BION ENVIRONMENTAL TECHNOLOGIES INC 10-K

ITEM 1. BUSINESS. GENERAL The Company has been under substantial financial and management stress over the past eighteen (18) months. Covid-related delays during technology pilot development at Buflovak in New York, followed by post-Covid supply chain disruptions during construction of our demonstration facility at Fair Oaks, have led to extreme difficulties in raising needed funds. These delays prevented us from meeting our project development and related capital timelines, and were further compounded by the death (following extended illness) of Dominic Bassani, who most recently served as our COO from May 2022 after serving as our CEO for the prior decade, the subsequent resignation of Bill O’Neill, Dominic’s replacement at the CEO position, effective May 31, 2024, followed by the anticipated retirement of Mark A. Smith, the Company’s President, General Counsel and Chief Financial Officer, effective July 31, 2024. Since the end of May 2024, a new core leadership team has been installed (see H and I, below) and a short-term funding facility has been implemented (see J, below) while longer term capital solutions are evaluated. Our new leadership team believes the financial and management difficulties Bion has faced are outweighed by the success of our technology demonstration and optimization initiatives at our Fair Oaks facility. This success coincides with clear and growing trends in both sustainable agriculture and clean fuels technology and policy that favor Bion’s technology and business opportunities. Bion leadership believes this confluence of events positions the Company, assuming it aligns with appropriate strategic partners and obtains sufficient financing, to exploit a unique opportunity to participate in transformational change at the intersection of agriculture, renewable energy and clean fuels, clean air and water, and evolving consumer demand. PLEASE NOTE: A: The Company is not currently generating any significant revenues. Further, the Company’s anticipated revenues, if any, from existing Projects, JVs and proposed Projects will not be sufficient to meet the Company’s anticipated operational and capital expenditure needs for many years. Current liabilities were approximately $5.8 million at June 30, 2024 which represents an increase of approximately $4.2 million from June 30, 2023 (largely due to an increase in ‘accounts payable and accrued expenses’ totaling approximately $2.1 million and an increase in ‘current debt’ of approximately $2.1 million as a result of the Company’s limited success in raising new financing (equity and/or debt) and existing debt terms becoming current during the recent period combined with continued expenses (including those related to the Initial Project). Similarly, the Company’s cash on hand decreased from approximately $626,000 to approximately $52,000 over the same period. The Company extreme difficulty is obtaining needed funds during the entire 2023 fiscal year has continued throughout the first quarter of the current fiscal year to date. See NOTE 1. Going Concern and Management’s Plans, Plan of Operations and Outlook and ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations and Note 11 Subsequent Events (below). B:   Previous management 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 at that date. Additionally, due to some equipment break-downs, the Initial Project was in maintenance mode rather than conducting operations, while the Company awaited required replacement parts and subsequent repairs. This process was slowed by the Company’s ongoing difficulties in raising needed funds for its activities. The Company’s Board of Directors re-evaluated the classification/status of the Initial Project as part of the Company’s annual review process and determined that the Initial Project should have been ‘placed in service’ at the June 30, 2024, fiscal year end. Further, after extensive discussion between previous management and the Board, it was determined that the ‘carrying value’ of the Initial Project, as of that date, be reduced to $0 on the Company balance sheet, in order to conform with accepted accounting practices. Bion’s technology demonstration system was always planned as a small scale integrated Gen3Tech beef project. Due to covid-related delays and increased capital constraints, it was decided to move quickly to initially construct Phase 1, which was the standalone ARS at Fair Oaks. As matters progressed, including cost overruns, management and financial crises, etc., Bion was unable to proceed further at Fair Oaks. It was anticipated that the ARS would be relocated to another site (potential locations included Ribbonwire Ranch or University of Nebraska-Lincoln) after providing the final design data, where it would be integrated with a small scale Gen3Tech beef facility as originally planned. We recently learned it would not be economically feasible to decommission and disassemble the ARS, then transport, reassemble, and recommission it at another location. Therefore, since the Initial Project is now: i) largely a research & development facility and ii) is located on land subject to a short-term lease, it no longer has commercial value and was written down to $0. As a result, a large ‘one time/non-recurring’ ‘non-cash’ charge of $9,460,425 has been taken by the Company, at that date, which charge reduced the Company shareholders’ equity to ($5,808,501) and resulted in a loss of $11,691,115 for the 2024 fiscal year. 2 C: 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 be due and payable (with interest accrued at 9% per annum) on October 1, 2024, if not previously converted into securities of the Company. The Note is convertible at $1.00 per unit, at the sole election of the Lender, into units consisting of one share of the Company’s common stock and a warrant to purchase one 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. These funds were received in the context of negotiations/discussions regarding a potential larger investment by affiliates and/or associates of the Lender, but no further funds were received, and the larger transaction was never completed. The funds were used primarily to re-initiate operations at the Initial Project. The Default (which is continuing) has created substantial problems for and materially damaged the Company and rendered the Company unable to meet its current creditor obligations on a timely basis. The Company is currently evaluating its rights regarding the Default by the Lender. See Notes5 and 8 re Convertible Bridge Loan/Default and Note 11, Subsequent Events. This situation has contributed to the substantial increase in the Company’s ‘Current Liabilities’ including ‘accounts payable’ over recent periods. See Consolidated Financial Statements and ‘Management’s Discussion and Analysis’. The Company has engaged in discussion/negotiation with its larger creditors (including its largest creditor--- the primary contractor on the Initial Project) but has been unable to reach agreements regarding payments due to the uncertainty as to if, when and how much funding the Company will be able to raise in future periods. As a result, the Company’s largest creditor---the general contractor for the Initial Project --- has filed a mechanics lien in Indiana (and its largest sub-contractor has sent notices related to its intention to file a mechanics lien) and other creditors are threatening to commence litigation and/or repossess/remove leased equipment). D . At the end of December 2023, Bion achieved key objectives in the optimization of the Ammonia Recovery System at our commercial-scale demonstration facility in Fair Oaks, Indiana. Though delayed by supply chain issues, the demonstration at Fair Oaks confirmed the system's state-of-the-art capabilities. In managements’ opinion, the wide applicability of the ARS and its environmental benefits cannot be overstated, as livestock-related and other nutrient issues continue to grow, both in the U.S. and globally. E : On January 2, 2024, Bion received a new (continuation) patent that broadened the claims related to its Ammonia Recovery System (ARS) to include industrial and municipal wastewater sources, in addition to animal waste streams that were previously covered. Since that time, Bion has focused a portion of its limited resources on understanding and evaluating opportunities to apply its ARS as a ‘standalone’ ammonia control solution in these sectors. In such cases, the ARS would be deployed as a bolt-on ammonia solution (vs integrated into a Bion Gen3Tech livestock platform) for facilities that produce biogas from organic waste streams, such as food, food processing, and livestock packing/slaughter, that are subject to EPA-mandated discharge limits that require ammonia control. We believe at this time there is potentially a robust opportunity to provide ammonia control solutions to others and we intend to pursue this opportunity in the coming year. F : 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: a) members of the family of Dominic Bassani, recently deceased former Chief Executive Officer and (with his family) the Company’s largest shareholder (collectively “Bassani Family”), and b) Mark A. Smith, President of the Company and a director (“MAS”). The Bassani Family and MAS entered into these agreements with the intention of mitigating dilution to shareholders as new, successor management is added to the Company’s management team. The Bassani Family has agreed to surrender not less than approximately 20% of its Company holdings (as of December 2023) which surrender will increase to approximately 30% based on certain financing performances (see Form 8-K dated April 3, 2024, Exhibit 10.1). The Bassani Family will elect exactly which Company securities it will surrender for cancellation on or before June 30, 2024, the Company’s fiscal year end. The Bassani Family Agreement also sets forth requirements regarding conversion of convertible notes held by members of the Bassani Family after the security surrender. See Exhibit 10.1 for the material terms of the contemplated transactions. MAS has agreed to surrender approximately 30% of his Company holdings (as of December 2023). Immediately upon the effectiveness of the MAS Agreement, he cancelled all Company options held by him (2,425,000, in aggregate) and waived $56,250 of accrued deferred compensation (convertible into 75,000 shares of the Company’s common stock). The MAS Agreement also sets forth requirements regarding conversion of convertible notes held by MAS after the security surrender and references the planned retirement of MAS on or before May 15, 2024. See Exhibit 10.2 for the material terms of the contemplated transactions. Subsequently, and effective June 27, 2024, the Board of Directors of the Company agreed to amend the terms of the agreements dated April 1, 2024. The amendments solely extend any dates of certain required conversions and/or exercises (and related promissory note maturity dates and warrant expiration dates), if any, that were earlier than January 15, 2025, to said date. No changes were made regarding any ‘givebacks’ of securities of the Company. On June 30, 2024, the Bassani Family provided the Company with their list regarding surrender of 20% of its Company holdings (as of December 2023)(See Exhibit 10.1). As previously reported, MAS has previously completed 100% of his ‘give backs’. G: On May 13, 2024, the Board of Directors commenced a Board-led review of potential strategic alternatives to ensure the Company’s survival and to enhance Bion’s potential growth and maximize shareholder value. The review will include assessing approaches to optimize the Company’s multiple business opportunities through alternative capital return strategies, potential strategic or financial transactions, and developing strategic initiatives best applicable to each opportunity created by our technology in order to consider all possible paths towards maximizing value creation. No timetable has been established for the conclusion of this review and no decisions related to any further actions or potential strategic alternatives have been made at this time. There can be no assurance that the review will result in any transaction or other strategic change or outcome. 