $25,000 per month in cash and $6,000 per month of deferred compensation.

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

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.

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

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…”.

SEC filings) until his retirement on July 31, 2024.

Pursuant to the extension agreements after expiration of agreements during the prior

decades, Smith continued his agreement to:

i) 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.

Due to expiration of his most recent extension, Mr.

Smith served the Company on a month-to –month basis through his retirement.

On April 29, 2022, Smith’s nominal monthly salary

was increased to $25,000, of which $5,000 was to be deferred each month, but, in actuality, much or all of his salary was deferred over

recent years and then converted into securities of the Company by Smith.

Smith may provide some transition related services for the

Company on a consulting basis over the course of the current year.

Dominic Bassani (“Bassani”) served in

senior management positions with the Company (as a full-time consultant) from 2001 until his death during 2023.

See prior Forms 10-K for

detailed summaries regarding his agreements and compensation (much of which was deferred) and/or taken in the form of securities of the

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.

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 (“WUF”) (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

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…”.

O’Neill elected not to complete his term and resigned from all positions

effective May 31, 2024.

As a result, 500,000 options that we not vested were forfeited and 304,743 warrants were cancel based on the terms

of his contract.

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.

set forth in the paragraphs above from December 31, 2017 (initial maturity date) to January 15, 2025 (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 Craig Scott, Jon Northrop (director), Bassani, Smith and Schafer) and their donees be amended to:

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

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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.

stock covered by unvested restricted stock awards for each of our directors and named executive officers as of June 30, 2024.

Outstanding Equity Awards at Fiscal Year-End

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Brightcap/ Dominic Bassani (2)

Brightcap/ Dominic Bassani (1)

Edward Schafer (1)

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Edward Schafer (1)

William O’Neill (3)

Options are subject to a 75% execution/exercise price adjustment upon notice of intent to exercise under certain conditions.

Craig Scott (3)

Jon Northrop (3)

Salvatore Zizza (3)

William Rupp (3)

Options are subject to a 75% execution/exercise price adjustment upon notice of intent to exercise under certain conditions.

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

Options are subject to a 50% execution/exercise

price adjustment upon notice of intent to exercise under certain conditions.

Director Compensation

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Director Compensation

earned or paid in Cash ($)

Awards ($)(1)

incentive plan compensation ($)

Fees earned or paid in Cash ($)

Stock Awards ($)

Option Awards ($)(1)

Non-equity incentive plan compensation ($)

Nonqualified deferred

other compensation ($)

compensation earnings ($)

All other compensation ($)

Greg Schoener

Edward Schafer

Salvatore Zizza

Robert Weerts

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

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regarding the beneficial ownership of our common stock as of August 1, 2024 by:

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

● each person that is known

by us to beneficially own more than 5% of our common stock;

● each of our directors;

each of our executive officers and significant employees;

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

● each of our executive officers

and significant employees;

● all our executive officers,

directors and significant employees as a group.

Under the rules of the Securities and Exchange Commission,

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Old Bethpage, NY 11604

Dominic Bassani (2)

Dominic Bassani Estate (2)

64 Village Hills Drive

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Danielle Lominy (5)

c/o Dominic Bassani

c/o Dominic Bassani Estate

64 Village Hill Drive

3 unchanged sentences

Old Bethpage, NY 11804

Anthony Orphanos (7)

c/o Blacksmith Advisors, LLC

320 Park Avenue 18th Floor

c/o Po Box 323

New York, NY 11804

William O’Neill (8)

107 12th Street E

Petersburg, FL 3371

Robert Weerts (8)

c/o Po Box 323

New York, NY 11804

Turk Stovall (9)

c/o PO Box 323

Old Bethpage NY 11804

Craig Scott (10)

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All executive officers and directors as a group (10 persons)

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.

Includes 70,577 shares, 3,025,000 shares underlying options and 965,000 shares underlying warrants held directly by Mr.

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.

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.

535,221 shares, 1,215,000 shares underlying warrants held directly by Linda Bassani, and

909,747 shares held in IRA accounts.

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 her residence and are included in Mrs.

Bassani’s beneficial ownership

for purposes of the calculation including:

a) 570,000 shares directly b) 646,458 shares underlying

warrants owned directly;

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

2019 Irrevocable Trust (“2019Trust”) which owns:

i) 3,000,000 warrants to purchase

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

owner of 1,500,000 shares underlying warrants and ii) $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.

Bassani disclaims ownership of 1,511,477 shares underlying warrants held by the Danielle Christine Bassani Trust, which is separately itemized herein.

Bassani’s adult daughter Danielle Lominy (formerly Danielle Bassani), who resides within his residence, is the beneficiary of the Danielle Christine Bassani Trust and Mr.

Bassani is not one of the trustees of the trust.

Bassani further disclaims beneficial ownership of shares and warrants owned by various other family members (including Christopher Parlow who is itemized separately), none of whom live with him or are his dependents, and such shares are not included in this calculation.

Includes 752,268 shares, 2,425,000 shares underlying options, 1,806,987 warrants held directly by Mr.

a) 747,998 shares of common stock and 498,915 underlying

warrants that could be issued on the conversion (at the election of The Bassani Estate)

of a convertible note in the amount of $373,999, (convertible @ $0.50 price) and b) 273,639

shares of common stock that could be issued on the conversion (at the election of The Bassani

Estate) of a convertible note in the amount of $164,183.00 (convertible @ $0.60 price) and

c) 222,962 shares of common stock that could be issued on the conversion (at the election

of The Bassani Estate) of Adjusted Convertible Note in the amount of $7,906.66 (convertible

@$.115 price) and d) 31,985 shares of common stock that could be issued on the conversion

(at the election of The Bassani Estate) of deferred compensation in the amount of $11,834.15.

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

Christine Bassani Trust, which is separately itemized herein.

Bassani’s adult

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

the beneficiary of the Danielle Christine Bassani Trust and Mrs.

Bassani is not one of the

trustees of the trust.

Bassani further disclaims beneficial ownership of shares and

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

separately), none of whom live with her or are her dependents, and such shares are not included

in this calculation.

2,850,422 shares 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.

Also includes 1,626,123 shares 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 86,754 shares of common stock held by LoTayLingKyur LLC which is controlled

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.

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.

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.

Also includes 242,152 shares and 242,152 warrants underlying units

that could be issued on the conversion by Mr.

Smith of his 2020 Convertible Obligation

in the aggregate amount of $121,075.58.

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

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.

Also includes 244,700 shares

of common stock that could be issued on the conversion (at the election of Mr.

deferred compensation in the amount of $80,751.

Does not include shares and warrants owned

by various other family members of which Mr.

Smith disclaims beneficial ownership.

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

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.

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.

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.

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.

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.

minor daughters.

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

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

shares of the Company’s common stock and as a result, Christopher Parlow is the

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

Additionally, the

2019 Trust owns $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.

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 minor daughter.

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

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

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

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

Additionally, the

2019 Trust owns $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

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.

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

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.

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.

Includes 94,927 shares held directly by Mr.

156,750 shares underlying warrants held directly by Mr.

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).

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

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.

Includes 504,894 shares, 1,545,000 shares underlying options and 573,747 shares underlying warrants held directly by Mr.

The total also includes 40,011 shares of common stock that could be issued on the conversion (at the election of Mr.

The conversion

price will be $.115 per share.

700,000 shares held directly by Mr.

Schoener and warrants to purchase 300,000 shares.

400,000 shares held directly by Mr.

of August 1, 2024, Mr.

Stovall does not own any Bion Securities.

(10) Includes

478,444 shares held directly by Mr.

Scott, 4,000 shares held by his spouse, 1,545,000 shares

underlying options and 573,747 shares underlying warrants held directly by Mr.

also includes 508,457 shares of common stock that could be issued on the conversion (at the

election of Mr.

Scott) of deferred compensation in the amount of $188,128.82.

Includes 120,635 shares held directly by Mr.

Northrop and options to purchase 515,500 shares held by Mr.

(11) Includes

120,635 shares held directly by Mr.

Northrop and options to purchase 517,500 shares held

Does not include shares or options owned by the adult children of Mr.

Northrop nor his former wife.

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

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

nor his former wife.

(12) Includes

105,112 shares of common stock and 50,000 shares of common stock underlying options held

directly by Mr.

(13) Includes

50,000 shares of common stock underlying options and 75,000 shares of common stock underlying

warrants held directly by Mr.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS,

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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.

The aggregate fees billed for the fiscal year ended 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 $54,325.

In December 2022 the Company engaged Haynie &

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financial statements included in the Company’s quarterly reports on Form 10-Q (and related matters) were $71,000.

The aggregate fees billed for the fiscal year ended

June 30, 2024 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 $83,000.

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.

fees in each of the last two fiscal years ended June 30, 2023.

There were no fees billed by Haynie & Company

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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.

for tax compliance and related services for the fiscal year ended June 30, 2023 was nil.

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.

by Haynie & Company for tax compliance and related services for the year ended June 30, 2024 was $18,000.

All Other Fees

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(Incorporated by reference to Exhibit 10.1 filed with Form 8-K filed on May 3, 2022).

of Intent with Ribbonwire Ranch (July 20, 2022).

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).

of Intent Transparency Wise LLC (Incorporated by reference to Exhibit 10.1 filed with Form 8-K filed

on November 17, 2023).

of Bassani Family Agreement (Incorporated by reference to Exhibit 10.1 filed with Form 8-K filed

on April 3, 2024).

of MAS Agreement (Incorporated by reference to Exhibit 10.1 filed with Form 8-K filed on April 3, 2024).

Craig Scott Resume (Incorporated

by reference to Exhibit 10.1 filed with Form 8-K filed on June 4, 2024).

Gregory Schoener Background

(Incorporated by reference to Exhibit 10.2 filed with Form 8-K filed on June 4, 2024).

Turk Stoval Resume (Incorporated

by reference to Exhibit 10.1 filed with Form 8-K filed on June 20, 2024).

Family 20% Give Back List dated 6/30/2024 (Incorporated by reference to Exhibit 10.1 filed with Form

8-K filed on July 3, 2024).

Status Notification for Bion (Incorporated by reference to Exhibit 10.1 filed with Form 8-K filed

on August 29, 2024).

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

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and shall not be deemed incorporated by reference into any filing, in accordance with Item 601 of Regulation S-K.

Independent Registered Public Accounting Firm (Haynie & Company, PCAOB ID:

Report of Independent Registered Public Accounting Firm ( Eide Baily LLP ;

Denver, CO, PCAOB ID:

Report of Independent Registered Public Accounting Firm ( Haynie & Company , PCAOB ID:

Consolidated balance sheets

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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.

sheets of Bion Environmental Technologies, Inc.

(the Company) as of June 30, 2024 and 2023 and the related consolidated statements of

operations, changes in stockholders’ equity (deficit), and cash flows for each of the years in the two-year period ended June 30,

2024, 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, 2024 and 2023, and the results of its operations and its

cash flows for each of the years in the two-year period ended June 30, 2024, in conformity with accounting principles generally accepted

in the United States of America.

Going Concern

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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

matter arising from the current period audit of the financial statements that were communicated or required to be communicated to the

audit committee and that:

2 unchanged sentences

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.

financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions

on the critical audit matters or on the accounts or disclosures to which they relate.

Equity Transactions

5 unchanged sentences

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.

June 30, 2024, the Company recorded stock-based compensation expense (including options, warrants, and units issued to employees and for

services) of $85,994, warrant modifications of $150,206, and a $140,941 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

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.

of time performing procedures and evaluating audit evidence in connection with forming our overall opinion on the 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

/s/ Haynie & Company

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September 30, 2024

Report of Independent Registered Public Accounting

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,

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

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.

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

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

(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.

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

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

BION ENVIRONMENTAL TECHNOLOGIES, INC.