3 H : Effective May 31, 2024, Bion accepted the resignation of Bill O’Neill, both as CEO and Director. Mr. O’Neill had previously informed the Board that he believed he was not being adequately compensated or incentivized and the job was too difficult. On May 21, 2024, Bion received a letter from Mr. O’Neill that expressed his dissatisfaction with the Board’s refusal to address his demands and stated he was resigning to pursue other opportunities, despite the fact he had not yet completed the last year of a three-year agreement. Bion chose to accept his resignation in the belief the Company needed a change in leadership and approach. I : On June 1, 2024, Craig Scott joined the Company's Board of Directors. Mr. Scott has served Bion in several senior positions, dating back to 1996. Mr. Scott also agreed to assume a broader management role for Bion and subsequently accepted the role of interim Chief Executive Officer. Also in June, Greg Schoener assumed the role of Chief Operating Officer on an interim basis. He also joined Bion's Board of Directors. Mr. Schoener is a successful business owner and operator, serving the construction industry in Houston, Texas. He brings broad business management experience, with an emphasis on mission-focused execution and accountability. He has been a Bion shareholder since late-2020. Bob Weerts, another Bion shareholder and a successful serial entrepreneur from Winnebago, Minnesota, also accepted a position on Bion’s Board of Directors. J : On June 18, 2024, Bion formed a strategic relationship with Turk Stovall and Stovall Ranching Companies with the goal of developing a 15,000-head sustainable beef project at Stovall’s Yellowstone Cattle Feeders (YCF) location in Shepherd, Montana. The YCF feedyard is a traditional outdoor dirt feedlot that today is permitted to feed up to 25,000 head. Mr. Stovall also agreed to join Bion's Board of Directors and lead a joint venture between Stovall Ranching Companies and Bion to develop the project. The facility is envisioned to produce premium quality Montana beef that we believe will be the 'cleanest', most eco-friendly finished beef in the marketplace. K : On August 23, 2024, Bion announced that three affiliates of the Company (Greg Schoener, Interim COO & Director; Turk Stovall, Director; Bob Weerts, Director) and two shareholders (one of whom is the brother of Greg Schoener) have agreed to advance to the Company, through a newly formed LLC, up to $500,000 in consideration of a secured convertible promissory note. It is anticipated that others will join the LLC, although there can be no assurance they will. The note instrument and agreements have not been executed at this time because terms and other details have not been finalized yet; 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. Summary and Overview Bion Environmental Technologies, Inc.'s ("Bion," "Company," "We," "Us," or "Our") was incorporated in 1987 in the State of Colorado. Bion’s long term mission has been to make livestock production more sustainable, profitable and transparent by deploying our Gen3Tech platform/business model (discussed below) in ventures focused on the ‘feeder’ space of the livestock production/value chain. The Gen3Tech will allow us to supply verifiably sustainable premium meat products, together with environmentally friendly, sustainable and/or organic co-products from the production process. Bion primarily focused on the beef industry because we believe it faces the most challenges of all the livestock sectors and can benefit the most from the application of Bion’s technology and business strategy. We believe the Stovall-Bion JV represents the best opportunity to prove our strategy and plan to supply sustainable beef at scale. It is our primary focus. Our patented and proprietary technology was developed specifically to provide 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, is a primary source of excess nutrients, that have been identified as the greatest water quality problem in the U.S. today; CAFOs are also under increasing scrutiny for their impacts on air pollution and soil health. 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, including renewable energy and nutrients. These ‘assets’ have traditionally been wasted or underutilized and are the same ‘pollutants’ that today fuel harmful algae blooms, contaminate groundwater, and exacerbate climate change. Bion’s technology captures and upcycles these polluting waste emissions and discharges to produce renewable energy, organic fertilizers, and/or low carbon fertilizers for corn used in the production of clean fuels. Many associated with the livestock industry, Bion’s leadership included, believe that within a few years, reducing CAFO impacts – especially ammonia/nutrient control – will be required or incentivized/ subsidized in the U.S., as it is now in the EU. Implementing a new regulatory framework in the livestock industry would create a very large business opportunity for Bion and others to provide ‘retrofit’ solutions to CAFOs to mitigate their environmental impacts. While it has been slow to develop, it was this expectation of regulation (or an incentive-driven, industry-wide transition to cleaner practices) that originally sparked Bion’s commitment to provide technology solutions to the problem. With the recent and growing attention to the environmental impacts from CAFOs, especially impacts related to human health, such as PM2.5 formation and groundwater nitrates, we believe that the demand for change in how CAFOs are regulated (or cleanup is otherwise incentivized) is accelerating and will provide us with a robust retrofit opportunity in the not-too-distant future. The ARS has also demonstrated that it has applications in the industrial and municipal wastewater sectors, as described below, and we are currently evaluating those capabilities and economics and the business opportunities they present. During the second half of calendar 2023, the Company completed construction of our Ammonia Recovery System (ARS or Initial Project), our commercial scale demonstration facility located near Fair Oaks, Indiana. Through the end of 2023, and 2024 to date, Bion has executed a series of testing protocols designed to optimize the ARS’s performance, prepare for final design of a full-scale commercial system, and support the economic models for sustainable beef production. The ARS has exceeded expectations for performance related to both ammonia recovery and efficiencies. Based on the expanded capabilities of the ARS, and resulting from our January 2024 patent, the Company’s focus now also includes standalone ‘bolt-on’ ammonia control solutions for industrial and municipal facilities that use anaerobic digestion (“AD”) to produce biogas. Unlike CAFOs that are regulated under a ‘nutrient management plan’, industrial and municipal facilities are ‘point sources’ under the Clean Air and Water Acts. Their emissions and discharges are strictly regulated by US EPA, and they are required to control nutrients in their waste stream discharge. With the January 2024 patent that extended our IP to include these sources, we believe additional (and potentially robust) opportunities exist (in addition to animal waste) for our ARS as a standalone ‘bolt-on’ ammonia control solution for those facilities that produce biogas from organic waste streams. We also believe that the standalone opportunity, especially if a retrofit of an existing biogas facility, could represent a much shorter project development timeline and path to revenues, compared to a new beef facility We intend to pursue this opportunity with a strategic partner with specific expertise and an operating footprint in the biogas/ renewable natural gas (RNG) and/or clean fuels spaces, including sustainable aviation fuel (SAF). We are evaluating several such potential partners at this time. Bion believes these opportunities can create extraordinary value for our shareholders and employees (all of whom own securities in the Company) and both agriculture and clean fuels ‘partners’ who join us in our ventures and/or utilize our technology. We anticipate pursuing the opportunities created by our patented Ammonia Recovery System (ARS) and the third-generation technology (“Gen3Tech”) it supports, utilizing a joint venture/strategic partner model and/or through sales/licensing transactions. We believe our technology and our strategic partner model will improve the well-being of those enterprises utilizing our technology, create value for our shareholders, and improve the planet. 4 Change in Approach Through the end of calendar 2022, Bion’s strategy to exploit the beef opportunity was focused on developing an initial sustainable beef project as ‘proof of concept’. At the beginning of 2023, under the guidance of our former CEO, Bion’s strategy shifted to executing multiple letters of intent and agreements for sustainable beef JV projects and moving forward with development of those projects in quick succession. During our 2023 fiscal year, Bion entered into three (3) letters of intent (“LOIs”): a) July 2022 letter of intent to develop a large-scale commercial project - a 15,000-head sustainable beef cattle feeding operation together with the Ribbonwire Ranch (“Ribbonwire LOI”), in Dalhart, Texas (with a provision to expand to 60,000 head) (“Dalhart Project”), b) January 2023 letter of intent to develop a large-scale commercial project - a 15,000-head sustainable beef cattle feeding operation together with the Olson Feeders and TD Angus (“Olson LOI”), near North Platte, Nebraska (with a provision to expand to 45,000 head or more) (“Olson Project”), c) April 2023 letter of intent to develop a large-scale commercial project - a 15,000-head sustainable beef cattle feeding operation together with Dakota Valley Growers (“DVG LOI”) near Bathgate, North Dakota (“DVG Project”). Based on our experience, we believe it will not be difficult to secure participation in our Projects from additional feeders/cattlemen, especially once project financing and offtake agreements for both protein and co-products, are in place. The pivot in strategy to a faster development timeline was based on several basic assumptions that proved incorrect (or, at least, premature): a) that there was a large, ready market for sustainable beef, waiting to be filled, b) that the beef industry status quo was eager for change and would be supportive of a transition to sustainable beef, and c) that the substantial investment that would be required to retool production at scale was readily available. It also relied on Bion establishing strategic partnerships and relationships related to i) clean fuels/ renewable energy, ii) fertilizer, iii) beef retail/food service distribution, iv) corporate and project finance, and v) others, that would allow us to ‘plug in’ feeders into an existing value chain that included distribution/ offtake agreements for protein and byproducts. Multiple factors have contributed to our inability (to date) to secure these relationships: covid-related delays and cost increases with our technology pilot; additional delays in the construction, optimization, and demonstration of the ARS technology at commercial scale at Fair Oaks that prevented us from proving the technology’s effectiveness; compounded by the extended illness and death of our former CEO and other management issues. These factors also made it increasingly difficult for us to raise capital. Bion’s new leadership team has returned the company to its earlier approach, focusing on building a ‘flagship’ first project to prove concept feasibility and to provide a development and finance model for future projects. Leadership made this decision after determining that a) a large addressable market for sustainable beef does exist and consumers have demonstrated a ‘willingness to pay’ a premium for sustainable food products; however, since such products cannot be supplied today at scale, it is not a ‘ready’ market and will take time to develop), b) an entrenched industry is never eager for change and it will only occur through enlightened/ proven self-interest, and c) investment capital of the magnitude needed for large scale conversion to sustainable production will first require proof of concept. Leadership believes for several reasons that the best opportunity for the Company to prove its sustainable beef concept at this time is with the Stovall Ranch JV in Montana. In June 2024, Bion formed a strategic relationship with Turk Stovall and Stovall Ranching Companies. Turk Stovall is a fifth-generation Montana cattleman, with an extensive graduate-level education in cattle husbandry and an MBA in agribusiness, and he is the largest custom cattle feeder in Montana. He also has broad experience and relationships with both the U.S. and Montana’s beef industry and important state leaders, resources, and agencies. Bion and Stovall have agreed to establish a JV, to be led by Mr. Stovall, with the goal of developing a 15,000-head sustainable beef project at Stovall’s Yellowstone Cattle Feeders (‘YCF’) location in Shepherd, Montana. We anticipate 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. Bion will focus almost exclusively on moving that project forward over the current year. Upon completion of the first facility at YCF, the JV intends to immediately begin development of a second set of barns and process equipment for additional capacity. Ultimately, the JV envisions bringing a robust cattle feeding industry to Montana, with additional feedyards in the eastern part of the state, which it currently lacks, along with sufficient corn production and packing/ slaughter capacity. We believe that our Gen3Tech platform and barns will mitigate the extreme weather that has limited outdoor cattle feeding in the northern states. Currently, Montana ships approximately 1.2 million feeder calves south to Colorado, Kansas, Nebraska and other Midwest states to be fed. Bion and Stovall Ranching Companies believe that indoor feeding, with its enhanced efficiencies, will support the development of infrastructure that will allow premium Eco-friendly beef to be produced wholly in Montana, from calving to packing. We also believe that the State of Montana, like many states in the northern Midwest, will support such development that will bring generational change and benefits to the state and its agricultural communities. The Stovall-Bion JV (and future beef projects) will be developed to produce blockchain-verified, sustainable beef in customized covered barns (resulting in reduced stress on cattle caused by extreme weather, higher feed/weight gain efficiency, and shortened finishing times) with ongoing manure transfer (through slatted floors) to anaerobic digesters (AD) that harvest biogas/ renewable natural gas (RNG) for sale. After the digester, Bion’s ARS will capture and stabilize the ammonia, to recover its nutrient value that is now being lost, as well as to remediate 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, and fertilizer products, both ‘Climate- and Water-Smart’ and/or organic. 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 potentially nutrient credits. 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. Once Bion’s technology and production platform, business model, and consumer demand have been proven, it may create the opportunity for joint ventures between the Company and larger livestock/food/fertilizer industry participants. To accomplish Bion’s goals in this sector, we anticipate that we will ‘partner’ with other technology and service 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 larger enhanced revenue contributors provided by Bion to the JVs (and Bion licensees). The Company believes that a large portion of its business will be conducted through such JVs, but a material portion may involve licensing and or other approaches. 5 Renewable Energy/ Clean Fuels Strategic Partner Bion is currently (and has been) in discussions with several companies related to strategic partnerships in renewable energy production – RNG and solar – and clean fuels, as well as reducing the carbon footprint of livestock production, especially beef. With today’s U.S, and global emphasis on decarbonizing energy and the food supply chain, the sectors have become closely intertwined, they are evolving quickly, and integrated solutions have become increasingly complex. While Bion has over 30 years of experience in capturing and recycling nutrients, the Company needs to build on its ability to fully understand the overlapping opportunities in the two spaces, and how to exploit them to their fullest potential. Bion is now evaluating both European and U.S. renewable energy developers, operators, and investors to determine the best fit for moving forward with AD/RNG development for its own beef project(s), animal waste treatment for others, both here and in the EU, as well as a development partner in industrial and municipal opportunities. After its IP was extended to industrial and municipal waste streams in January 2024, Bion announced its intention to establish strategic partnerships and to market the ARS as a standalone ’bolt-on’ ammonia control solution for anaerobic digestion (“AD”) of both animal manure waste (non-Bion livestock waste treatment facilities), as well as industrial and municipal wastewater, both in the U.S. and in Europe (See Standalone Opportunity below). Bion is now focused primarily on: i) operation and final testing at the Initial Project, our commercial-scale ARS installation at Fair Oaks, IN, for support of final design, feasibility studies and/or engineering reports related to our initial JV Project (and further optimization of its operational parameters), ii) pre-development planning of the Montana Stovall-Bion JV beef project, including distribution agreements for beef and co-products, iii) identifying a biogas/ clean fuels partner(s) for both livestock and industrial projects, iv) developing applications and markets for its low carbon ‘Climate-Smart’ and organic fertilizer products (including life-cycle analysis (LCA) to determine Carbon Intensity (CI) Score for both liquid and solid products, and organic listings/certifications for multiple liquid products) and its sustainable (conventional and organic) animal protein products, v) discussions regarding initiation and development of agreements and joint ventures (“JVs” as discussed herein) based on the augmented capabilities of our Gen3Tech platform (in the sustainable beef and other livestock segments), (vi) exploring opportunities related to stand-alone ARS markets, and vii) ongoing R&D activities. Each of the initiatives/activities referenced above are subject to resolution of the financial constraints facing the Company that are described in multiple places in this document. Technology Platform and Development Bion has invested decades of work and substantial capital in the development of our technology and technology platform since 1989. The predecessors to Bion’s Gen3Tech platform, our patented first- and second-generation technologies (“1G and 2G Tech”), were proven at commercial scale. 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. The 2G Tech was reviewed and qualified for federal loan guarantees under USDA’s Technical Assessment program. Bion’s 2G Tech dairy project (“Kreider 1” or “KF1”), located at Kreider Farms in Pennsylvania (“PA”) received the first verified /measurable nutrient reduction credits from a non-point source livestock facility in the U.S. and its nutrient reductions were verified by the Pennsylvania Department of Environmental Protection (“DEP”) during 2012. For more information on Bion’s 2G Tech, please see Bion’s Form 10-K, for the year ended June 30, 2023. (and prior years). A key attribute of Bion’s 2G Tech, now our Gen3Tech, was that nutrient and other pollution reductions could be measured, providing a level of verification on par with a municipal wastewater treatment plant, which created the opportunity for the nutrient reductions to be used as “qualified offsets” to EPA-mandated requirements. However, while it was an engineering success, the 2G Tech failed financially because the platform was dependent on either regulation or revenues from an anticipated incentive program under the Chesapeake Bay Strategy, that did not materialize. 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. The Gen3Tech platform was developed to maximize value from resource recovery and co-products, by using AD to produce biogas and our ARS to produce fertilizer products. By verifying these processes to the consumer, we would achieve premium pricing from USDA PVP-certified ‘environmentally sustainable’ retail branding of the animal protein products it supports. Further, the third-generation platform provides enhanced nutrient control, compared to prior versions, and will also generate verified water quality trading credits (or some other form of payment for ecosystem services that we believe is inevitable for nutrient impaired watersheds). The core technology that supports the Gen3Tech platform is Bion’s patented and proprietary Ammonia Recovery System (ARS), which utilizes existing commercial evaporation and distillation process equipment (with decades of reliability and service history) that is customized for Bion’s specific applications. The first patent on the ARS was filed in 2015, for an ammonia recovery process that produces ammonium bicarbonate (a commercial fertilizer) without external chemical additives, thereby providing the basis for organic certification. A Notice of Allowance from the US Patent and Trademark Office (“USPTO”) was received during August 2018 related to this patent application and the patent was subsequently issued. Since July 2017 Bion has filed for continuations of this patent to provide broadened protections and to cover improvements to the process developed in the interim. During August 2020 the Company received a ‘Notice of Allowance’ for our third patent related to our Gen3Tech and additional related applications are pending and/or planned (See “Patents”). In January 2024, the ARS claims were extended to industrial and municipal wastewater streams, in addition to the animal manure waste streams, previously covered. 