AND SUBSIDIARIES

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Deferred compensation (Note 4)

Convertible notes payable - affiliates (Note 5)

Convertible bridge note payable (Note 5)

Operating lease liability, current (Note 8)

1 unchanged sentence

Operating lease liability, long term (Note 8)

Convertible notes payable (Note 5)

Convertible notes payable - affiliates (Note 5)

1 unchanged sentence

Equity (deficit):

Common stock, no

par value, 250,000,000

shares authorized, 48,044,790

and 43,758,820

shares issued, respectively;

and 43,054,511

shares outstanding, respectively

Common stock, no par value, 250,000,000 shares authorized,

57,227,248 and 48,044,790 shares issued, respectively;

56,522,939 and 47,340,480 shares outstanding, respectively

Additional paid-in capital

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Total Bion's stockholders’ equity (deficit)

( 5,808,501 )

Noncontrolling interest

Total equity (deficit)

( 5,770,928 )

Total liabilities and (deficit)

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Interest income

(Gain) on disposal of assets

Interest expense

Gain on sale of domain

Gain on legal dissolution of subsidiary

( 10,234,501 )

Loss on asset impairment

Total other expense

( 11,691,115 )

Net income (loss)

( 3,189,115 )

Net (loss) attributable to the noncontrolling interest

Net income (loss) applicable to Bion's common stockholders

Net (loss) applicable to Bion's common stockholders

$ ( 11,691,115 )

Net income (loss) applicable to Bion's common stockholders

$ ( 3,189,115 )

Net (loss) applicable to Bion's common stockholders

per basic and diluted common share

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AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS'

EQUITY (DEFICIT)

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)

YEARS ENDED JUNE 30, 2024 AND

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Series C Preferred Stock

Additional paid-in

Subscription Rec-

-eivables for

Subscription Receivables for

Noncontrolling

paid-in capital

equity/(deficit)

1 unchanged sentence

$ ( 504,650 )

Warrants exercised for common shares

Commissions on warrant exercises

Conversion of debt and liabilities

Issuance of units for services

Modification of warrants

Issuance of warrants

Vesting of options for services

Net income (loss)

Balances, June 30, 2022

$ ( 124,047,548 )

$ ( 894,579 )

Sale of units

Sales of common stock

Sale of common stock

Warrants exercised for common shares

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Debt modification

( 3,189,115 )

Balances, June 30, 2023

$ 131,935,418

$ ( 504,650 )

$ ( 127,236,663 )

Sale of units

Warrants exercised for common shares

Warrants exercised under cashless exercise

Options exercised under cashless exercise

Issuance of units for services

Issuance of warrants for services

Vesting of options for employees and services

Vesting of warrants for employees and services

Debt Modification

Giveback of convertible liabilities and debt from affiliates

Conversion of debt and liabilities

Modification of warrants

Commissions on sale of units

( 11,691,115 )

Balances, June 30, 2024

$ 133,623,927

$ ( 504,650 )

( 138,927,778 )

$ ( 5,770,928 )

See notes to consolidated financial statements

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CASH FLOWS FROM OPERATING ACTIVITIES

Net income (loss)

$ ( 11,691,115 )

Adjustments to reconcile net loss to net cash used in operating activities:

Gain on legal dissolution of subsidiary

$ ( 3,189,115 )

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation expense

Impairment of assets

Accrued interest on loans payable, deferred compensation and other

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Warrants issued for compensation for services

Decrease (increase) in prepaid expenses

Increase (decrease) in deposits in other assets

Decrease in prepaid expenses

(Decrease) in deposits in other assets

Increase (decrease) in accounts payable and accrued expenses

6 unchanged sentences

( 3,557,059 )

( 2,062,155 )

Disposal of property and equipment

Net cash used in investing activities

( 3,557,059 )

( 2,062,155 )

CASH FLOWS FROM FINANCING ACTIVITIES

2 unchanged sentences

Commissions on sale of warrants

Commissions on sale of units

Redemption of Preferred Series B shares and interest

Proceeds from convertible bridge loan

Proceeds from convertible notes loan

Proceeds from exercise of warrants

Net cash provided by financing activities

Net increase (decrease) in cash

( 2,534,478 )

Net decrease in cash

( 2,534,478 )

5 unchanged sentences

Adjustment for debt modification

Adjustment for debt modification from giveback agreements

Adjustment for deferred compensation modification from giveback agreements

Conversion of debt and liabilities into common units

2 unchanged sentences

Capitalized interest in property and equipment

Shares issued for warrant exercise commissions

Purchase of property and equipment for accounts payable

4 unchanged sentences

YEARS ENDED JUNE 30, 2024 AND 2023

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

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.

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

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).

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.

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

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

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’

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

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 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.

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

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:

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,

‘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,

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),

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

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

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.

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

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.

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.

Specifically, the Initial Project was designed/developed

to provide and/or accomplish the following:

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.

Use Bion’s data collection system to support 3 rd party verified system efficiency requirement to qualify for USDA Process-Verified-Program (PVP):

certification of sustainable branded beef (and potentially pork) product metrics.

Produce sufficient ammonium bicarbonate nitrogen fertilizer (“AD Nitrogen”) 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.

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.

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.

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

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.

The Company’s initial ammonium bicarbonate liquid

product completed its Organic Materials Review Institute (“OMRI”) application and review process with approval during May

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’

Bion believes that at least a premium segment of the

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-fed beef, which is regarded as a generally more sustainable offering than

grain-fed (largely without 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’.

Each of these items supports Bion’s belief that

there is a potentially very large opportunity to supply premium sustainable beef products that satisfy 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 organic,

can provide an affordable product that satisfies the consumer’s desire for sustainability, but with the superior taste and texture

those consumers have grown to prefer.

Sustainable Beef

Bion’s goal is to be one of the ‘first

to market’ with meaningfully verified sustainable beef products that can be produced at sufficient scale to service national market

The cattle produced at Bion facilities will have a substantially lower carbon footprint, dramatically reduced nutrient impacts

to water, 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 will be comprised

of covered barns with slotted floors (allowing the waste to pass through) which will reduce ammonia and greenhouse gas volatilization

and loss, as well as odors, thereby improving animal health and human working conditions while preventing air/soil pollution.

will be collected and moved directly to 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 geographical locations

with adequate sunshine and appropriate ‘tariffs’) 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 advanced 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.

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).

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 (including Tyson’s very recent ‘Brazen’ program),

but a closer look finds that many have consisted 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.

Sustainable Organic Beef

Bion also believes it may also have 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 ammonium bicarbonate fertilizer

captured by the Gen3Tech platform.

Bion believes its meat products will meet consumer demands with respect to sustainability and safety

(organic) and provide the tenderness and taste American consumers have come to expect from premium conventional American beef.

Such products

are largely unavailable in the market today.

We believe Bion’s unique ability to produce the fertilizer needed to grow a supply

of relatively low-cost organic corn, and the resulting opportunity to produce organic beef, will dramatically differentiate us from potential

This organic opportunity is dependent on successfully establishing Bion’s fertilizer products as acceptable for use

in organic grain production.

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.

Organic and ‘Climate Smart’

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.

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

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.

contain virtually none of the other salt, iron and mineral constituents of the livestock waste stream that often accompany other organic

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.

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 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.

Gen3Tech Kreider 2 Poultry Project

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”).

Now that development of the Company’s Gen3Tech is being deployed, the Company has commenced discussions with KF regarding updating

and amending the JV agreement and anticipates executing an amended joint venture agreement during 2023.

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

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 anticipates 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.

Note that while 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:

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 needed to commence its development.

However, the Company is currently engaged in

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.

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

In the absence of firm regulatory mandates, 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 certified as

‘ClimateSmart’.

All processes will be verifiable by third parties (including regulatory authorities and certifying boards)

to comply with environmental regulations and trading programs and meet the requirements for:

a) renewable energy and carbon credits, b)

organic certification of the fertilizer coproducts and c) USDA PVP certification of an ‘Environmentally Sustainable’ brand

(see discussion above and below), 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.

The Company has additional applications pending and/or planned.

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 the single largest enhanced revenue contributor provided by Bion to the JVs (and Bion licensees).

The Company believes that the largest portion of its business with be conducted through such JVs, but a material portion may involve licensing

and or other approaches.

In parallel with technology development, Bion has

worked (which work continues) to implement market-driven strategies designed to stimulate private-sector participation in the overall

nutrient and carbon reduction strategy.

These market-driven strategies can generate “payment for ecosystem services”,

in which farmers or landowners are rewarded for managing their land and operations to provide environmental benefits that will generate

additional revenues.

Existing renewable energy credits for the production and use of biogas are an example of payment for ecosystem services.

Another such strategy is nutrient trading (or water quality trading), which will potentially create markets (in Pennsylvania and other

states) that will utilize taxpayer funding for the purchase of verified pollution reductions from agriculture (“nutrient credits”)

by the state (or others) through competitively-bid procurement programs.

Such credits can then be used as a ‘qualified offset’

by an individual state (or municipality) to meet its federal clean water mandates at significantly lower cost to the taxpayer.

Market-driven

strategies, including competitive procurement of verified credits, is 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 the 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

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 fiscal 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.

The Livestock Problem

The livestock industry is under tremendous pressure

from regulatory agencies, a wide range of advocacy groups, institutional investors and the industry’s own consumers, to adopt sustainable

Environmental cleanup is inevitable and has already begun — and policies have already begun to change, as well.

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 21 st Century consumer demands for meaningful

sustainability.

(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

Under current manure management practices, 80% or more of total nitrogen from manure, much of it in the form of ammonia, escapes

during storage, transportation, and during and after soil application, representing both substantial lost value and environmental costs.

More than half of the nitrogen impacts from livestock

waste come from airborne ammonia emissions, which are extremely volatile, reactive and mobile.

Airborne ammonia nitrogen eventually settles

back to the ground through atmospheric deposition — it ‘rains’ 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.

EPA already considers excess nutrients “one of America’s most widespread,

costly and challenging environmental problems”.

Nutrient runoff is expected to worsen dramatically in the coming decades due to

rising temperatures and increasing rainstorm intensity as a result of climate change.

Nitrate-contaminated groundwater is of growing concern

in agricultural regions nationwide, where it has been directly correlated with nutrient runoff from upstream agricultural operations using

raw manure as fertilizer.

Pennsylvania, Wisconsin, California and Washington, and others, now have regions where groundwater nitrate levels

exceed EPA standards for safe drinking water.

High levels of nitrate can cause blue baby syndrome (methemoglobinemia) in infants and affect

women who are or may become pregnant, and it has been linked to thyroid disease and colon cancer.

EPA has set an enforceable standard

called a maximum contaminant level (MCL) in water for nitrates at 10 parts per million (ppm) (10 mg/L) and for nitrites at 1 ppm (1 mg/L).

Federal regulations require expensive pretreatment for community water sources that exceed the MCL;

however, private drinking water

wells are not regulated, and it is the owners’ responsibility to test and treat their wells.

Additionally, groundwater flows also

transport this volatile nitrogen downstream where, along its way, it intermixes with surface water, further exacerbating the runoff problem.

Like atmospheric deposition, the current conservation practices we rely on to reduce agricultural runoff are largely bypassed by this

subsurface flow.

Additionally, in arid climates, such as California,

airborne ammonia emissions from livestock manure contribute to air pollution as a precursor to PM2.5 formation, small inhalable particulate

matter that is a regulated air pollutant with significant public health risks.

Whether airborne or dissolved in water, ammonia can only

be cost-effectively controlled and treated at the source—before it has a chance to escape into the environment where it becomes

extremely expensive to ‘chase’, capture, and treat.

High phosphorus concentrations in soils fertilized

with raw manure are another growing problem.

The ratio of nitrogen to phosphorus in livestock waste is fixed, and because manure application

rates are calculated based on nitrogen requirements, often phosphorus is overapplied as an unintended consequence.

Phosphorus accumulation

in agricultural soils reduces its productivity, increases the risk of phosphorus runoff, and represents a waste of a finite resource.

Decoupling the nitrogen from the phosphorus would allow them to be precision-applied, independently of each other, when and where needed.

The livestock industry has recently come under heavy

fire for its impacts on climate change, which has become a rallying cry for the anti-meat campaign discussed above.

Estimates of the magnitude

of those impacts vary widely, but the general consensus is that globally, livestock account for 14.5 percent of greenhouse emissions.

however, that number drops to 4.2 percent, due to the increased efficiencies of American beef production.

The greatest impacts

come from direct emissions of methane from enteric fermentation (belches), methane and nitrous oxide emissions from the manure, with arguably

the largest being the massive carbon footprint of the synthetic nitrogen fertilizers used to grow the grains to feed the livestock.

For decades the livestock industry has overlooked

and/or socialized its environmental problems and costs.

Today, the impacts of livestock production on public health and the environment

can no longer be ignored and are coming under increasing scrutiny from environmental groups and health organizations, regulatory agencies

and the courts, the media, consumers, and activist institutional investors.

The result has been a significant and alarming loss of market

share to plant-based protein and other alternative products.

Bion’s Gen3Tech platform was designed to resolve these environmental

issues and bring the industry in line with twenty-first century consumer expectations.

Going concern and management’s plans:

The 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

generated/incurred a net income of $ 8,292,000

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.

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

AND ORGANIZATION :

Nature of Operations

Bion Environmental Technologies, Inc.'s ("Bion,"

"Company," "We," "Us," or "Our") was incorporated in 1987 in the State of Colorado.

Our patented and proprietary technology was developed

to provide advanced waste treatment and resource recovery for large-scale livestock production facilities (also known as “Concentrated

Animal Feeding Operations” or “CAFOs").

Our Gen3Tech can largely mitigate the environmental problems of CAFOs, while

simultaneously improving operational/ resource efficiencies by recovering high-value co-products from the waste stream, including renewable

energy and nutrients.

Bion is focused on the ‘feeder’ space of the livestock production/value chain, primarily in the beef

industry because we believe it faces the most challenges of all the livestock sectors and can benefit the most from the application of

Bion’s technology and business strategy.

We believe 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.

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,

We anticipate 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.

Advancing the Stovall-Bion JV project is our

primary focus, although we are also expending resources evaluating our ARS as a standalone ammonia control solution.

Going Concern

The accompanying consolidated financial statements do not include any adjustments relating to the recoverability or

classification of assets or the amounts and classification of liabilities that may result should the Company be unable to continue

as a going concern.