6 Ammonia Recovery System The patented ARS is the core of Bion’s Gen3Tech platform . It recovers and upcycles more than 90 percent of the volatile ammonia that is available in the livestock manure (or other organic) waste stream effluent after biogas/methane is produced through anaerobic digestion (AD). The technology has applications in various industrial organic waste streams, including food processing, slaughter/packing plants, and municipal facilities that utilize AD to produce biogas. The ARS utilizes the CO2 that is also in the organic waste stream to stabilize the ammonia, forming ammonium carbonate/bicarbonate in either a liquid or solid form. Ammonium bicarbonate has a long history of use as a water-soluble nitrogen fertilizer, that was commonly used before the advent of low-cost synthetic fertilizers, such as urea. Ammonia nitrogen enters the environment through volatilization (evaporation) from the AD effluent, before and after it is applied to croplands as fertilizer, or it enters the water supply directly in runoff from fields where it has been spread. Approximately 80 percent of the ammonia in livestock manure is lost in this manner. Once the ammonia has escaped to the environment, it is highly mobile, water soluble, and difficult to recapture and treat (it is the primary cost-driver in municipal wastewater treatment). Airborne ammonia can contribute to the formation of PM2.5, small inhalable particulate matter that causes respiratory distress and is regulated under the Clean Air Act. In runoff, ammonia in the form of nitrate contaminates groundwater and fuels algae blooms in coastal waters that are becoming increasingly toxic. Ammonia nitrogen is the primary driver of nutrient runoff that US EPA calls the most expensive and difficult to treat water quality problem in the U.S. today. Capturing and stabilizing the ammonia both minimizes its environmental impacts and allows us to produce our low-carbon and/or organic ‘pure’ nitrogen fertilizer products that can be transported to where they are needed and applied when they are needed. Operating results at the Initial Project demonstrate ARS performance exceeds initial expectations for ammonia recovery and related economics. The Company has achieved multiple key technical objectives in the optimization of the ARS, which will support the final design process for full-scale systems, based on results to date and testing anticipated to be completed by the end of September 2024. The ARS has achieved and maintained controlled operations under a variety of conditions, producing both liquid and crystal ammonium carbonate/bicarbonate, Bion’s commercial nitrogen fertilizer products. Bion has largely optimized the ARS’s operating parameters and has demonstrated that it meets and/or exceeds the results needed for Bion’s economic models for large-scale commercial projects. The Company expects final optimization to continue through the end of September 2024 and provide the data required to support final design/engineering for commercial project modules. Bion received an OMRI (Organic Materials Review Institute) Listing on its first commercial nitrogen fertilizer product, a 10-0-0 ammonium bicarbonate solution, in August 2024, which provides assurance to organic growers and their certifiers that the fertilizer can be used in organic production. Fertilizers that can be used in organic production command substantially higher prices than synthetic (chemically-produced) commercial fertilizers, such as urea. Bion will initially focus on several markets for its OMRI Listed fertilizers, including production of high-value specialty crop fruits & vegetables, organic corn side dressing, and hydroponic and greenhouse applications. Bion also expects demand in regions where nitrogen inputs are required to maximize the benefits of cover crops that store carbon and improve soil and microbial health. Further, Bion is also evaluating opportunities in regenerative practices that include fertilized pastures to graze cattle. At this time, Bion intends to continue producing liquid and crystal fertilizer products at the Initial Project to support testing and life-cycle analysis, product trials, and ongoing organic and low-carbon fertilizer initiatives. Bion has produced and will continue to produce a solid/granular nitrogen fertilizer product at the Initial Project 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. Final economic and energy efficiency models will be validated during the final design process. The Company intends to engage Hebeler Process Solutions/ Buflovak, our technology development-engineering firm, during the upcoming quarter to prepare an evaluation and report of the ARS and its economics, while also moving forward on final commercial design for the Stovall JV project. Bion anticipates it will also engage a nationally-recognized and unrelated engineering firm to produce a third-party engineering report, describing the processes and economics of its Ammonia Recovery System, which is a requirement for USDA loan guarantees. We believe this data will also provide potential stakeholders, including a) cattle producers and feeders, packers, distributors, retailers in the agricultural segment, b) biogas and clean fuels developers and producers, c) operators of industrial and/or municipal facilities utilizing ADs and d) financial institutions with the information they need to proceed with confidence in collaborating with Bion on projects. Each of the initiatives/activities referenced above are subject to resolution of the financial constraints facing the Company that are described in multiple places in this document. 7 Gen3Tech Platform Our Gen3Tech platform provides comprehensive waste treatment and resource recovery that is unmatched in the industry today. The platform consists of manure handling and conditioning, anaerobic digestion (AD) and biogas upgrading, coupled with our Ammonia Recovery System (ARS) and fertilizer processing, handling and storage. The Gen3Tech platform is the basis for a JV business model with four primary distinct revenue streams: 1) pipeline quality renewable natural gas and related carbon and other environmental credits, 2) premium fertilizer product and related credits s: organic and ‘low-carbon’, 3) premium pricing/revenues for USDA PVP-certified (or otherwise verified) ‘Environmentally Sustainable’ or ‘Eco-friendly’ branded meat at the retail level, and potentially 4) nutrient reduction credits in certain watersheds. Carbon and nutrient credit revenues will be supported by third-party verification of the waste treatment processes with relatively limited incremental cost to Bion. The same verified data will also provide the backbone for the USDA PVP-certified sustainable brand, with limited incremental cost. 1) Renewable energy and renewable energy- and carbon-related credits: Bion’s Gen3Tech platform utilizes anaerobic digestion (“AD”), customized to maximize both recovery of biogas (methane) and ammonia nitrogen from the waste stream. At sufficient scale, methane produced from AD can be cost-effectively conditioned/cleaned, compressed and injected into a pipeline or used onsite, depending on project needs and economics. The US Renewable Fuel Standard (“RFS”) program and state programs, like the LCFS in California and elsewhere, provide ongoing renewable energy credits for the production of biogas and its subsequent use as a renewable fuel. The CO2 recovered in the gas cleaning process will be recycled for use in the production of organic fertilizer products along with the ammonia-rich digestate, instead of venting it to atmosphere. Gen3Tech facilities will also generate photovoltaic (solar) electricity from modules placed on the roofs of the barns (approximately 12 acres of rooftop per 15,000 head of cattle module) to supply onsite needs and/or export to the grid, depending on project requirements. Additional renewable energy-related credit programs are being developed that Bion believes will impact these revenues, including a Carbon Intensity (CI) score that measures the amount of carbon produced per unit of energy produced. 2) Fertilizers: Organic and ‘Low Carbon’ : The Company has focused a large portion of its activities on developing, testing, and demonstrating the 3rd generation of its technology and technology platform, 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 ammonium bicarbonate products (liquid and solid) produced by Bion’s Gen3Tech platform require the use of no outside compounds or chemicals and will enjoy a dramatically lower carbon footprint than synthetic nitrogen fertilizers. Much of the reactive nitrogen captured and upcycled into our fertilizer products was going to be lost through volatilization and runoff, and that loss would generally need to be offset with a synthetic nitrogen fertilizer, such as anhydrous ammonia or urea. These synthetic nitrogen products are produced through the Haber-Bosch (and other) synthetic processes, which converts hydrogen and atmospheric nitrogen to ammonia in the form of urea, with methane from fossil fuels as the energy source. It is an extremely energy-intensive process with a very large carbon footprint that accounts for much of agriculture’s overall carbon footprint. 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. 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. In March 2024, Bion applied for an OMRI (Organic Materials Review Institute) Listing on its first commercial nitrogen fertilizer product, a 10-0-0 ammonium bicarbonate solution. Bion was granted the Listing in August, which provides assurance to organic growers and their certifiers that the fertilizer can be used in organic production. Ammonium bicarbonate, manufactured using thermal and mechanical processes, has a long history of use as a fertilizer. Fertilizers that can be used in organic production command substantially higher prices than synthetic (chemically-produced) commercial fertilizers, such as urea. Based on preliminary market surveys to date, we believe that existing competing organic fertilizer products are being sold presently at price points significantly greater than Bion’s projected cost and projected pricing. Bion will initially focus on several markets for its OMRI Listed fertilizers, including production of high-value specialty crop fruits & vegetables, organic corn side dressing, and hydroponic and greenhouse applications. Bion also expects demand in regions where nitrogen inputs are required to maximize the benefits of cover crops that store carbon and improve soil and microbial health. Further, Bion is also evaluating opportunities in regenerative practices that include fertilized pastures to graze cattle. We also believe that livestock products from animals raised with feed grains grown using Bion’s organic ammonium bicarbonate fertilizer products (and that otherwise qualify) will receive organic approvals. In addition to liquid ammonium nitrogen fertilizer, Bion’s ARS is capable of recovering nitrogen in the form of solid ammonium bicarbonate products containing up to 18%-22% (or higher) nitrogen in a crystalline form that is easily transported (while producing liquids with various percentages of ammonium bicarbonate nitrogen during interim stages of the process). This solid product is water soluble and provides a readily available nitrogen source for crops. It will contain virtually none of the other salt, iron and mineral constituents of the livestock waste stream that often accompany other organic fertilizers. This product is being developed to fertilizer industry standards so that it can be precision-applied to crops using existing equipment. 8 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. 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. The overarching standard of organic production, per NOP guidelines, is that a “product shall have been produced and handled without the use of synthetic chemicals…” That is rule Number One. At NOP, the term "synthetic" means “a substance that is formulated or manufactured by a chemical process or by a process that chemically changes a substance extracted from naturally occurring plant, animal, or mineral sources, except that such term shall not apply to substances created by naturally occurring biological processes.” In evaluating and approving Bion’s liquid ammonia for OMRI listing, Bion’s patented ammonia recovery system was not deemed synthetic. That is an important distinction for future Bion product filings based upon the same patented process. Irrespective of an organic certification, Bion believes that its crystalline ammonium bicarbonate will have use in another, potentially large, fertilizer market: production of corn grown for ethanol that is then upgraded to sustainable aviation fuel (SAF). The Company is exploring the market potential for its fertilizer (in liquid and/or solid forms) as a verifiably low carbon/ ‘Climate Smart’ product (potentially a much larger market than the organic market) with focus on producing corn used for biofuels. The carbon footprint (Carbon Intensity) of clean fuels (and therefore the tax credits available for their use) is determined by a ‘life cycle analysis’ (LCA) that considers all the energy inputs to the fuel and its production processes, compared to a fossil-fuels baseline. In the case of corn ethanol that can be upgraded to SAF, one of the largest inputs is the fertilizer used to grow the corn. The baseline for that fertilizer is urea. We believe Bion’s ability to substantially reduce the carbon footprint of the fertilizer, and therefore that of the entire chain, will create significant value for our partners and customers. This will require working with industry and academic entities to develop appropriate metrics and produce an independent ‘life cycle assessment’ (LCA) for Bion’s ammonium nitrogen fertilizer product, which can be compared to conventional nitrogen fertilizer products, like urea. Because Bion’s ARS recovers both nitrogen and CO2 from the waste stream (including using CO2 usually vented to the atmosphere as a stabilizing agent), it creates added 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 that will lead to a very low carbon footprint. Further, 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 wastewater treatment for re-deposited ammonia nitrogen. The Company believes there is a significant ‘Climate Smart’ 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. Bion has conducted a preliminary LCA – while it is not considered ‘independent’, it used the internationally-accepted GREET model – and it demonstrates our ammonium bicarbonate has a dramatically lower carbon footprint compared to the urea baseline. 