The Company’s consolidated financial statements have been prepared

assuming the Company will continue as a going concern.

The Company is not currently generating any significant revenues.

the Company’s anticipated revenues, if any, from existing JVs and proposed projects will not be sufficient to offset operating and

capital costs (for Projects) for a minimum of two to five years.

Further, there are no assurances that the Company will ultimately be

successful in its efforts to develop and construct its Projects and market its Systems;

but, it is certain that the Company will require

substantial funding from external sources.

Given the unsettled state of the current credit and capital markets for companies such as Bion,

there is no assurance the Company will be able to raise the funds it needs on reasonable terms.

The aggregate effect of these factors

raises substantial doubt about the Company’s ability to continue as a going concern.

During the year ended June 30, 2024, a one-time, non-recurring, non-cash

charge of $ 9,460,425 was incurred by the Company in connection with a write-down of the capitalized carrying value of the Initial Project

(at Fair Oaks, Indiana) because the Initial Project was recently reclassified as largely a research & development facility and is

located on land subject to a short term lease (as described above in Item 7, Management’s Discussion and Analysis).

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

liabilities were approximately $ 5.8 million and $ 1.6 million at June 30, 2024 and 2023, respectively, the increase of approximately $ 4.2

million was largely due to an increase in ‘accounts payable and accrued expenses’ and debt moving from long term to current

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

The Company’s extreme difficulty in obtaining needed funds during the entire 2024 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

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

The constraints on available resources have had, and continue to have,

negative effects on the pace and scope of the Company’s efforts to operate and develop its business.

The Company has had to delay

payment of trade obligations and has had to economize in many ways that have potentially negative consequences.

If the Company is able

to raise needed funds during the remainder of the current fiscal year (and subsequent periods), of which there is no assurance, management

will not need to consider deeper cuts (including additional personnel cuts) and/or curtailment of ongoing activities including research

and development activities.

The Company will need to obtain additional capital to fund its operations and technology development, to satisfy

existing creditors, to develop Projects.

The Company anticipates that it will seek to raise from $ 20,000,000 to $ 80,000,000 or more debt

and/or equity through joint ventures, strategic partnerships and/or sale of its equity securities (common, preferred and/or hybrid) and/or

debt (including convertible) securities, and/or through use of ‘rights’ and/or warrants (new and/or existing) and/or through

other means during the next twelve months.

However, as discussed above, there is no assurance, especially in light of the difficulties

the Company has experienced in many recent years and the extremely unsettled capital markets that presently exist for small pre-revenue

companies like us, that the Company will be able to obtain the funds that it needs to stay in business, complete its technology development

or to successfully develop its business and Projects.

Ultimately, in the event the Company cannot secure additional financial resources,

or complete a strategic transaction in the longer term, the Company may need to curtail or suspend its operational plans or current initiatives,

or potentially liquidate its business interests, and investors may lose all or part of their investment.

BION ENVIRONMENTAL TECHNOLOGIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED JUNE 30, 2024 AND 2023

The accompanying consolidated financial statements do not include any adjustments

relating to the recoverability or classification of assets or the amounts and classification of liabilities that may result should the

Company be unable to continue as a going concern.

The following paragraphs describe management’s plans with regard to these conditions.

The Company continues to explore sources of additional financing (including

potential agreements with strategic partners – both financial and ag-industry) to satisfy its current and future operating and capital

expenditure requirements as it is not currently generating any significant revenues.

During the years ended June 30, 2023 and 2022, the Company received

gross proceeds of approximately $ 4,038,000 and $ 1,737,000 , respectively, from the sale of its debt and equity securities.

paid commissions on the exercise of warrants in the amount of $ 86,000 and $ 19,000 in 2023 and 2022, respectively.

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 Projects (including operations at the Initial Project, JV Projects

(including the Dalhart/Olson/DVG Projects), and the Kreider 2 facility) and CAFO Retrofit waste remediation systems.

The Company anticipates

that it will seek to raise from $ 20,000,000 to $ 80,000,000 or more debt and/or equity through joint ventures, strategic partnerships and/or

sale of its equity securities (common, preferred and/or hybrid) and/or debt (including convertible) securities, and/or through use of

‘rights’ and/or warrants (new and/or existing) and/or through other means during the next twelve months.

However, as discussed

above, there is no assurance, especially in light of the difficulties the Company has experienced in many recent years and the extremely

unsettled capital markets that presently exist for small companies like us, that the Company will be able to obtain the funds that it

needs to stay in business, complete its technology development or to successfully develop its business and Projects.

There is no realistic likelihood that funds required during the next

twelve months (or in the periods immediately thereafter) for the Company’s basic operations, the Initial Project and/or proposed

JVs and/or Projects will be generated from operations.

Therefore, the Company will need to raise sufficient funds from external sources

such as debt or equity financings or other potential sources.

The lack of sufficient additional capital resulting from the inability to

generate cash flow from operations and/or to raise capital from external sources would force the Company to substantially curtail or cease

operations and would, therefore, have a material adverse effect on its business.

Further, there can be no assurance that any such required

funds, if available, will be available on attractive terms or that they will not have a significantly dilutive effect on the Company’s

existing shareholders.

All of these factors have been exacerbated by the extremely limited and unsettled credit and capital markets presently

existing for small companies like Bion.

Covid-19 pandemic related matters:

The Company faces many risks and uncertainties

and factors beyond our control that have been 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.

Management’s Plan

To help alleviate short-term cash needs and continue current operations,

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 additional investors will join the LLC, and that the funds available

to Bion will increase, 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;

however, the group has begun advancing money to the Company.

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.

To date, the Company has primarily raised funds through private placements

with accredited investors, often conducted through FINRA-registered broker/dealers.

However, the Company anticipates, moving forward,

it will need to raise capital using a combination of financial instruments and sources, that could also include strategic and/or institutional

investors, including family offices and private equity, brokered equity or debt offerings with both public and private investors, and

banks and other ag lending institutions, among others, although there can be no assurance it will be successful.

Many of these financing

options may involve dilution, potentially substantial, for current shareholders.

Management intends to augment its access to capital by

adding one or more staff members (or consultants) with experience in the capital markets, as well as utilizing its current contacts and

relationships in the capital markets.

Bion is currently in discussions with several potential strategic partners

in renewable energy – RNG and solar – and clean fuels, as well as reducing the carbon footprint of livestock production, especially

Some of these candidates have expressed an interest in investing in Bion and JV projects, and management believes that Bion will

receive an investment from such a partner (as well as from other strategic partners from other parts of the value chain), although there

can be no assurance that it will.

Bion is now evaluating both European and U.S.

renewable energy/ clean fuels developers, operators, and

investors to determine the best fit for moving forward with AD/RNG development for its own beef project(s), access to clean fuels value

chains for its low-carbon fertilizers, 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.

The Company continues to explore sources of additional financing to satisfy

its current operating requirements and future growth needs.

The Company has faced substantial demand for capital and operating expenditures

for the fiscal year 2024 that we anticipate will increase during the 2025 fiscal year and periods thereafter as we move toward commercial

implementation of our 3G Tech and development of JVs (including costs associated with additions of personnel to carry out the business

activities of the Company).

As a result, the Company has faced, and continues to face, significant cash flow management challenges due

to material working capital constraints.

To partially mitigate these working capital constraints, the Company's core senior management

and some key employees and consultants have been deferring most of their cash compensation and/or are accepting compensation in the form

of securities of the Company and members of the Company's senior management have from time-to-time made loans to the Company in the past

and may do so in future periods.

To help alleviate short-term cash needs for continued

operations, 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;

however, 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.

THERE IS NO ASSURANCE THAT THE COMPANY WILL REACH

OR APPROACH THE GOALS/TARGETS SET FORTH ABOVE.

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

DIFFICULTIES AND ACCESS TO VERY LARGE AMOUNTS OF CAPITAL (EQUITY AND DEBT) AS EACH 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.

BION ENVIRONMENTAL TECHNOLOGIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED JUNE 30, 2024 AND 2023

ACCOUNTING POLICIES

5 unchanged sentences

All significant intercompany accounts and transactions have been eliminated in consolidation.

Bion PA1 LLC was dissolved on December 29, 2021 (See

Its operating losses are included in the consolidation through December 29, 2021.

Cash and cash equivalents :

3 unchanged sentences

Property and equipment:

Property and equipment are stated at cost and are

depreciated, when placed into service, using the straight-line method over the estimated useful lives of the related assets, generally

three to twenty years.

The Company capitalizes all direct costs and all indirect incrementally identifiable costs related to the design

and construction of its Integrated Projects such as consulting fees, internal salaries and benefits and interest.

The Company reviews

its property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may

not be recoverable.

An impairment loss would be recognized based on the amount by which the carrying value of the assets or asset group

exceeds its estimated fair value, and is recognized as a loss from operations.

Property and equipment are

stated at cost and are depreciated, when placed into service, using the straight-line method over the estimated useful lives of the related

assets, generally three to twenty years.

The Company capitalizes all direct costs and all indirect incrementally identifiable costs related

to the design and construction of its Integrated Projects such as consulting fees, internal salaries and benefits and interest.

reviews its property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an

asset may not be recoverable.

An impairment loss would be recognized based on the amount by which the carrying value of the assets or

asset group exceeds its estimated fair value and is recognized as a loss from operations.

The Company has elected to expense all costs and filing

2 unchanged sentences

no direct relationship to the value of the Company’s patents.

BION ENVIRONMENTAL TECHNOLOGIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED JUNE 30, 2024 AND 2023

Stock-based compensation :

54 unchanged sentences

value drivers are unobservable.

BION ENVIRONMENTAL TECHNOLOGIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED JUNE 30, 2024 AND 2023

Observable inputs are based on market data obtained

52 unchanged sentences

(as if exercised) and convertible securities (as if converted) that have been excluded from the calculation of basic income (loss) per

Schedule of anti dilutive securities

Schedule of basic income (loss) per

Convertible debt

Convertible preferred stock

BION ENVIRONMENTAL TECHNOLOGIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED JUNE 30, 2024 AND 2023

The following is a reconciliation of the denominators

of the basic and diluted income (loss) per share computations for the years ended June 30, 2024 and 2023.

Schedule of earnings per share, basic and diluted

Schedule of reconciliation of the denominators

of the basic and diluted income (loss) per share

Shares issued – beginning of period

1 unchanged sentence

Shares outstanding – beginning of period

Weighted average shares issued

during the period

Diluted weighted average shares –

end of period

Weighted average shares issued during the period

Diluted weighted average shares – end of period

Use of estimates :

23 unchanged sentences

Once the lease commenced the Company moved into construction phase.

The balance for the Initial Project construction in process includes $ 211,984 for capitalized interest and $ 135,648 in non-cash compensation

as of June 30, 2023.

Management has reviewed the remaining property and

equipment for impairment as of June 30, 2023 and believes that no impairment exists.

Depreciation expense was $ 1,645 and $ 1,161 for the

years ended June 30, 2023 and 2022, respectively.

The balance for the Initial Project construction in process includes $ 74,144 and $ 211,984 for capitalized interest and $ 135,648 and $ 135,648

in non-cash compensation as of June 30, 2024 and 2023, respectively.

Management previously believed that the Initial Project

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

However, discussions

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

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

Additionally, due to some

recent equipment break-downs, the Initial Project is currently in maintenance mode rather than conducting operations while the Company

awaits required replacement parts and subsequent repairs.

This process has been slowed by the Company’s ongoing difficulties in

raising needed funds for its activities.

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

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

at the June 30, 2024 fiscal year end.

Further, after extensive discussion, it was determined that ‘carrying value’ of the

Initial Project on the Company balance sheet as of that date be reduced to $ 0 in order to conform to the applicable accounting literature

and guidance that the Company’s management had received because the Initial Project is:

i) largely a research & development

facility and ii) is located on land subject to a short term lease.

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

charge of $ 9,460,425 has been taken by the Company at June 30, 2024.

Depreciation expense was $ 1,582 and $ 1,645 for

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

BION ENVIRONMENTAL TECHNOLOGIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED JUNE 30, 2024 AND 2023

COMPENSATION :

The Company owes deferred compensation to various

employees, former employees and consultants totaling $ 864,781 and $ 594,798 as of June 30, 2023 and 2022, respectively.

Included in the

deferred compensation balances as of June 30, 2023, are $ 527,058 and $ 20,167 owed Dominic Bassani (“Bassani”), the Company’s

Chief Operating Officer (who was Chief Executive Officer until through April 30, 2022), and Mark A.

Smith (“Smith”), the Company’s

President, respectively, pursuant to extension agreements effective January 1, 2015, whereby unpaid compensation earned after January

1, 2015, accrues interest at 4 % per annum and can be converted into shares of the Company’s common stock at the election of the

employee during the first five calendar days of any month.

The conversion price shall be the average closing price of the Company’s

common stock for the last 10 trading days of the immediately preceding month.

The deferred compensation owed Bassani and Smith as of June

30, 2022 was $ 437,508 and $ 10,000 , respectively.

The Company also owes various consultants and an employee, pursuant to various agreements,

for deferred compensation of $ 105,056 and $ 74,790 as of June 30, 2023 and 2022, respectively, with similar conversion terms as those described

above for Bassani and Smith, with the exception that the interest accrues at 0 % to 3 % per annum.

The Company also owes a former employee

$ 72,500 , which is not convertible and is non-interest bearing.

Bassani and Smith have each been granted the right to convert up to $ 300,000

of deferred compensation balances at a price of $ 0.75 per share until June 30, 2024 into common shares (to be issued pursuant to the 2006

Smith also has the right to convert all or part of his deferred compensation balance into the Company’s securities (to be

issued pursuant to the 2006 Plan) “at market” and/or on the same terms as the Company is selling or has sold its securities

in its then current (or most recent if there is no current) private placement.

Smith also received the right to transfer future deferred

compensation to his 2020 Convertible Obligation at his election but such right is no longer in force.

Bill O’Neill has a balance of $ 140,000 and $ 20,000 at June 30, 2023

employees, former employees and consultants totaling $ 890,223

and $ 864,781 as of June 30,

2024 and 2023, respectively.

There is no interest or conversions on the deferred balance.

During the year ended June 30, 2023, Smith elected

to add $ 90,000 of deferred compensation to his 2020 Convertible Note.

Included in the deferred compensation balances as of June 30, 2024, are $ 160,133

owed Craig Scott (“Scott”), the Company’s current CEO, $ 367,500 ,

owed William O’Neill (“O’Neill”), the Company’s former CEO (until May 31, 2024), $ 11,834 owed the estate/heirs of Dominic Bassani (“Bassani”), the Company’s recently deceased former Chief Operating

Officer (who was Chief Executive Officer until through April 30, 2022) (NOTE:

Dominic Bassani passed away on November 11, 2023.), and

$ 75,748 owed Mark A.

Smith (“Smith”), the Company’s recently retired President, respectively.

The sums owed to Bassani and Smith are owed

pursuant to extension agreements effective January 1, 2015, whereby unpaid compensation earned after January 1, 2015, accrues interest

at 4 % per annum and can be converted into shares of the Company’s common stock at the election of the employee during the first

five calendar days of any month.

The conversion price shall be the average closing price of the Company’s common stock for the

last 10 trading days of the immediately preceding month.

The deferred compensation owed Bassani and Smith as of June 30, 2023 was $ 527,058

and $ 20,167 , respectively.

O’Neill is owed a balance of $ 367,500 and $ 140,000

at June 30, 2024 and 2023, respectively, pursuant to his 2021 employment agreement.

There is no interest accrual or conversion rights

related to the deferred balance.

O’Neill terminated his service to the Company prior to the full term of his agreement.

The Company owes deferred compensation to Craig

Scott of $ 160,133

at June 30, 2024 and 2023, respectively, with similar conversion terms as those described above for Bassani and Smith, with the

exception that the interest accrues at 0% to 3% per annum.

The Company also owes various consultants and

an employee, pursuant to various agreements, for deferred compensation of $ 202,509 and $ 51,444 as of June 30, 2024 and 2023, respectively,

with similar conversion terms as those described above for Bassani and Smith, with the exception that the interest accrues at 0% to 3%

The Company also owes a former employee $ 72,500 , which is not convertible and is non-interest bearing.

Bassani and Smith have

each been granted the right to convert up to $ 300,000 of deferred compensation balances at a price of $ 0.75 per share until January 15,

2025 into common shares (to be issued pursuant to the 2006 Plan).

Smith also has the right to convert all or part of his deferred compensation

balance into the Company’s securities (to be issued pursuant to the 2006 Plan) “at market” and/or on the same terms

as the Company is selling or has sold its securities in its then current (or most recent if there is no current) private placement.

also received the right to transfer future deferred compensation to his 2020 Convertible Obligation at his election but such right is

no longer in force.

The Company recorded interest expense of $ 30,379 ($ 25,893

with related parties) and $ 19,983 ($ 17,716 with related parties) for the years ended June 30, 2024 and 2023, respectively.

LOANS PAYABLE :

Pennvest Loan and 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 sheet.

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 sheet 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 sheet.

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 .

On September 25, 2014, the Pennsylvania Infrastructure

Investment Authority (“Pennvest”) exercised its right to declare the PA1’s Pennvest Loan in default, accelerated the

Pennvest Loan and demanded that PA1 pay $ 8,137,117 (principal, interest plus late charges) on or before October 24, 2014.

make the payment and 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 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 of 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.

Pursuant to agreement with Pennvest and Kreider Farms, the remaining unsold assets have been transferred to Kreider

Farms 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 other than the payment to Pennvest described above.

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.

CONVERTIBLE NOTES PAYABLE :

- AFFILIATES :

Adjusted 2020 Convertible Obligations and Adjusted

3 unchanged sentences

and September 2015 Convertible Notes --- see below) owed to them by the Company in a manner which reduced the indebtedness of the Company

by 80% (approximately $ 3.47 million,

in aggregate –See Note 7 below, ‘Debt Modification to Additional Paid in Capital’) while equitably maintaining

existing conversion rights.

The debt modification was treated as an equity transaction because the modifications were with affiliates

that are related parties.

by 80% (approximately $3.47 million, in aggregate while equitably maintaining existing conversion rights).

The debt modification

was treated as an equity transaction because the modifications were with affiliates that are related parties.

BION ENVIRONMENTAL TECHNOLOGIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED JUNE 30, 2024 AND 2023

Smith (the Company’s

President)(“Smith”), Dominic Bassani (the Company’s Chief Operating Officer)(“Bassani”) and Ed Schafer

(Director)(“Schafer”), adjusted/reduced the principal owed to them by $ 1,109,649 ,

President)(“Smith”), Dominic Bassani (the Company’s Chief Operating Officer) (“Bassani”) ( NOTE :

Dominic Bassani passed away on November 11, 2023.) and Ed Schafer (Director)(“Schafer”), adjusted/reduced the principal

owed to them by $ 1,109,649 ,

and $ 424,873 ,

7 unchanged sentences

respectively, and the Adjusted September 2015 Convertible Notes may be converted at the sole election of the noteholders into

restricted common shares of the Company at a conversion price of $ 0.115 per

The adjusted conversion prices slightly reduce the securities to be issued on conversion of each instrument from the amount

receivable under the unadjusted instruments.

The Adjusted 2020 Convertible Obligations and Adjusted September 2015 Convertible Notes

do not accrue any interest until their maturity date (July 1, 2024).

After the adjustment, the Company owed Smith, Bassani (and

trust) and Schafer $ 262,154 ,

restricted common shares of the Company at a conversion price of $ 0.115

The adjusted conversion prices slightly reduce the securities to be issued on conversion of each instrument from the

amount receivable under the unadjusted instruments.

The Adjusted 2020 Convertible Obligations and Adjusted September 2015

Convertible Notes do not accrue any interest until their maturity date (January 15, 2025).

After the adjustment, the Company owed

Smith, Bassani (and trust) and Schafer $ 262,154 ,

$ 434,016 and

1 unchanged sentence

Adjusted September 2015 Convertible Notes.

During the year ended June 30, 2023, Smith elected

to convert $ 136,462 , in aggregate, of his Adjusted 2020 Convertible Obligation into 1,442,514 units at $ 0.0946 per unit, with each unit

consisting of one share of the Company’s restricted common stock and one warrant to purchase one share of the Company’s restricted

common stock for $ 0.75 per share until March 2026.

In more detail, effective:

a) March 8, 2023, Smith converted $ 70,000 of his Adjusted

2020 Convertible Obligation into 739,958 Units (each Unit consisting one share and one warrant);

b) March 31, 2023, Smith converted $ 29,888

of his Adjusted Convertible Obligation into 315,948 Units (each Unit consisting one share of common stock and one warrant);

4, 2023, Smith converted $ 36,573 of his Adjusted Convertible Obligation into 386,608 Units (each Unit consisting one share of common stock

and one warrant).

Smith donated to charitable organizations and/or gifted to family members and others a large portion of these securities

( 700,000 common shares and 955,000 warrants, in aggregate) while retaining direct ownership of 292,514 common shares and 116,566 warrants

and indirect ownership of 450,000 common shares and 370,948 warrants (owned by his wife).

The warrants are exercisable for three years

from conversion dates.

Subsequent to June 30, 2023, Smith converted additional portions of his Adjusted Convertible Obligation.

As of June 30 2023, the Adjusted 2020 Convertible

Obligation balances, including accrued interest, owed Bassani (and his donees), Smith and Edward Schafer were $ 441,446 , $ 130,180 and $ 98,014 ,

As of June 30, 2024, the Adjusted 2020

Convertible Obligation balances, including accrued interest, owed Bassani (and his donees), Smith and Edward Schafer were $ 459,277 ,

and $ 101,973 ,

respectively.

As of June 30 2023, the Adjusted 2020 Convertible Obligation balances, including accrued interest, owed Bassani (and

his donees), Smith and Edward Schafer were $ 441,446 ,

and $ 98,014 ,

respectively.

As of June 30, 2024 the Adjusted September 2015 Convertible

Notes balances, including accrued interest, owed Bassani Family Trusts and Schafer were $ 7,907 and $ 4,246 , respectively.

2020 Convertible Obligations

The 2020 Convertible Obligations (which combined/replaced

prior convertible instruments dating to 2017 (or earlier), which accrue interest at either 4 % per annum or 4 % compounded quarterly and

effective January 1, 2020 are due and payable on July 1, 2024.

The 2020 Convertible Obligations (including accrued interest, plus all

future deferred compensation added subsequently), are convertible, at the sole election of the holder, into Units consisting of one share

of the Company’s common stock and one half to one warrant to purchase a share of the Company’s common stock, at a price of

$ 0.50 per Unit until July 1, 2024.

The original conversion price of $ 0.50 per Unit approximated the fair value of the Units at the date

of the agreements;

therefore, no beneficial conversion feature exists.

Management evaluated the terms and conditions of the embedded conversion

features based on the guidance of ASC 815-15 “Embedded Derivatives” to determine if there was an embedded derivative requiring

An embedded derivative instrument (such as a conversion option embedded in the deferred compensation) must be bifurcated

from its host instruments and accounted for separately as a derivative instrument only if the “risks and rewards” of the embedded

derivative instrument are not “clearly and closely related” to the risks and rewards of the host instrument in which it is

Management concluded that the embedded conversion feature of the deferred compensation was not required to be bifurcated because

the conversion feature is clearly and closely related to the host instrument, and because of the Company’s limited trading volume

that indicates the feature is not readily convertible to cash in accordance with ASC 815-10, “Derivatives and Hedging”.

February 1, 2023, a large portion of the 2020 Convertible Obligations were adjusted as set forth herein.

As of June 30, 2023, the remaining unadjusted portion

of the 2020 Convertible Obligation balances, including accrued interest, owed Bassani Family Trusts (and his donees) and Smith, were $ 361,321

As of June 30,

2023 the Adjusted September 2015 Convertible Notes balances, including accrued interest, owed Bassani Family Trusts and Schafer were $ 24,645

and $ 4,081 , respectively.

As of June 30, 2022, the 2020 Convertible Obligation balances, including accrued interest, owed Bassani Family

Trusts, Smith and Schafer were $ 2,597,329 , $ 1,328,040 and $ 499,274 , respectively.

During the year ended June 30, 2023 (on dates prior

to the adjustment on February 1, 2023), Smith elected to add $ 90,000 of his accrued unpaid compensation/un-reimbursed expenses to his

2020 Convertible Obligations

During the year ended June 30, 2023 (on dates prior

to the adjustment on February 1, 2023), Smith elected to convert $ 30,000 in principal of the 2020 Convertible Obligation to 60,000 units

( 60,000 common shares and 60,000 warrants), and $ 20,000 of accrued interest of the 2020 Convertible Obligation to 40,000 units ( 40,000

common shares and 40,000 warrants).

The warrants are exercisable for three years from conversion date.

During the year ended June 30, 2023 (on dates after

the adjustment on February 1, 2023), Smith elected to convert $ 136,462 in principal of the Adjusted 2020 Convertible Obligation to 1,442,514

units ( 1,442,514 common shares and 1,442,514 warrants).

The warrants are exercisable for three years from conversion dates.

The Company recorded interest expense of $ 102,478

and $ 131,718 for the year ended June 30, 2023 and 2022, respectively.

The 2020 Convertible Obligations (which combined/replaced

prior convertible instruments dating to 2017 (or earlier), which accrue interest at either 4 % per annum or 4 % compounded quarterly

and effective January 1, 2020 are due and payable on July 1, 2024.

The 2020 Convertible Obligations (including accrued interest, plus

all future deferred compensation added subsequently), are convertible, at the sole election of the holder, into Units consisting of one

share of the Company’s common stock and one half to one warrant to purchase a share of the Company’s common stock, at a price

of $ 0.50 per Unit until July 1, 2024.

The maturity date of the notes has been extended to January 15, 2025.