3) Sustainable Brand Premium: Consumers have demonstrated a willingness to pay a premium for safe and sustainable food choices. Based on Bion’s recognition of the potential opportunities created by such willingness, beginning in 2015, Bion worked with the USDA’s Process Verified Program (“PVP”) – the ‘gold standard’ in food verification and branding – to establish a USDA PVP-certified sustainable brand. Bion received conditional approval from the PVP related to its Kreider 1 project (utilizing 2G Tech). It is our intention to submit an application for the Gen3Tech platform when the initial Gen3Tech Project is operational and seek an approval for certification based on third-party-verified reductions in nutrient impacts, greenhouse gases and pathogens in the waste stream (and other attributes), based on our Gen3Tech platform. PVP certification incorporated as part of a recognizable brand (together with point-of-sale information) will provide consumers with products and brands that can be trusted. Bion believes that such a brand and livestock product line will command a pricing premium for Bion’s livestock JVs and their customers. Food safety and sustainability are issues of growing importance in the U.S. and worldwide. Bion’s branding initiative reflects trends already underway in the livestock industry. Driven by growing consumer demand, large food retailers (such as Walmart and Costco) and restaurant chains (including Chipotle and McDonalds) are increasingly demanding greater responsibility and improved sustainability in food production practices from their suppliers. The Global Roundtable for Sustainable Beef (“Roundtable”) was created to advance a sustainable global beef value chain that is “environmentally sound, socially responsible and economically viable”. The Roundtable represents members from across the supply chain, including U.S., Canadian and Australian cattlemen’s associations, Cargill, JBS, Elanco, McDonalds and A&W. Large institutional investors have begun to pressure the livestock industry. Ceres and several other large activist institutional investors have already expressed concerns about carbon footprint, water quality, antibiotic usage and animal welfare in letters to management of their investment holdings in the food production industry. The Collier Farm Animal Investment Risk & Return (“FAIRR”) Initiative was recently launched to highlight the environmental, social, and governance (“ESG”) risks associated with large-scale livestock production. 9 In past years, the UN FAO has issued several highly critical reports of the livestock industry, more recently focused on its impacts on climate change. While some of their early reports were based on incomplete data and faulty methodologies and have since been somewhat quietly ‘retracted’, a wide array of activist groups, including climate, animal rights, and anti-factory farming advocates, have seized on them to create a global “anti-meat” messaging campaign. Their messaging is predicated on the (incorrect) notion that agriculture, and the livestock sector specifically, is the largest contributor to climate change, greater than the energy and transportation sectors. While this fact has been publicly ‘debunked’, the anti-meat campaign has been joined and amplified by various other stakeholders, governments, and more recently, competitors in the alternative protein space, such as plant-based and cellular meats. Over the last few years, most large meat and dairy product retailers have announced ‘sustainability’ initiatives, although the definition of sustainability is often unclear. Based on recent statements from the industry regarding sustainability policy, many that identify goals that are 10 to 30 years in the future, Bion believes that sustainability on the production side will look a lot like what the Company’s Gen3Tech platform can provide today. The Gen3Tech platform can deliver verifiable metrics that demonstrate meaningful improvements in sustainability for livestock production that are unmatched in the industry today, including a dramatically reduced carbon and nutrient footprint; lower negative impacts to water, soil and air; increased pathogen destruction; and other environmental and public health impacts. The Covid-19 pandemic has further heightened consumer awareness and concerns related to a) environmental sustainability, b) food safety, c) sourcing and traceability and d) humane treatment of both animals and workers. The more the livestock industry’s supply chain practices become transparent and known by consumers, the more consumers are seeking alternatives. Bion’s ‘Sustainable’ branding program is designed to address a wide array of consumer concerns including: a) ‘where does your food come from?’ (animal heritage information); b) climate change (carbon) and other key environmental impacts (air/water/soil); c) antibiotic use/ standards; d) animal welfare/ humane treatment; e) laborer welfare/ working conditions. These issues can be addressed with the consumer through general advertising and/or at the point of sale with a QR code on the packaging that links back to product-specific data. The verification processes that will be employed by Bion’s Gen3Tech platform support block chain traceability, providing accountability throughout that part of the supply chain addressed by Bion’s platform and enabling any quality issues to be quickly identified by lot and location, minimizing risk to its consumers. In essence, Bion’s comprehensive technology platform will enable its livestock JVs and other adopters to be not only the provider of the product the consumer wants, but also the businesses that shares their consumers’ values. 4) Water Quality Trading/ Nutrient Credits: In parallel with technology development, Bion has worked (which work continues) to implement market-driven strategies designed to stimulate private-sector participation in the overall U.S. nutrient and carbon reduction strategy. These market-driven strategies can generate “payment for ecosystem services”, in which farmers or landowners are rewarded for managing their land and operations to provide environmental benefits that will generate additional revenues. Existing renewable energy credits for the production and use of biogas are an example of payment for ecosystem services. Another such strategy is nutrient trading (or water quality trading), which will potentially create markets (in Pennsylvania and other states) that will utilize taxpayer funding for the purchase of verified pollution reductions from agriculture (“nutrient credits”) by the state (or others) through competitively-bid procurement programs. Such credits then can be used as a ‘qualified offset’ by an individual state (or municipality) to meet its federal clean water mandates at significantly lower cost to the taxpayer. Market-driven strategies, including competitive procurement of verified credits, are supported by U.S. EPA, the Chesapeake Bay Commission, national livestock interests, and other key stakeholders. Legislation in Pennsylvania to establish the first such state competitive procurement program passed the Pennsylvania Senate by a bi-partisan majority during March 2019 but has not yet crossed other hurdles required for actual adoption. Bion believes that nutrient reduction (and other similar) credits and/or other methods of monetizing environmental benefits from the capture and re-purposing of the nutrients (largely nitrogen and phosphorus) from the livestock waste stream, will become available in multiple states over the next several years. The passage in the Pennsylvania (“PA”) Senate of key legislation – SB 575 – in June 2019 that would have established a competitively-bid market for nutrient credits in PA, is indicative of the trends. Despite the fact that the bill was not considered in the House, due to the Covid-19 pandemic (a re-introduced bill will have to be considered again in the current and/or future sessions, Bion anticipates that after passage of a similar bill in the future, PA will establish a competitively-bid market for nutrient credits within twelve months after legislative passage and being signed into law by the Governor. See “Policy Change is Coming” and “Kreider Poultry Joint Venture and Pennsylvania and Chesapeake Bay Initiatives” below for discussion of the history and status of matters in PA. Political pressures, coupled with resistance from the entrenched interests of the cleanwater ‘status quo’, make it impossible to reasonably project a timetable for adoption of the policy changes needed to establish a nutrient trading program (or similar program that would allow agriculture to monetize low-cost nutrient reductions). 10 Initial Project The Initial Project is our commercial-scale Ammonia Recovery System designed to demonstrate and optimize our core technology in preparation for development of a full-scale commercial project. During September 2021, Bion entered into a lease for the development site of the Initial Project, located on approximately four (4) acres of leased land near Fair Oaks, Indiana, and a related agreement regarding disposal of manure effluent with the Curtis Creek Dairy unit of Fair Oaks Farms (“FOF”). Design and pre-development work commenced during August 2021 and construction was largely completed in September 2023, several months behind schedule. The facility utilizes effluent from the anaerobic digesters that process the waste from the dairy. The ARS demonstration facility has exceeded expectations for both treatment performance and economic efficiencies. The project was not developed at economic commercial scale or with an expectation of profitability due to its limited scale. The facility is large enough to demonstrate engineering capabilities of Bion’s ARS at commercial scale, but small enough that it could be constructed and commissioned relatively quickly. It was designed so that successful installation, commissioning, and operations could 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. The Initial Project produced a 10-0-0 commercial nitrogen liquid fertilizer that received an OMRI Listing as described above. Originally, construction and onsite assembly operations were targeted to commence sometime late in 2022, however, supply chain backlogs (many pandemic associated) delayed delivery dates for core modules of the Bion system to the site until during January 2023. Construction has been substantially completed related to Phase 1 of the Initial Project, shakedown and optimization completed, and the operation is now focused on final optimization of operation parameters for final design of full-scale systems. See Note 3 “Property and Equipment” and Note 11 “Subsequent Events” (for activities since the start of the first