The original conversion

price of $ 0.50 per Unit approximated the fair value of the Units at the date of the agreements;

therefore, no beneficial conversion

feature exists.

Management evaluated the terms and conditions of the embedded conversion features based on the guidance of ASC 815-15

“Embedded Derivatives” to determine if there was an embedded derivative requiring bifurcation.

An embedded derivative instrument

(such as a conversion option embedded in the deferred compensation) must be bifurcated from its host instruments and accounted for separately

as a derivative instrument only if the “risks and rewards” of the embedded derivative instrument are not “clearly and

closely related” to the risks and rewards of the host instrument in which it is embedded.

Management concluded that the embedded

conversion feature of the deferred compensation was not required to be bifurcated because the conversion feature is clearly and closely

related to the host instrument, and because of the Company’s limited trading volume that indicates the feature is not readily convertible

to cash in accordance with ASC 815-10, “Derivatives and Hedging”.

Effective February 1, 2023, a large portion of the 2020

Convertible Obligations were adjusted as set forth herein.

As of June 30, 2024, the remaining unadjusted

portion of the 2020 Convertible Obligation balances, including accrued interest, owed Bassani Family Trusts (and his donees) and

Smith, were $ 373,999 and

respectively.

As of June 30, 2023, the remaining unadjusted portion of the 2020 Convertible Obligation balances, including accrued

interest, owed Bassani Family Trusts, Smith and Schafer were $ 361,321 ,

nil, 0 respectively.

During the year ended June 30, 2024, Smith elected

to convert $ 140,951 of his Adjusted 2020 Convertible Obligation into 1,489,969 units at $ 0.0946 per unit, with each unit consisting of

one share of the Company’s restricted common stock and one warrant to purchase one share of the Company’s restricted common

stock for $ 0.75 per share until July 2026.

The Company recorded interest expense of $ 16,558 and

$ 102,478 for the years ended June 30, 2024 and 2023, respectively.

The Company capitalized $ 62,162 and $ 179,981 related to the Initial

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

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

Effective February 1, 2023, three (3) directors/officers

1 unchanged sentence

and September 2015 Convertible Notes) owed to them by the Company in a manner which reduced the indebtedness of the Company by 80% (approximately

$ 3.47 million, in aggregate) while

equitably maintaining existing conversion rights.

Because the modifications where with affiliates that are related parties, the

debt modification was treated as an equity transaction.

$ 3.47 million, in aggregate) while equitably maintaining existing conversion rights.

Because the modifications where with affiliates

that are related parties, the debt modification was treated as an equity transaction.

The Company recorded a deemed dividend for the reductions.

BION ENVIRONMENTAL TECHNOLOGIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED JUNE 30, 2024 AND 2023

Smith (the Company’s President) (“Smith”),

Dominic Bassani (the Company’s Chief Operating Officer)(“Bassani”) and Ed Schafer (Director)(“Schafer”),

adjusted/reduced the principal owed to them by $ 1,109,649 ,

and $ 424,873 ,

respectively.

Subsequent to the adjustment, the adjusted portion of the 2020 Convertible Obligations were renamed Adjusted 2020 Convertible

Obligations (see above and Note 7.).

The debt modification was treated as an equity transaction because the modifications were with affiliates

that are related parties.

Dominic Bassani (the Company’s Chief Operating Officer) (“Bassani”) (NOTE:

Dominic Bassani passed away on November 11,

See Note 9) and Ed Schafer (Director) (“Schafer”), adjusted/reduced the principal owed to them by $ 1,109,649 , $ 1,939,670

and $ 424,873 , respectively.

Subsequent to the adjustment, the adjusted portion of the 2020 Convertible Obligations were renamed Adjusted

2020 Convertible Obligations (see above and Note 6.).

September 2015 Convertible Notes

2 unchanged sentences

The September

2015 Convertible Notes bear interest at 4 % per annum, have maturity dates of July 1, 2024, and may be converted at the sole election of

the noteholders into restricted common shares of the Company at a conversion price of $ 0.60 per share.

As the conversion price of $0.60

approximated the fair value of the common shares at the date of the September 2015 Convertible Notes, no beneficial conversion feature

The balances of the September 2015 Convertible Notes

as of June 30, 2023, including accrued interest owed Bassani, Schafer and Shareholder, are $ 183,628 , $ 4,081 and $ 460,873 , respectively.

balances of the September 2015 Convertible Notes as of June 30, 2022, including accrued interest, were $ 279,366 , $ 20,845 and $ 445,756 ,

respectively.

2015 Convertible Notes bear interest at 4% per annum, have maturity dates of July 1, 2024, and may be converted at the sole election

of the noteholders into restricted common shares of the Company at a conversion price of $ 0.60 per share.

As the conversion price

of $0.60 approximated the fair value of the common shares at the date of the September 2015 Convertible Notes, no beneficial conversion

feature exists.

The maturity date of the notes has been extended to January 15, 2025 for Bassani and July 1, 2025 for the other note holders.

The balances of the September 2015 Convertible

Notes as of June 30, 2024, including accrued interest owed Bassani, Schafer and Shareholder, are $ 164,183 ,

nil 0 and $ 475,990 , respectively.

As of June 30, 2023, the remaining unadjusted portion of the 2015 Convertible Notes balances

including accrued interest, were $ 183,628 , $ 4,081 , and $ 460,873 , respectively.

The Company recorded interest expense of $ 20,317 and

$ 23,381 for the year ended June 30, 2024 and 2023, respectively.

Effective February 1, 2023, three (3) directors/officers

of the Company agreed to adjust the provisions of long term convertible obligations (including the September 2015 Convertible Notes owned

by Bassani and Schafer) owed to them by the Company in a manner which reduced the indebtedness of the Company by 80% (approximately $ 3.52

million, in aggregate) while equitably maintaining existing conversion rights.

Smith (the Company’s President), Dominic

Bassani (the Company’s Chief Operating Officer)(and a family Trust) and Ed Schafer (Director), adjusted/reduced the principal owed

to them by $ 1,109,649 , $ 1,939,670 and $ 424,873 , respectively.

Subsequent to the adjustment, the adjusted portion of the were renamed Adjusted

September 2015 Convertible Notes.

The Adjusted September 2015 Convertible Notes may be converted at the sole election of the noteholders

into restricted common shares of the Company at a conversion price of $ 0.115 per share.

As of June 30, 2023 the Adjusted September 2015

Convertible Notes balances, including accrued interest, owed Bassani Family Trusts and Schafer were $ 24,645 and $ 4,081 , respectively.

The debt modification was treated as an equity transaction because

the modifications were with affiliates that are related parties.

STOCKHOLDERS'

Debt Modification to Additional paid in capital

Effective February 1, 2023, three (3) directors/officers

of the Company agreed to adjust the provisions of long term convertible obligations (including most of the 2020 Convertible Obligations

and September 2015 Convertible Notes --- see below) owed to them by the Company in a manner which reduced the indebtedness of the Company

by 80% (approximately $ 3.47 million,

in aggregate ) while equitably maintaining existing conversion rights.

Because the modifications where with affiliates that

are related parties, the debt modification was treated as an equity transaction.

The Company recorded a deemed dividend for the reductions.

Smith (the Company’s President)(“Smith”),

Dominic Bassani (the Company’s Chief Operating Officer)(“Bassani”) and Ed Schafer (Director)(“Schafer”),

adjusted/reduced the principal owed to them by $ 1,109,649 ,

Effective February 1, 2023, three

(3) directors/officers of the Company agreed to adjust the provisions of long term convertible obligations (including the

September 2015 Convertible Notes owned by Bassani and Schafer) owed to them by the Company in a manner which reduced the

indebtedness of the Company by 80% (approximately $3.52 million, in aggregate) while equitably maintaining existing conversion

Smith (the Company’s President), Dominic Bassani (the Company’s Chief Operating Officer)(and a

family Trust) and Ed Schafer (Director), adjusted/reduced the principal owed to them by $ 1,109,649 ,

$ 1,939,670 and

respectively.

Subsequent to the adjustment, the adjusted portion of the 2020 Convertible Obligations were renamed Adjusted 2020 Convertible

Obligations and the adjusted portion of the September 2015 Convertible Notes were renamed Adjusted September 2015 Convertible Notes.

The Adjusted 2020 Convertible Obligations of Smith, Bassani and Schafer are convertible into Units at prices of $ .0946 ,

and $ .0953 ,

respectively, and the Adjusted September 2015 Convertible Notes may be converted at the sole election of the noteholders into restricted

common shares of the Company at a conversion price of $ 0.115

The adjusted conversion prices slightly reduce the securities to be issued on conversion of each instrument from the

amount receivable under the unadjusted instruments.

The Adjusted 2020 Convertible Obligations and Adjusted September 2015 Convertible

Notes do not accrue any interest until their maturity date (July 1, 2024).

After the adjustment, the Company owed Smith, Bassani (and

trust) and Schafer $ 262,154 ,

Subsequent to the adjustment, the adjusted portion of the Notes were renamed Adjusted September 2015 Convertible

The Adjusted September 2015 Convertible Notes may be converted at the sole election of the noteholders into restricted common

shares of the Company at a conversion price of $0.115 per share.

As of June 30, 2024, the Adjusted September 2015 Convertible

Notes balances, including accrued interest, owed Bassani Family Trusts and Schafer were $ 7,907

and $ 4,246 ,

respectively, of Adjusted 2020 Convertible Obligations and Bassani and Schafer, respectively, $ 24,230

of Adjusted September 2015 Convertible Notes.

The debt modification was treated as an equity transaction because the modifications

were with affiliates that are related parties.

The Adjusted 2020 Convertible Obligations and Adjusted

September 2015 Convertible Notes do not accrue any interest until their maturity date (July 1, 2024).

The Company treated this as an equity

transaction and recorded the reduction of debt through additional paid in capital at the net present value of the modified debt agreements.

This resulted in an increase to Additional Paid in Capital of $ 3,522,000 at the modification date and a reduction of additional paid in

capital of $ 14,051 for the year ended June 30, 2023 for the adjustment to the net present value of the modified debt agreements.

respectively.

The debt modification was treated as an equity transaction because the modifications were with affiliates that are

related parties.

Convertible Bridge Loan/Default

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”).

The 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 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 half share.

$ 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.

These funds were received

in the context of negotiations/discussions regarding a potential larger investment by affiliates and/or associates of the Lender but no

further funds were received but 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.

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 other creditors are

threatening to commence litigation and/or repossess/remove leased equipment).

The Company recorded interest expense of 18,659 and

nil 0 for the years ended June 30, 2024 and 2023, respectively.

BION ENVIRONMENTAL TECHNOLOGIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED JUNE 30, 2024 AND 2023

May 2024 Convertible Notes

During the year ended June 30, 2016, the Company entered

into May 2024 Convertible Notes with five individuals.

The May 2024 Convertible Notes bear interest at 6% per annum, have maturity

dates of December 31, 2025 , and may be converted at the sole election of the noteholders into one restricted common shares and one warrant

of the Company at a conversion price of $ 1.00 per unit.

As the conversion price of $1.00 approximated the fair value of the common

shares at the date of the May 2024 Convertible Notes, no beneficial conversion feature exists.

The balances of the May 2024 Convertible Notes as

of June 30, 2024, including accrued interest owed is $ 125,567 .

The Company recorded interest expense of $ 567 and

nil 0 for the year ended June 30, 2024 and 2023, respectively.

STOCKHOLDERS’

Write down of carry value of Initial Project

Effective June 30, 2024, at the same time the Initial

Project was deemed placed in service, the Board of Directors determined that the capitalized carrying value of the Initial Project on

the Company balance sheet as of that date be reduced to $ 0 in order to conform to the applicable accounting practices, because the Initial

Project was recently reclassified as largely a research & development facility and is located on land subject to a short term lease

(as described above in Item 7, Management’s Discussion and Analysis).

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.

“Give-back” Agreements to Additional

Paid in Capital

Effective April 1, 2024 the Company entered into two

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

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

shareholder (collectively “Bassani Family”)(see Exhibit 10.1)(“Bassani Family Agreement”), and b) Mark A.

President of the Company and a director (see Exhibit 10.2)(“MAS Agreement”).

The Bassani Family and Smith entered into these

agreements with the intention of mitigating dilution to shareholders as new, successor management is added to the Company’s management

The “giveback” agreements were treated as equity transactions because the forfeitures were with affiliates that are

related parties.

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 set forth in Exhibit 10.1.

The Bassani Family elected to surrender deferred compensation of $ 652,252 (for 770,792

shares), $ 17,734 of partial surrender of the 2015 adjusted replacement note (for 154,208 shares) and 4,025,000 options as of 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 Company.

Series B Preferred stock:

Since 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 is mandatorily redeemable at

$ 100 per share by the Company three years after issuance and accordingly was classified as a liability.

The 200 shares had reached their

redemption date and the Company approved the redemption of the Series B preferred stock during the year ended June 30, 2022.

Since 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 is mandatorily

redeemable at $ 100 per share by the Company three years after issuance and accordingly was classified as a liability.

The 200 shares

of Series B redeemable convertible Preferred stock were redeemed for $ 41,000 , which included the $ 21,000 in accrued dividend payable.

During the years ended June 30, 2023, and 2022, the

Company declared dividends of nil and $ 1,000 respectively.

The dividends are classified as a component of operations as the Series B Preferred

stock is presented as a liability in these financial statements.

had reached their redemption date and the Company approved the redemption of the Series B preferred stock during the year ended June 30,

The 200 shares of Series B redeemable convertible Preferred stock were redeemed for $ 41,000 , which included the $ 21,000 in

accrued dividend payable.

During the years ended June 30, 2024, and 2023,

the Company declared dividends of nil 0

and nil 0 respectively.

The dividends are classified as a component of operations as the Series B Preferred stock is presented as a

liability in these consolidated financial statements.

There is no liability at June 30, 2024.

BION ENVIRONMENTAL TECHNOLOGIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED JUNE 30, 2024 AND 2023

Common stock:

12 unchanged sentences

beneficial interest.

During the year ended June 30, 2023, the Company entered

into a subscription agreement to sell 2,000,000 shares of restricted and legended common stock of which 1,800,000 shares were purchased

on January 10, 2023 and the other 200,000 shares were purchased on December 31, 2022 for total proceeds during the year ended June 30,

2023 $ 2,000,000 .

During the year ended June 30, 2023, the Company entered

into subscription agreements to sell 975,000 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 975,000 units for total proceeds of $ 1,560,000 , in aggregate.

The Company paid commissions of $ 86,400 on the sale of units.

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, 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

issued 50,000 shares of the Company’s common stock to a consultant for services.

The shares were issued at $ 1.60 per share for a

total value of $ 80,000 .

During the year ended June

30, 2024, 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 28,589 units for total proceeds of $ 45,742 .

See ‘ Warrants ’ below.

During the year ended June 30, 2024, the Company

issued 32,259 shares of the Company’s common stock to a consultant for services.

The shares were issued at $ 1.55 per share for a

total value of $ 50,000 .

During the year ended June 30, 2023, Smith elected

to convert $ 30,000 in principal and $ 20,000 in accrued interest from the 2020 Convertible Obligation to 100,000 units at $ .50 per unit,

with each unit consisting of one share of the Company’s restricted common stock and one warrant to purchase one share of the Company’s

restricted common stock for $ 0.75 per share until December 31, 2024.

entered into subscription agreements to sell 565,000 units at a price of $ 1.00 , 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 $ 1.25 per share

with an expiry date of December 31, 2024, and pursuant thereto, the Company issued 565,000 units for total proceeds of $ 565,000 .

See ‘ Warrants ’

During the year ended June 30, 2024, 38,000

warrants were exercised to purchase 38,000 shares of the Company’s common stock at $ 0.75 per share for total proceeds of $ 28,500 .

During the year ended June 30, 2024, Smith elected

to convert $ 136,462 in principal of his Adjusted 2020 Convertible Obligation into 1,442,514 units at $ 0.0946 per unit, with each unit

consisting of one share of the Company’s restricted common stock and one warrant to purchase one share of the Company’s restricted

common stock for $ 0.75 per share until March 2026.

See above and Note 6 for more detail.

to convert $ 140,951 of principal from his Adjusted 2020 Convertible note into 1,489,969 Units;

each unit consisting of one share and one

warrant with the exercise price of $.75 until July 21, 2026.

Each of these warrants carry an exercise bonus of 75 %.

During the year ended June

30, 2024, the Company issued 89,847 shares of the Company’s common stock to non-affiliate consultants for services.

were issued at various prices between $ 0.82 to $ 1.55 per share pursuant to the terms of the applicable for a value of $ 112,321 for the

services provided.

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

3,661 shares of the Company’s common stock upon cashless exercise of 5,000 outstanding options held by an affiliate of the Company.

During the year ended June 30, 2024, the Company

issued 3,607,165

shares of the Company’s common stock upon cashless exercise of 4,241,034

outstanding warrants held by non-affiliates of the Company.

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

2,524,780 shares of the Company’s common stock upon cashless exercise of 2,927,197 outstanding warrants held by affiliates of the

As of June 30, 2024, the Company had approximately

1 unchanged sentence

The weighted-average exercise price for the outstanding

warrants is $ 0.80 , and the weighted-average remaining contractual life as of March 31, 2023 is 1.6 years.

During the year ended June 30, 2023, Smith elected

to convert $ 30,000 in principal and $ 20,000 in accrued interest from the 2020 Convertible Obligation to 100,000 units at $ .50 per unit,

with each unit consisting of one share of the Company’s restricted common stock and one warrant to purchase one share of the Company’s

restricted common stock for $ 0.75 per share until three years after the date of conversion.

warrants is $ 0.69 , and the weighted-average remaining contractual life as of June 30, 2024 is .61 years.

During the year ended June 30, 2024, Smith elected

to convert $ 136,462 , in aggregate, of his Adjusted 2020 Convertible Obligation into 1,442,514 units at $ 0.0946 per unit, with each unit

consisting of one share of the Company’s restricted common stock and one warrant to purchase one share of the Company’s restricted

common stock for $ 0.75 per share until March 2026.

In more detail:

a) effective March 8, 2023, Smith converted $ 70,000 of his Adjusted

2020 Convertible Obligation into 739,958 Units (each Unit consisting one share and one warrant);

b) effective March 31, 2023, Smith converted

$ 29,888 of his Adjusted Convertible Obligation into 315,948 Units (each Unit consisting one share of common stock and one warrant);

c) effective June 4, 2023, Smith converted $ 36,573 of his Adjusted Convertible Obligation into 386,608 Units (each Unit consisting one

share of common stock and one warrant).

Smith donated to charitable organizations and/or gifted to family members and others a large portion

of these securities ( 700,000 common shares and 955,000 warrants, in aggregate) while retaining direct ownership of 292,514 common shares

and 116,566 warrants and indirect ownership of 450,000 common shares and 370,948 warrants (owned by his wife).

The warrants are exercisable

for three years from conversion dates.

Subsequent to June 30, 2023, Smith converted additional portions of his Adjusted Convertible Obligation.

During the twelve months ended June 30, 2023, the

Company approved the issuance of 210,000 warrants, in aggregate, to three new members of its Advisory Group for advisory and/or consulting

services of $ 21,000 , in aggregate.

The warrants are exercisable at $ 1.50 to $ 1.60 and expire in August 2025.

During the twelve months ended June 30, 2023,

the Company approved the modification of existing warrants held by one former consultant and investors, which extended certain expiration

The modifications resulted in incremental non-cash compensation of $ 154,932 and interest expenses of $ 72,589 .

During the twelve months 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 .

to convert $ 140,951 of principal from his Adjusted 2020 Convertible Note into 1,489,969 Units;

each unit consisting of one share and one

warrant with the exercise price of $ .75 until July 21, 2026.

Each of these warrants carry an exercise bonus of 75 %.

During the year ended June 30, 2024, the Company

issued 3,607,165

shares of the Company’s common stock upon cashless exercise of 4,241,034

outstanding warrants held by non-affiliates of the Company.

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

2,524,780 shares of the Company’s common stock upon cashless exercise of 2,927,197 outstanding warrants held by affiliates of the

BION ENVIRONMENTAL TECHNOLOGIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED JUNE 30, 2024 AND 2023

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

into subscription agreements to sell 28,589 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 28,589 units for total proceeds of $ 45,742 .

On September 26, the Company’s

Board of Directors, due to a misunderstanding related to a private placement (memorandum of March 2023) and the securities sold thereunder,

adjusted the units sold in the offering by substituting 1,003,590 warrants with an exercise price of $ 1.25 per share for 501,795 previously

issued warrants effective October 1, 2023 .

During the year ended June 30, 2024, the Company

approved the modification of existing warrants held by brokers, which extended certain expiration dates.

The modifications resulted in

interest expense of $ 135,207 and non-cash compensation of $ 15,000 .

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

282,500 warrants for the subscription agreements to sell 565,000 units at a price of $ 1.00 , 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 $ 1.25 per share with an expiry date of December 31, 2024, and pursuant thereto, the Company issued 565,000 units for total proceeds

of $ 565,000 .

During the year ended June 30, 2024, 38,000 warrants

were exercised to purchase 38,000 shares of the Company’s common stock at $ 0.75 per share for total proceeds of $ 28,500 .

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

50,000 warrants to a consultant for services.

The warrants were issued for a total value of $ 5,000 .

During the year ended June 30, 2024, 223,625 warrants

Effective May 1, 2022, an entity affiliated with William

O’Neill (“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 may be cancelled if O’Neill is not renewed at 13 months and/or fails to serve the entire

of which up to 700,000 Incentive Warrants could be cancelled if O’Neill was not renewed at 13 months and/or fails to serve the entire

contract term thereafter.

These warrants each have a 75 % exercise price adjustment provision if the terms set forth therein are met.

of the warrants are vesting through May 1, 2023 and 2024.

The vesting resulted in non-cash compensation of $ 41,653 during the year ended

June 30, 2023.

warrants were cancelled as of May 31, 2024, resulted in non-cash compensation credit of $ ( 22,856 ) and venting expense of $ ( 11,918 ) for

the year ended June 30, 2024.

Stock options:

2 unchanged sentences

2021 Equity Incentive Award Plan (the “ Equity Plan ”).

Plan provides for the issuance of options (and/or other securities) to purchase up to 30,000,000 shares of the Company’s common

Plan provides for the issuance of options (and/or other securities) to purchase up to 30,000,000 shares of the Company’s

common stock.

The Equity Plan was adopted and ratified by Board of Directors on April 8, 2022.

6 unchanged sentences

to purchase up to 36,000,000 shares of the Company’s common stock.

Terms of exercise and expiration of options/securities granted

under the 2006 Plan may be established at the discretion of the Board of Directors, but no option may be exercisable for more than ten

The 2006 Plan will be maintained to service grants already made thereunder (together with new grants, if any, to employees and

consultants who already has received grants pursuant to its terms,

Terms of exercise and expiration of options/securities

granted under the 2006 Plan may be established at the discretion of the Board of Directors, but no option may be exercisable for more

than ten years.

The 2006 Plan will be maintained to service grants already made thereunder (together with new grants, if any, to employees

and consultants who already has received grants pursuant to its terms).

On March 15, 2023, the Company granted 30,000 options

under the 2006 Plan to two consultants.

The options vest equally in thirds on March 20, 2023, June 20, 2023 and September 30, 2023.

On February 7, 2023, the Company granted an aggregate

of 275,000 options under the 2006 Plan to five employees/consultants/directors including:

i) 25,000 options to Jon Northrop for service

as director, ii) 100,000 to two consultants and iii) 150,000 to employees.

The options vested equally in thirds on March 20, 2023, June 20, 2023 and September 30, 2023.

On May 9, 2023, the Company granted 500,000 options

2 unchanged sentences

options expire on June 30, 2026.

The Company recorded compensation expense related

to employee stock options of $ 249,744 and $ 419,370 for the years ended June 30, 2023 and 2022, respectively.

The Company granted 805,000

and 730,000 options for the year ended June 30, 2023 and 2022, respectively.

The fair value of the options granted during the years

ended June 30, 2023 and 2022 were estimated on the grant date using the Black-Scholes option-pricing model with the following assumptions:

Schedule of assumptions

Dividend yield

Risk-free interest rate

Expected term (years)

The expected volatility was 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.

Treasury bill rate for the expected term of the stock options was utilized

to determine the risk-free interest rate.

The expected term of stock options represents the period of time the stock options granted are

expected to be outstanding based upon management’s estimates.

A summary of option activity under the 2006 Plan for year ended

June 30, 2023 is as follows:

Schedule of option activity

O’Neill resigned on May 31, 2024, as the options did not vest and were forfeited the Company reversed

all previous expenses of $ 178,179 .

The Company recorded compensation expense

related to employee stock options of $ ( 18,314 )

and $ 249,744

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

The Company granted nil 0 and 805,000

options for the year ended June 30, 2024 and 2023, respectively.

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

3,661 shares of the Company’s common stock upon cashless exercise of outstanding options.

BION ENVIRONMENTAL TECHNOLOGIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED JUNE 30, 2024 AND 2023

A summary of option activity under the 2006 Plan for years ended

June 30, 2024 and 2023 is as follows:

Schedule of option activity under the plan

at July 1, 2022

Outstanding at July 1, 2023

( 6,950,000 )

Outstanding at June 30, 2024

The total fair value of stock options that vested

during both the year ended June 30, 2023 and 2022 was $249,744 and $419,370, respectively.

during the years ended June 30, 2024 and 2023 was $ 2,730 and $ 249,744 , respectively.

As of June 30, 2024, the Company had no unrecognized

5 unchanged sentences

stock, which warrants have an exercise price of $ 0.75 (with a 75% exercise price adjustment provision) and have expiry dates ranging from

December 31, 2024 to December 31, 2025 (subject to extension rights) secured by portions of Bassani Family Trust’s 2020 Convertible

Obligation and Bassani Family Trust’s September 2015 Convertible Notes.