quarter of the 2024 fiscal year). Upon completing the primary goals of phase 1 of the Initial Project (only final optimization and design remain), the Company will determine whether to continue to operate the Initial Project at that location or 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 ARS system to conduct ongoing research and development related thereto and the KFIC is a possible site for the long-term re-location of the core modules. This venture, if it moves forward, is anticipated to include joint preparation of applications for grants and other funding from the USDA (‘climate smart’ program, rural development, etc.) and other sources. The Company will also evaluate re-locating the core module of the Initial Project to Dalhart, Texas, where it might be integrated into the first phases of the Dalhart Project and/or to other locations. Business Opportunities Bion’s core ARS technology and the Gen3Tech platform and business model it supports, create three distinct, but related, opportunities for Bion and its strategic partners to exploit: 1) the transition to sustainable and sustainable-organic beef, 2) standalone ammonia control for biogas production, and 3) retrofit of existing CAFOs to mitigate environmental impacts. Bion leadership believes the sustainable beef opportunity is unique at this time, as we are not aware of any other comprehensive system or process that offers treatment for or recovery of ammonia from beef waste. We are still evaluating the ARS’s capabilities in the industrial and municipal sectors; however, early indications are that there will be a ‘sweet spot’ (a combination of source, concentration, and solids content) where the ARS can provide cost-effective solutions, especially livestock packing/ slaughter waste, which waste stream is quite similar to manure waste. While the retrofit opportunity will require policy change, when cleanup of the $175B livestock industry is mandated, it represents an opportunity for Bion and others that is very large. Sustainable Beef Bion’s efforts are primarily focused on exploiting our sustainable beef opportunity through the Stovall-Bion JV. We believe that the beef industry represents the ‘best use’ of Bion’s system capabilities and attributes, and its strategic partner model, The beef industry today faces a wide range of challenges, from a fragmented commodity-producing industry with narrow margins to antiquated and inefficient production practices that start with outdoor feedyards. Beef production and consumption is a primary target of the global ‘anti-meat’ messaging campaign from consumer, investor, and environmental advocacy groups (and the industry’s competitors in the alternative plant-based and cellular protein spaces). Bion intends to produce truly sustainable beef, certified by USDA, with dramatic, third-party verified reductions in the negative environmental effects by mitigating nutrient, greenhouse gas, and other environmental impacts. To accomplish Bion’s goal, we will partner with producers and other technology companies who provide solutions for different links of the beef value chain. Our joint venture/strategic partner-focused business model is designed to deliver a premium sustainable product to the consumer and increased profitability up and down the supply chain. At present, there is essentially no traceable and verifiable ‘sustainable beef’ available to the US market, except for niche products. In response to consumer demand for transparency and sustainability, Bion expects the meat industry in general, and beef specifically, to evolve towards using new technologies to deliver these attributes. While we anticipate a faster adoption of tracking, verification and sustainability technologies in other perishable food categories, like produce and dairy due to their shorter product cycles (and related harvest and production techniques), meat industry leaders have also announced their willingness to move forward with initiatives in this area. Many companies have announced ‘sustainability’ initiatives, but most appear to consist largely of ‘greenwashing’ marketing commitments rather than substantive undertakings at this date. Note, however, that Tyson’s Brazen beef initiative (which was announced during March 2023) may develop into a substantive competitive factor in the sustainable beef marketplace, although the meaningfulness of its claims is now being challenged too. 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 and their ‘willingness to pay’ (WTP) for it. Bion’s goal is to be first (or at least early) to market with meaningful and verified sustainable beef products that can be produced at sufficient scale to service national market demand at an affordable price. The cattle produced at Bion facilities will have a substantially lower carbon footprint, dramatically reduced nutrient impacts to water and air, and an almost total pathogen kill in the waste stream. Further, the economics of producing these cattle (including the cost of the facility/technology upgrade) will be greatly enhanced by the revenue realized from the recovery of valuable resources, including renewable energy, high-value fertilizer products, and clean water. 11 To Bion’s knowledge, there is no comprehensive treatment solution for beef manure waste other than our Gen3Tech Platform. Further, Bion’s business model, which addresses the entire supply chain, creates additional opportunities to improve on both environmental impacts and production efficiencies. Bion has 30 years of experience in livestock waste management and is building a world class team, focused on beef. We believe we have a significant advantage as the $66 billion U.S. beef industry contends with its environmental impacts, inherent inefficiencies, and a changing consumer demographic. Bion‘s sustainable beef business model, based on our Gen3Tech platform, will develop and operate large scale facilities that: a) utilize custom designed barns (which enable a more controlled and monitored husbandry environment) and photovoltaic solar electricity generation utilizing the rooftops (where climate conditions permit), b) with continual manure transfer to anaerobic digesters (“ADs”), c) which produce RNG and related environmental revenues, and d) then channel the AD waste (including CO2 recovered from the RNG processing/cleanup) through a series of patented technologies to refine the waste into its various components. The diagram below depicts a simplified facility schematic/flow chart: This overall business model unites several interrelated businesses driven by Bion’s technology and augments and aggregates multiple revenue streams as described below. See “ Technology and Technology Platform ” above for descriptions of the 4 major categories of products/revenue streams which Bion anticipates from its Gen3Tech beef facilities: a) premium ‘sustainable branded’ beef, b) renewable energy and energy/environmental/carbon-related credits, c) fertilizer products (organic and/or low carbon) and, potentially d) nutrient credits. A Bion sustainable beef facility (see diagram above) will be comprised of covered barns with slotted floors (allowing the waste to pass through) which will reduce ammonia volatilization and loss to the atmosphere, as well as odors, thereby improving animal health and human working conditions while preventing air/soil/water pollution. The manure will be collected and moved directly to customized anaerobic digestion facilities which will produce renewable natural gas (and re-cycle CO2 from the gas cleaning process). Covered barns will reduce weather impacts on the livestock and have been demonstrated to promote improved general health and weight gain in the cattle housed in them. The barns’ very large roof surface area will be utilized (in appropriate geographical locations) for the installation of photovoltaic solar generation systems to produce electricity for the facility, as well as export to the grid. The barn roofs will also be configured to capture rainwater, which, coupled with the water recovered from the treatment process, will reduce the projects’ reliance on current water supplies. Waste treatment and resource recovery will be provided by Bion’s Gen3Tech platform, which Bion believes offers the most comprehensive solution for livestock waste available today. In addition to direct environmental benefits, every pound of nitrogen that is captured, upcycled, and returned to the agricultural nitrogen cycle as high-quality fertilizer (vs lost to contaminate downstream waters), is also a pound of nitrogen that will not have to be produced as synthetic urea or anhydrous ammonia, with their tremendous carbon cost. System performance and environmental benefits will be monitored and verified through third parties, with USDA PVP certification of the sustainable brand that Bion also believes will be the most comprehensive available in the market. Recently there have been efforts to establish sustainable brands (including USDA PVP certification) for a number of small-scale livestock producers (largely in the grass-fed beef category). To date, the reach and extent of such efforts is limited, and it is difficult to determine their effectiveness. Additionally, there have been public announcements of initiatives related to beef sustainability (largely focused on the ‘cow-calf’ segment of the livestock chain) in procurement by major beef processing companies, but a closer look finds that most consist largely of ‘green washing’ public proclamations in the wake of environmental and social criticism that re-package prior initiatives and lack any significant new substance. 12 At present, there is essentially no traceable and verifiable ‘sustainable beef’ available to the US market except for niche products. In response to consumer demand for transparency and sustainability, Bion expects the meat industry in general, and beef specifically, to evolve towards using new technologies to deliver these attributes in their products. While we anticipate a faster adoption of tracking, verification and sustainability technologies in other perishable food categories like produce and dairy due to their shorter product cycles (and related harvest and production techniques), meat industry leaders have also announced their willingness to move forward with initiatives in this area. Many companies have announced meaningful ‘sustainability’ initiatives, but most appear to consist largely of ‘greenwashing’ marketing commitments rather than substantive undertakings at this date. Some portion of sustainable beef will likely be organic (see below). Sustainable Organic Beef Bion believes it has a unique opportunity to produce, at scale, affordable corn-fed organic beef that is also certified as sustainable. In addition to the sustainable practices described above, organic-sourced beef cows would be finished on organic corn, which would be produced using the ammonia nitrogen fertilizer captured by the Gen3Tech platform and ARS. Bion believes its meat products will meet consumer demands with respect to sustainability and safety (organic) and also provide the tenderness and taste American consumers have come to expect from premium conventional American beef that has been missing in current organic beef products. Such products are largely unavailable in the market today. We believe Bion’s unique ability to produce the fertilizer needed to grow a supply of relatively low-cost organic corn, and the resulting opportunity to produce organic beef, will differentiate us from potential competitors. 