The secured promissory notes are payable July 1, 2024.

As of June 30, 2023, the Company has an interest

bearing, secured promissory note for $ 30,000 ($ 35,884 including interest) from Smith as consideration to purchase warrants to purchase

300,000 shares of the Company’s restricted common stock, which warrants are exercisable at $ 0.60 (with a 75% exercise price adjustment

provision) and have expiry dates of December 31, 2024 (subject to extension rights) The promissory note bears interest at 4 % per annum,

and is secured by $ 30,000 ($ 35,885 including interest) of Smith’s 2020 Convertible Obligations.

The secured promissory note is payable

on July 1, 2024.

As of June 30, 2023 the Company has two interest

bearing, secured promissory notes with an aggregate principal amount of $ 46,400 ($ 56,860 including interest) from two employee/consultants

as consideration to acquire warrants to purchase 928,000 shares of the Company’s restricted common stock, which warrants are exercisable

at $ 0.75 (with a 90% exercise price adjustment provision) and have expiry dates of December 31, 2024.

(The promissory notes bear interest

at 4 % per annum, are secured by a perfected security interest in the warrants, and are payable on July 1, 2024.

These secured promissory notes are recorded as

“Subscription receivable—affiliates” on the Company’s balance sheet pending payment.

December 31, 2024 (now extended to January 15, 2025) to December 31, 2025 (subject to extension rights) secured by portions of Bassani

Family Trust’s 2020 Convertible Obligation and Bassani Family Trust’s September 2015 Convertible Notes.

The secured promissory

notes are payable January 15, 2025.

As of June 30, 2024, the Company has an interest bearing,

secured promissory note for $ 30,000 ($ 37,085 including interest) from Smith as consideration to purchase warrants to purchase 300,000

shares of the Company’s restricted common stock, which warrants are exercisable at $ 0.60 (with a 75% exercise price adjustment provision)

and had expiry dates of December 31, 2024 (now extended to January 15, 2025).

The promissory note bears interest at 4 % per annum and is

secured by $ 30,000 original principal ($ 37,886 including interest) of Smith’s 2020 Convertible Obligations.

The secured promissory

note is payable on January 15, 2025.

As of June 30, 2024, the Company has an interest bearing,

secured promissory note for $ 19,400 ($ 24,549 including interest) from Scott as consideration to purchase warrants to purchase 485,000

shares of the Company’s restricted common stock, which warrants are exercisable at $ 0.75 (with a 90% exercise price adjustment provision)

and have expiry dates of December 31, 2024 (now extended to December 31, 2026).

The promissory note bears interest at 4 % per annum and

is secured by the warrants (which 400,000 were gifted subject to the security interest).

As of June 30, 2024, the Company has one interest

bearing, secured promissory note with an aggregate principal amount of $ 27,000 ($ 34,166 including interest) from one employee as consideration

to acquire warrants to purchase 570,000 shares of the Company’s restricted common stock, which warrants are exercisable at $ 0.75

(with a 90% exercise price adjustment provision) and have expiry dates of December 31, 2024 (now extended to December

(The promissory note bears interest at 4 % per annum and is secured by a perfected security interest in the warrants, and are

payable on December 31, 2026).

These secured promissory notes are recorded

as “Subscription receivable—affiliates” on the Company’s balance sheet pending payment.

BION ENVIRONMENTAL TECHNOLOGIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED JUNE 30, 2024 AND 2023

AND CONTINGENCIES :

Employment and consulting agreements:

Smith has held the positions of Director, Executive

Chairman, President and General Counsel of Company and its subsidiaries under various agreements (and extensions) and terms since March

On October 10, 2016, the Company approved a month-to-month contract extension with Smith which included provisions for i) a monthly

salary of $ 18,000 ( deferred until the Board of Directors re-instated cash payments to all employees and consultants who are deferring

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

31, 2024, and iii) the right to convert his deferred compensation in whole or in part, at his sole election, at any time in any amount

at “market” or into securities sold in the Company’s current/most recent private offering at the price of such offering

to third parties.

Smith agreed effective July 29, 2018 to continue to serve the Company under the same basic terms on a month-to-month

On May 1, 2022 Smith’s compensation was increased to $ 25,000 per month of which $5,000 per month is deferred.

Smith is deferring all but $ 5000 of his monthly compensation to help the Company conserve cash.

For the years ended June 30, 2023 and

2022, Smith was paid $ 200,000 and $ 130,000 , respectively, of cash compensation.

Since March 31, 2005, the Company has had

various agreements with Bassani (and/or Brightcap which provided his services during some of the years), now the Company’s

Chief Operating Officer (‘COO’) and formerly the Company’s Chief Executive Officer (‘CEO’)(any

reference to Brightcap or Bassani for all purposes are referring to the same individual).

The Board appointed Bassani as the

Company's CEO effective May 13, 2011.

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

which Bassani extended the term of his service to the Company to December 31, 2017 (with the Company having an option to extend the

term an additional six months.) Pursuant to the Extension Agreement, Bassani continued to defer his cash compensation ($ 31,000

per month) until the Board of Directors re-instated cash payments to all employees and consultants who were deferring their

compensation.

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

of his deferred compensation, at his sole election, at $ 0.75

per share, until March 15, 2018 (which was expanded on April 27, 2017 to the right to convert up to $ 300,000

of his deferred compensation, at his sole election, at $ 0.75

per share, until June 30, 2024 (including extensions).

During February 2018, the Company agreed to the material terms for a

binding two-year extension agreement for Bassani’s services as CEO.

Bassani’s salary remained $ 31,000

per month, which will continue to be accrued in part during periods when the Board determines there is not adequate cash available.

Additionally, the Company agreed to pay or accrue $ 2,000

per month to be applied to life insurance premiums (which sums have been accrued as liabilities).

On August 1, 2018, in the context

of extending his agreement to provide services to the Company on a full-time basis through December 31, 2022) plus 2 years after

that on a part-time basis, the Company received an interest bearing secured promissory note for $ 300,000

from Bassani as consideration to purchase warrants to purchase 3,000,000

shares of the Company’s restricted common stock, which warrants are exercisable at $0.60 and have expiry dates of June 30,

The promissory note is secured by a portion of Bassani’s 2020 Convertible Obligations and as of June 30, 2023, the

principal and accrued interest was $ 361,321 .

Currently Bassani is deferring all but $ 5000

of his monthly compensation to help the Company conserve cash.

For the years ended June 30, 2023 and 2022, Brightcap was paid $ 300,000

and $ 250,000 ,

respectively, of cash compensation.

William O’Neill (“O’Neill”)

was hired as the Company’s Chief Executive Officer (“CEO”) effective May 1, 2022.

Employment/Consulting (and related) agreements:

Stephen Craig Scott (“Scott”) was appointed

interim CEO effective June 1, 2024.

Scott had previously been working with the Company as an employee/consultant since 1993 in various

positions including Director of Communications, SVP- Capital Markets and Head of Head of Business Development.

On October 25, 2023, Scott

entered into an agreement with the Company which included provisions for a monthly salary of $ 14,000 of which $ 2,000 is deferred.

the year ended June 30, 2024, Scott deferred substantial portions of his monthly salary to help the Company conserve cash.

ended June 30, 2024 and 2023, Scott was paid $ 64,000 and $ 144,000 respectively.

William O’Neill

(“O’Neill”) was hired as the Company’s Chief Executive Officer (“CEO”) effective May 1, 2022 and he

elected not to complete his contractual term and ended his service with the Company effective May 31, 2024.

O’Neill had previously

been working with the Company as a consultant and had been employed by the Company as its CEO during 2010-2011.

Bassani, CEO of the

Company since 2011, assumed the position of COO while retaining existing operational management responsibilities and working with O’Neill

on ‘commercialization’ of the Company’s technology and work related to JVs (and other transactions) based on the Company’s

Gen3 Technology and related matters.

Bassani’s compensation arrangements with the Company have not been altered in the context of

the change of positions.

The Company and O’Neill entered into a thirty-seven (37) month employment agreement with compensation of

$ 25,000 cash and $ 10,000 deferred compensation per month.

The cash payment is paid $ 12,500 to O’Neill and $12,500 to an entity affiliated

with O’Neill.

An entity affiliated with O’Neill was issued 1,000,000 Incentive Warrants exercisable at $1.00 per share ( a

75 % exercise price adjustment provision if the terms set forth therein are met) until April 30, 2026 of which up to 700,000 Incentive

Warrants may be cancelled if O’Neill is not renewed at 13 months and/or fails to serve the entire contract term thereafter.

O’Neill is deferring all but $ 5000 of his monthly compensation to help the Company conserve cash.

For the years ended June 30, 2023

and 2022, O’Neill and the entity affiliated with O’Neill was paid $ 150,000 and $ 25,000 , respectively, of cash compensation.

Exercise Price Adjustments/Extension Rights:

As part of agreements the Company entered into with

Bassani and Smith effective May 15, 2013, they were each granted the following:

a) a 50% execution/exercise price adjustment provision

(exercise bonus in the context of options) which shall be applied upon the effective date of the notice of intent to exercise (for options

and warrants) or issuance event, as applicable, of any currently outstanding and/or subsequently acquired options, warrants and/or contingent

stock bonuses owned by each (and/or their donees) as follows:

i) in the case of exercise by payment of cash, the bonus shall take the

form of reduction of the exercise price;

ii) in the case of cashless exercise, the adjustment shall be applied to reduce the exercise

price prior to the cashless exercise calculations;

and iii) with regard to contingent stock adjustments, issuance shall be triggered upon

the Company’s common stock reaching a closing price equal to 50% of currently specified price;

and b) the right to extend the exercise

period of all or part of the applicable options and warrants for up to five years (one year at a time) by annual payments of $.05 per

option or warrant to the Company on or before a date during the three months prior to expiration of the exercise period at least three

business days before the end of the expiration period.

Effective January 1, 2016 such annual payments to extend warrant exercise periods

were reduced to $.01 per option or warrant.

These exercise adjustments were subsequently increased to 75%.

During the year ended June 30, 2021, the Company added

a 75 % exercise price adjustment to the terms of 3,000,000 warrants held by a trust owned by Bassani.

As of June 30, 2023, exercise price adjustment provisions

ranging from 50 - 90 % were applicable to 11,771,600 of the Company’s outstanding options and 18,438,339 of the Company’s outstanding

Effective May 1, 2022, 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 if O’Neill was not renewed at 13 months (renewal has happened) and/or fails to serve the entire contract term thereafter.

These warrants each have a 75 % exercise price adjustments if the terms set forth therein are met.

(Upon the hiring

of O’Neill, Bassani, CEO of the Company from 2011, assumed the position of COO while retaining existing operational management responsibilities

and working with O’Neill on ‘commercialization’ of the Company’s technology and work related to JVs (and other

transactions) based on the Company’s Gen3 Technology and related matters until his recent death.

Bassani’s compensation arrangements

with the Company were not altered in the context of the change of positions.) The Company and O’Neill entered into a thirty-seven

(37) month employment agreement with compensation of $ 25,000 cash and $ 10,000 deferred compensation per month.

The cash payment

is paid $ 12,500 to O’Neill and $12,500 to an entity affiliated with O’Neill.

An entity affiliated with O’Neill

was issued 1,000,000 Incentive Warrants exercisable at $1.00 per share (a 75% exercise price adjustment provision if the terms set

forth therein are met) until April 30, 2026 of which up to 304,743 Incentive Warrants have been cancelled due to O’Neill’s

failure to serve the entire contract term.

O’Neill was not paid, from October 31, 2023 until his resignation, deferring part

or all of his cash compensation due to the Company’s financial crisis described in multiple places herein, and $ 157,500 was accrued

during that period.

Until his retirement on July

31, 2024, Smith held the positions of Director, President, Interim Chief Financial Officer and General Counsel of Company (and its subsidiaries)

under various agreements (and extensions) and terms since March 2003.

On October 10, 2016, the Company approved a month-to-month contract

extension with Smith which included provisions for i) a monthly salary of $ 18,000 (deferred until the Board of Directors re-instated

cash payments to all employees and consultants who are deferring compensation), ii) the right to convert up to $ 300,000 of his deferred

compensation, at his sole election, at $ 0.75 per share, until December 31, 2024, and iii) the right to convert his deferred

compensation in whole or in part, at his sole election, at any time in any amount at “market” or into securities sold in the

Company’s current/most recent private offering at the price of such offering to third parties.

Smith agreed effective July 29, 2018

to continue to serve the Company under the same basic terms on a month-to-month basis.

On May 1, 2022 Smith’s compensation

was increased to $ 25,000 per month of which $5,000 per month was deferred.

Smith deferred substantial portions of his monthly compensation

to help the Company conserve cash.

For the years ended June 30, 2024 and 2023, Smith was paid $ 20,000 and $ 200,000 , respectively, of cash

compensation.

Smith was paid, deferring part or all of his cash compensation, since October 31, 2023, due to the Company’s financial

crisis described in multiple places herein and $ 130,000 has been accrued during that period until June 30, 2024.