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, 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. Standalone Opportunity Based on results with our ARS at the Fair Oaks facility, and after our IP was extended to industrial and municipal waste streams in January 2024, we announced our intention to establish strategic partnerships in the biogas/RNG sector and to market the ARS as a standalone ’bolt-on’ ammonia control solution for anaerobic digestion (“AD”) of both animal manure waste (non-Bion livestock waste treatment facilities), as well as industrial and municipal wastewater, both in the U.S. and in Europe: A) INDUSTRIAL AND MUNICIPAL WASTEWATER represents our best opportunity in the US, because these types of facilities are already regulated by point source water discharge standards. AD is now used at 1,269 water resource recovery facilities in the U.S., with another 102 stand-alone systems that digest food waste. The American Biogas Council estimates that there are an additional 8,600 sites with development potential. Germany, by comparison, has almost 10,000 operating AD sites, indicating the potential for substantial growth in biogas production here in the U.S. In an industrial or muni application, ammonia control is an anticipated cost – Bion anticipates it would be paid a tolling fee to remove the ammonia nitrogen from the discharge stream. As a service provider, Bion will need to be the ‘low-cost solution’ compared to other ammonia removal technologies, although higher treatment costs could be mitigated by byproduct values as described below. This is a new application of our technology, in a sector that is evolving quickly with the increasing focus in the U.S. on biogas production from organic waste. With our expertise and experience limited to animal waste, it is critical that we identify a strategic partner in this space as soon as possible. Bion’s technical and economic advantage in this space is our ammonium bicarbonate fertilizer. Technology competitors, such as ammonia stripping, may not produce a salable product at the end of their treatment process (stripping mostly releases nitrogen gas to the atmosphere). In the organic fertilizer markets, our competitors are also able to capture ammonia, but not stabilize it inexpensively, leading to higher production costs than we anticipate. In the low-carbon fertilizer space, our low net cost due to the tolling fee may offset the lower production costs we anticipate for large scale green ammonia projects we might compete with. As a result of this ‘double dip’ (being paid both to remove the ammonia, then to sell it as a fertilizer), we think this space should be a good fit for Bion. We believe meat and poultry slaughter/processing plants may be the best fit for our technology. Their wastewater streams are concentrated, relatively consistent, and have similar characteristics to the animal waste stream our technology was developed to treat. Further, the industry is now being targeted for increased EPA regulation. It is generally accepted that the top 10 percent of facilities (by capacity) will be subject to more stringent discharge standards. This is expected to require additional treatment at the largest facilities, which could enhance the retrofit opportunity in this space. Municipal wastewater treatment is much more complex, owing to the wide variety of components/ contaminants in the waste stream, including PFAS (dissolved from plastics), siloxane (chemical material from makeup and other personal products), pharmaceuticals, etc. Bion would need to conduct extensive pilots and trials prior to entering the municipal space. Again, a strategic engineering partner with municipal experience will be critical to success in this space. 13 B) ANIMAL WASTE. According to the American Biogas Council here are 473 animal waste digesters operating in the U.S. today, most on dairy operations. The American Biogas Council and USDA’s AgSTAR program estimate more than 8,000 additional sites with development potential. Bion’s ARS was designed specifically for this purpose: control ammonia from livestock waste and produce the highest value byproducts with it. In the U.S., post-AD animal waste digestate is treated like raw animal manure and can be land-applied under a nutrient management plan. Absent a regulatory driver, there is no tolling fee opportunity in the U.S., yet. While animal waste AD is not required to comply with point source discharge permits, in certain areas like California, nutrient management budgets are stretched, and it is becoming increasingly difficult to find enough land to apply the digestate. Identifying those areas will be the key to success in this market. We expect regulatory drivers to develop in the U.S. on a regional basis initially, based on groundwater contamination and PM2.5 levels (see earlier discussion). The new PM2.5 regulations are just being published, so it will be some months before we have clarity on exactly what the new non-attainment areas are. The CA central valley is one of the first places where PM2.5 levels could drive ammonia regulations and create that regulatory driver. More than a dozen states have severe groundwater concerns, mostly related to agriculture. While behind the PM2.5 issue, groundwater is now viewed as a health issue and is gaining quickly. Recent trends in Michigan and California indicate they may soon begin to regulate animal waste digestate in the same manner as any other industrial source, subject to groundwater permitting requirements. The European Union is ripe for nutrient control of post-AD animal manure waste, due to an existing focus on ammonia and nitrogen, and strong subsidy market drivers that essentially serve the same purpose as regulation. Bion has already been named as the ammonia control technology provider for a regional dairy waste AD project in Ireland that is awaiting federal funding. Bion believes its proven technology and value-added fertilizers will give it a significant competitive advantage in the EU markets. CAFO Retrofit Opportunity 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 represents one of the greatest opportunities to achieve wholesale and meaningful improvements in U.S. air and water quality and to dramatically reduce the negative environmental impacts from the food supply chain. Bion’s Gen3Tech platform can largely eliminate the environmental impacts of CAFOs. Bion’s technology, coupled with its unique business model, enables the cleanup of the ‘dirtiest’ parts of the food supply chain: animal protein production and generates value to help offset the costs of that cleanup. Cleaning up the livestock supply chain will be expensive and will require subsidies. Bion’s management believes that CAFO cleanup, driven by either regulation or incentive, is inevitable and that our technology, which was ‘purpose built’ for this challenge, will play an important role in that cleanup. The livestock industry and its markets are already changing. With our commercial-ready technology and business model, Bion believes it has a ‘first-mover advantage’ over others that will seek to exploit the opportunities that will arise from the industry’s inevitable transformation. Bion anticipates moving forward with the development of its initial commercial installation utilizing its Gen3Tech with the Stovall-Bion JV, during the current 2024 calendar year. We believe that the success of this project will demonstrate that CAFO cleanup can be achieved and can provide a pathway to true economic and environmental sustainability, with ‘win-win’ benefits for the livestock industry, the environment, and the consumer. Bion intends to pursue this opportunity for CAFO cleanup and advocate for its implementation on a broad scale. The Livestock CAFO Problem The livestock CAFO industry is under tremendous pressure from regulatory agencies, a wide range of advocacy groups, institutional investors and the industry’s own consumers, to adopt sustainable practices. Environmental cleanup is inevitable and has already begun - and policies have already begun to change, as well. Bion’s Gen3Tech was developed for implementation on large scale livestock production facilities, where scale drives both lower treatment costs and efficient co-products production, as well as dramatic environmental improvements. We believe that scale, coupled with Bion’s verifiable treatment technology platform, will create a transformational opportunity to integrate clean production practices at (or close to) the point of production—the primary source of the industry’s environmental impacts. Bion intends to assist the forward-looking segment of the livestock industry to bring animal protein production in line with 21st Century consumer demands for meaningful sustainability. In the U.S. (according to the USDA’s 2017 agricultural census) there are over 9 million dairy cows, 90 million beef cattle, 60 million swine and more than 2 billion poultry which provides an indication of both the scope of the problem addressed by Bion’s technology, as well as the size of Bion’s opportunity. Environmental impacts from livestock production include surface and groundwater pollution, greenhouse gas emissions, ammonia, and other air pollution, excess water use, and pathogens related to foodborne illnesses and antibiotic resistance. While the most visible and immediate problems are related to nutrient runoff and its effects on water quality, the industry has recently been targeted by various stakeholder groups for its impacts on climate change. Estimates of total annual U.S. livestock manure waste vary widely, but start around a billion tons, between 100 and 130 times greater than human waste. However, while human waste is generally treated by septic or municipal wastewater plants, livestock waste – raw manure – is spread on our nation’s croplands for its fertilizer value. Large portions of U.S. feed crop production (and most organic crop production) are fertilized, in part, in this manner. Under current manure management practices, 80% or more of total nitrogen from manure, much of it in the form of ammonia, escapes during storage, transportation, and during and after soil application, representing both substantial lost value and environmental costs. 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. 14 Runoff from livestock waste has been identified in most of our major watersheds as a primary source of excess nutrients that fuel algae blooms in both fresh and saltwater. Over the last several years, algae blooms have become increasingly toxic to both humans and animals, such as the Red Tides on the Florida and California coasts, and the Lake Erie algae bloom that cut off the water supply to Toledo, Ohio, residents in 2014. When the nutrient runoff subsides, it leaves the algae blooms with no more ‘food’ and the blooms die. The algae’s decomposition takes oxygen from the water, leading to ‘dead zones’ in local ponds, lakes, and ultimately, the Great Lakes, as well as the Chesapeake Bay, Gulf of Mexico, and other estuary waters. Both the toxic algae blooms and the low/no-oxygen dead zones devastate marine life, from shrimp and fish to higher mammals, including dolphins and manatees. U.S. EPA already considers excess nutrients “one of America’s most widespread, costly and challenging environmental problems”. Nutrient runoff is expected to worsen dramatically in the coming decades due to rising temperatures and increasing rainstorm intensity as a result of climate change. Nitrate-contaminated groundwater is of growing concern in agricultural regions nationwide, where it has been directly correlated with nutrient runoff from upstream agricultural operations using raw manure as fertilizer. Pennsylvania, Wisconsin, California and Washington, and others, now have regions where groundwater nitrate levels exceed EPA standards for safe drinking water. High levels of nitrate can cause blue baby syndrome (methemoglobinemia) in infants and affect women who are or may become pregnant, and it has been linked to thyroid disease and colon cancer. EPA has set an enforceable standard called a maximum contaminant level (MCL) in water for nitrates at 10 parts per million (ppm) (10 mg/L) and for nitrites at 1 ppm (1 mg/L). Federal regulations require expensive pretreatment for community water sources that exceed the MCL; however, private drinking water wells are not regulated, and it is the owners’ responsibility to test and treat their wells. Additionally, groundwater flows also transport this volatile nitrogen downstream where, along its way, it intermixes with surface water, further exacerbating the runoff problem. Like atmospheric deposition, the current conservation practices relied on to reduce agricultural runoff are largely bypassed by this subsurface flow. Nitrogen and ammonia are also global concerns, with a growing number of harmful algae blooms and recurring dead zones across the world. In the EU, a nitrogen cap has been established that has led to political and social unrest, especially in Ireland and the Netherlands, where farmers are faced with culling their dairy and swine herds by as much as 50 percent. The ability to capture and stabilize their ammonia, so that it can be easily transported away from regions where it is not wanted and then precision applied where and when needed, could have a profound impact on the agricultural economies of these countries that export the majority of the dairy and pork products they produce. Additionally, in arid climates, such as California, airborne ammonia emissions from livestock manure contribute to air pollution as a precursor to PM2.5 formation, small inhalable particulate matter that is a regulated air pollutant with significant public health risks. Whether airborne or dissolved in water, ammonia can only be cost-effectively controlled and treated at the source-- before it has a chance to escape into the environment where it becomes extremely expensive to ‘chase’, capture and treat. While not regulated yet, there have been ongoing discussions between the US EPA and the California Air Resources Board (CARB) what potential ammonia regulation might encompass. However, as above, California is moving forward with changes to how it deals with nitrates. High phosphorus concentrations in soils fertilized with raw manure are another growing problem. The ratio of nitrogen to phosphorus in livestock waste is fixed, and because manure application rates are calculated based on nitrogen requirements, often phosphorus is overapplied as an unintended consequence. Phosphorus accumulation in agricultural soils reduces its productivity, increases the risk of phosphorus runoff, and represents a waste of a finite resource. Decoupling the nitrogen from the phosphorus would allow them to be precision-applied, independently of each other, when and where needed. The livestock industry has recently come under heavy fire for its impacts on climate change, which has become a rallying cry for the anti-meat campaign discussed above. Estimates of the magnitude of those impacts vary widely, but the general consensus is that globally, livestock account for 14.5 percent of greenhouse emissions. In the U.S. however, that number drops to 4.2 percent, due to the increased efficiencies of American beef production. The greatest impacts come from direct emissions of methane from enteric fermentation (belches), methane and nitrous oxide emissions from the manure, with arguably the largest being the massive carbon footprint of the synthetic nitrogen fertilizers used to grow the grains to feed the livestock. Chronic droughts in the west have also impacted the long-term sustainability of some beef herds. Relocation of some beef cattle feeding locations may be required. Access to clean water is an issue of concern that is rising in the world of risks on the ranch. For decades the livestock industry has overlooked and/or socialized its environmental problems and costs. Today, the impacts of livestock production on public health and the environment can no longer be ignored and are coming under increasing scrutiny from environmental groups and health organizations, regulatory agencies and the courts, the media, consumers, and activist institutional investors. The result has been a significant and alarming loss of market share to plant-based protein and other alternative products. Bion’s Gen3Tech platform was designed to resolve these environmental issues and bring the industry in line with twenty-first century consumer expectations. 15 Advocacy groups targeting livestock and the beef industry have recently been joined by competitors that produce animal protein alternatives in seeking to exploit the industry’s environmental and economic weaknesses. Their global anti-meat messaging has had a substantial chilling effect on the relationships the beef industry has with its institutional investors; retail distributors, such as fast-food restaurants; and mostly, its consumers. Led by the United Nations Food and Agriculture Organization, a coordinated anti-meat messaging campaign has targeted consumers worldwide, primarily focused on the industry’s impacts on climate change. A 2018 NielsenIQ Homescan survey last year found that 39% of Americans are actively trying to eat more plant-based foods. Some of the recent growth in plant-based proteins results from increasing lactose intolerance and other health concerns; however, most of that growth is attributed to consumers’ growing concerns for the environmental impacts of real meat and dairy. Several large US companies that have traditionally focused on livestock production, including Cargill, ADM, Perdue Foods, and Tyson, have also recently entered the plant protein space. However, while meat alternatives, especially plant-based protein producers like Beyond Meat and Impossible Foods, have been heavily promoted (by themselves and the media) and enjoyed remarkable initial sales growth until recently, sales have flattened and/or declined over the past 18 months. It should be noted that these plant-based protein producers are primarily expected to be able to serve the ground/ processed meat market, which represents only about 10 percent of the overall animal protein market. Further, there has recently been pushback to these plant-based products, focusing on their highly processed nature and unproven health benefits, scalability/ pricing, and their uncertain carbon footprint---and market growth rates have substantially slowed and may have already plateaued and/or peaked. There have also been several companies recently enter the cellular and 3D-printed meat arena. While facing myriad challenges and further out on the development timeline, some people believe cellular agriculture (aka cultured, clean, lab-grown, cultivated) meat may have the potential to service a much larger percentage of the market than plant-based protein, including cuts like steaks, chops and roasts, but the likely cost remains very uncertain at this point. Policy Change is Coming Bion believes that policy change is coming; we continue to work with an array of stakeholders, including national representatives of the livestock industry, to support establishing new market driven strategies to allow the private sector, including the livestock industry, to provide low-cost large-scale verifiable solutions to our Nation’s clean water challenges. There are many states that face similar (or worse) to Pennsylvania’s livestock waste-related pollution issues, and they will be forced to adopt new strategies, as well. In the face of a growing problem that will only be exacerbated by climate change, it will be necessary to go beyond status quo solutions or risk losing the ecosystems that comprise many of our watersheds and estuaries. When competitively-bid markets for nutrient reductions (and/or other forms of payment for ecosystem services that will allow us to monetize environmental benefits) become fully established, Bion anticipates a robust opportunity to use its Gen3Tech-based platforms to retrofit both existing CAFOs and equip new large-scale livestock facilities (“Projects”) which will generate the supplemental revenue needed to profitably afford technology implementation from sales of verified nutrient reduction credits. Bion's Gen3Tech can provide a solution to a significant portion of the livestock problem discussed above, because it upcycles the nutrients, providing a pathway to export and precision apply them when and where needed, which prevents the uncontrolled release to the environment of most of the nutrients from the CAFO waste stream. Treatment costs are offset by recovering a substantial portion of those nutrients for value-added commercial utilization. In contrast, the current clean water strategy being utilized in the U.S. is clearly failing, because it doesn’t adequately address waste from agriculture. A lot of U.S. crops are now fertilized with raw, untreated manure. However, approximately 80 percent of the nitrogen in that manure is not utilized by the plants being fertilized but rather ‘escapes’ to contaminate the environment through various pathways. Because livestock waste is one of the largest contributors to nutrient problems in certain watersheds, livestock waste treatment can be the source of the low-cost solution for such problems – if the waste is treated upstream at (or close to) the source of production. Manure control technologies, applied to large scale facilities where concentration and scale enable cost-effective cleanup, can potentially offer the lowest cost nutrient solutions available in most watersheds today. More than 80 percent of U.S. livestock production takes place on large-scale facilities, where cost-effective treatment can be implemented. There is no longer any real question regarding whether such facilities need to be cleaned up. The actual question for public policy concerns is developing sources of new revenues which will enable the livestock industry to offset the implementation costs for the cleanup. Despite trends toward concentration in segments over the last several decades, the U.S. animal-protein industry, particularly beef, remains (in large part) a fragmented, low-margin commodity business without effective integrated efforts toward either environmentally or economically sustainable production. Cleaning it up will have to be orderly and contain a path to sustainability that does not cause U.S. food costs to spike or bankrupt the industry. This will require treatment sufficient to remove the volume of nutrients in excess of crop requirements. Because the global export market represents a significant part of the U.S. livestock production industry, direct increases in federal regulation without offsetting revenues would likely create costs that could not be absorbed by the industry in a manner that would allow it to remain competitive in international markets. Selective state regulation would have a similar chilling effect within the U.S., since regulated producers in one state would be unable to compete with unregulated producers in adjoining states. Subsidies and/or new revenue sources are required. Bion believes that reallocating some part of the approximately $110 billion in existing U.S. taxpayer-funded clean water spending to lower-cost alternative solutions in agriculture (including competitively-bid nutrient reduction procurement) is inevitable. It will provide the taxpayer with accelerated and substantially lower-cost (and verified) air and water quality solutions compared to current strategies. If Bion’s technology is implemented in appropriate situations, it will provide the livestock industry with the recurring revenues that are needed to offset the costs of technology adoption without major disruption to the industry. To date, a wide range of entrenched interests have opposed and fought policy change that might reallocate clean water spending to more cost-effective alternatives; but this common-sense approach is being accepted by a widening group of stakeholders. 16 Chesapeake Bay Watershed: Pennsylvania Initiatives The urgency to clean up nutrient (primarily nitrogen and phosphorus) pollution to the Chesapeake Bay was clearly demonstrated with President Obama's 2009 Executive Order concerning clean-up of the Chesapeake Bay and the EPA’s publication and issuance during December 2010 of the Chesapeake Bay Total Maximum Daily Load (TMDL) standard (http://www.epa.gov/reg3wapd/