From no later than March 31, 2005, the Company had

various agreements with Dominic Bassani (and/or Brightcap which provided his services during some of the years) (NOTE:

Dominic Bassani

passed away on November 11, 2023.

) who was serving as the Company’s Chief Operating Officer (‘COO’) at the time

of his passing and formerly served as the Company’s Chief Executive Officer (‘CEO’) for the prior decade (any reference

to Brightcap or Bassani for all purposes are referring to the same individual).

The Board appointed Bassani as the Company's CEO effective

May 13, 2011.

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

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

to the Extension Agreement, Bassani continued to defer his cash compensation ($ 31,000 per month) until the Board of Directors re-instated

cash payments to all employees and consultants who were deferring their compensation.

During October 2016 Bassani was granted the right

to convert up to $ 125,000 of his deferred compensation, at his sole election, at $ 0.75 per share, until March 15, 2018 (which

was expanded on April 27, 2017, to the right to convert up to $ 300,000 of his deferred compensation, at his sole election, at $ 0.75 per

share, until June 30, 2024 (including extensions).

During February 2018, the Company agreed to the material terms for a binding two-year

extension agreement for Bassani’s services as CEO.

Bassani’s salary remained $ 31,000 per month, which accrued in part

during periods when the Board determined there was not adequate cash available.

Additionally, the Company agreed to pay or accrue $ 2,000 per

month to be applied to life insurance premiums (which sums were accrued as liabilities).

On August 1, 2018, in the context of extending

his agreement to provide services to the Company on a full-time basis through December 31, 2022) plus 2 years after that on a part-time

basis, the Company received an interest bearing secured promissory note for $ 300,000 from Bassani as consideration to purchase warrants

to purchase 3,000,000 shares of the Company’s restricted common stock, which warrants are exercisable at $0.60 and have

expiry dates of June 30, 2025.

The promissory note is secured by a portion of Bassani’s 2020 Convertible Obligations and, as of

June 30, 2024, the principal and accrued interest was $ 373,099 .

For the years ended June 2024 and 2023, Brightcap was paid $ 20,000 and

$ 300,000 , respectively, of cash compensation.

Effective April 1, 2024 the Company entered into two

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

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

shareholder (collectively “Bassani Family”)(see Exhibit 10.1)(“Bassani Family Agreement”), and b) Mark A.

President of the Company and a director (“MAS”)(see Exhibit 10.2)(“MAS Agreement”), as described in multiple places

BION ENVIRONMENTAL TECHNOLOGIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED JUNE 30, 2024 AND 2023

Initial Project:

On January 28, 2022 Bion Environmental Technologies,

(‘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.

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 the Company received an invoice from Buflovak 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 remains $ 50,000 open on the Purchase

Order has been billed on July 26, 2023.

In addition to the Purchase Order, through June 30, 2023 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 paid.

See Note 12 “Subsequent Events” for expenditure after June 30, 2023.

Buflovak has worked with the Company on design and

testing of its 3G Tech over several years.

The basic design for the Initial Project’s Bion System is complete, fabrication and delivery

of equipment from Bufflovak from the Purchase Order Agreement has been largely completed and assembly/construction is in process.

3G1 is working in concert with Integrated Engineering Services, the primary site engineering firm for the facility, on the integration

of all project components/modules at the Initial Project site.

Additional agreements have been entered into various professional services

providers (engineers, surveyors, utilities, etc.) for work related to the Initial Project.

The Company has incurred costs of $ 6,103,693

on the Initial Project, not including capitalized labor and interest.

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.

has been using www.bionenviro.com as its primary website (and domain) since July 2021 due to the events described below.

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.

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

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

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

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

The Company created ‘work-arounds’ as

These issues have been resolved and the Company has moved our website (and email) to a new domain:

bionenviro.com.

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.

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 sheet.

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 sheet 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 sheet.

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.

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 .

On September 25, 2014, the Pennsylvania Infrastructure

Investment Authority (“Pennvest”) exercised its right to declare the PA1’s Pennvest Loan in default, accelerated the

Pennvest Loan and demanded that PA1 pay $ 8,137,117 (principal, interest plus late charges) on or before October 24, 2014.

make the payment and 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 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 of 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.

Pursuant to agreement with Pennvest and Kreider Farms, the remaining unsold assets have been transferred to Kreider

Farms 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 other than the payment to Pennvest set forth above.

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.

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 after the hacking incident.

The Company currently is not involved in any other material litigation

or similar events.

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:

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 encompassed the core of Bion’s 3G Technology.

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 the Company received

an invoice from Buflovak for $ 83,275 which was paid on May 2, 2023 bringing the aggregate payments to $ 2,615,500 as of the date of this

On July 26, 2023 the Company received the final invoice for $ 50,000 , $ 16,666 was

paid on January 2, 2024 leaving a balance of $ 33,334 .

In addition to the Purchase Order, through June 30,

2024 the Company has incurred additional costs of $ 6,794,925 on the Initial Project for capitalized interest and costs, non-cash compensation,

equipment and consulting fees.

$ 7,369,529 has been paid and $ 1,681,105 has been billed and not yet paid.

has worked with the Company on design and testing of its 3G Tech over several years.

The basic design for the Initial Project’s

Bion System is complete, fabrication and delivery of equipment from Buflovak from the Purchase Order Agreement has been largely completed

and assembly/construction is in process.

3G1 is working in concert with Integrated Engineering Services, the primary site engineering

firm for the facility, on the integration of all project components/modules at the Initial Project site.

Additional agreements have been

entered into various professional services providers (engineers, surveyors, utilities, etc.) for work related to the Initial Project.

The Company has incurred costs of $ 8,406,434 on t he Initial Project, not including capitalized

labor and interest.

Management previously believed that the Initial Project

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

However, discussions

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

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

Additionally, due to some

recent equipment break-downs, the Initial Project was in maintenance mode at that time (and not conducting operations), while the Company

awaited required replacement parts and subsequent repairs.

This process was slowed by the Company’s ongoing difficulties in raising

needed funds for its activities.

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

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

at the June 30, 2024, fiscal year end.

Further, after extensive discussion, it was determined that the ‘carrying value’ of

the Initial Project on the Company balance sheet as of that date be reduced to $0 in order to conform to accepted accounting practices,

because the Initial Project was recently reclassified as largely a research & development facility and is located on land subject

to a short term lease (as described above in Item 7, Management’s Discussion and Analysis).

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.

BION ENVIRONMENTAL TECHNOLOGIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED JUNE 30, 2024 AND 2023

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, 2024:

Schedule of future minimum lease payment

Year ended June 30, 2023 to June 2024

Year ended June 30, 2024 to December 2024

From July 2024 to December 2024

Undiscounted cash flow

Less imputed interest

Less current portion

Long term lease liability

The weighted average remaining lease term and discounted

3 unchanged sentences

lease cannot be readily determined.

The Company has not made lease payments

since October 16, 2023 and owes $ 50,000 in lease payments at June 30, 2024.

Litigation (and related matters):

1) Convertible Bridge Loan/Default

On September 28, 2023, in order to partially

mitigate the problems discussed in the going concern, 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”).

The 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 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 half share.

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.

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 other creditors are threatening to commence litigation and/or

repossess/remove leased equipment).

2) Creditor Matters

As is described in the Company’s Consolidated

Financial Statements included herein and discussed in the Notes to the Consolidated Financial Statements, the Company has had on-going

difficulties raising needed funds for its operations/activities over the past 2 years which has rendered the Company unable to meet its

current creditor obligations on a timely basis.

This situation includes a substantial increase in the Company’s ‘Current Liabilities’

including ‘accounts payable’ over recent periods.

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 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.

The Company currently is not involved in any other material litigation

or similar events.

BION ENVIRONMENTAL TECHNOLOGIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED JUNE 30, 2024 AND 2023

The reconciliation between the expected federal

4 unchanged sentences

$ ( 2,455,000 )

$ ( 670,000 )

State taxes, net of federal benefit

2 unchanged sentences

Change in valuation allowance

( 3,281,000 )

Income tax benefit

The Company has net operating loss carry-forwards

(“NOLs”) for tax purposes of approximately $ 39,500,000 as of June 30, 2023.

The Company has net operating loss carry-forwards (“NOLs”)

for tax purposes of approximately $ 42,551,000 as of June 30, 2024.

These NOLs expire on various dates through 2041.

The utilization of the NOLs may be limited under

Section 382 of the Internal Revenue Code.

The Company’s deferred tax assets for the

years ended June 30, 2023 and 2022 are estimated as follows:

Schedule of deferred tax assets and liabilities

The utilization of the NOLs may be limited

under Section 382 of the Internal Revenue Code.

The Company’s deferred tax assets for

the years ended June 30, 2024 and 2023 are estimated as follows:

Schedule of deferred tax assets

NOL carryforwards (Federal and State)

8 unchanged sentences

Net deferred tax assets

The Company has provided a valuation allowance of

100 % of its net deferred tax asset due to the uncertainty of generating future profits that would allow for the realization of such deferred

The Company has adopted the Bion Technologies, Inc.

401(k) Profit Sharing Plan and Trust (the “401(k) Plan”), a defined contribution retirement plan for the benefit of its employees.

The Company has provided a valuation allowance

of 100 % of its net deferred tax asset due to the uncertainty of generating future profits that would allow for the realization of such

deferred tax assets.

The Company has adopted the Bion Technologies,

401(k) Profit Sharing Plan and Trust (the “401(k) Plan”), a defined contribution retirement plan for the benefit of its

The 401(k) Plan is currently a salary deferral only plan and at this time the Company does not match employee contributions.

is open to all employees over 21 years of age and no service requirement is necessary.

The Company has evaluated events that occurred subsequent

to June 30, 2023 for recognition and disclosure in the financial statements and notes to the financial statements.

From July 1, 2023

through September 28, 2023, the Company has incurred costs of $ 583,870 for

an aggregate of $ 7,431,630 for

the Initial Project.

From July 1, 2023 through September 28, 2023, 38,000 warrants were exercised

to purchase 38,000 shares of the Company’s common stock at $ 0.75 per share for total proceeds of $ 28,500 .

The 401(k) is open to all employees over 21 years of age and no service requirement is necessary.

BION ENVIRONMENTAL TECHNOLOGIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED JUNE 30, 2024 AND 2023

As is described in the Company’s Financial Statements

included herein and discussed above in the Notes to the Financial Statements above and in Item 2, Management’s Discussion and Analysis,

the Company has had on-going difficulties raising needed funds for its operations/activities over the past 2 years which has rendered

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

The Company has engaged in discussion/negotiation with

its larger creditors (including its largest creditor--- the primary contractor on the Initial Project) but has been unable to reach agreements

regarding payments due to the uncertainty as to if, when, and how much funding the Company will be able to raise in future periods.

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

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 prime contractor and the property lessor.

Discussions and ultimate resolution are ongoing and subject to Bion’s

ability to raise capital in a timely manner.

On July 15, 2024, the Company issued 9,231 shares

of the Company’s common stock to a consultant for services.

The shares were issued at $ 1.20 per share for a total value of $ 9,000 .

On July 21, 2023, Mr.

Smith converted $ 49,048 of principal

from his Adjusted 2020 Convertible note into 518,477 Units at a conversion rate of $ .0946 ;

each unit consisting of one share and one warrant

with the exercise price of $ .75 until 7/21/2026.

Each of these warrants carry an exercise price adjustment provision of 75 %.

On August 16, 2023, the Company issued 10,753

shares of the Company’s common stock to a consultant for services.

The shares were issued at $ 1.55 per share for a total value of

On August 28, 2023, the Company sold 28,589 units

at a price of $ 1.60 for a total of $ 45,742 .

of the Company’s common stock to non-affiliate consultants for services.

The shares were issued at .65 per share pursuant to the

terms of the applicable for a value of $ 6,000 for the services provided.

Effective July 31, 2024, Mark A.

Smith, Bion’s

President, CFO, and General Counsel retired, as was planned for some time.

Smith was responsible for a wide range of duties and his

previous roles will need to be filled over the next several months, both by existing staff and new associates.

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 (LLC), up to $ 500,000 in consideration

of a secured convertible promissory note.

The note instrument and agreements have not been executed at this time because terms and other

details have not been finalized yet;

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

a final agreement is executed, it will be attached as an exhibit to a Form 8-K.

Pursuant to the requirements of Section 13 or 15(d)

3 unchanged sentences

September 30, 2024

Smith, President and Chief

Financial Officer (Principal Financial

and Accounting Officer)

/s/ Stephen Craig Scott

Stephen Craig Scott Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this

Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:

Executive Chairman,

September 28, 2023

President, Chief Financial Officer

/s/ William O’Neill

Chief Executive Officer

September 30, 2024

William O’Neill

Stephen Craig Scott

/s/ Jon Northrop

1 unchanged sentence

September 30, 2024

/s/ Edward Schafer

September 30, 2024

1 unchanged sentence

September 30, 2024

/s/ Robert Weerts

September 30, 2024

Robert Weerts

/s/ Turk Stoval

September 30, 2024

/s/ Salvatore

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures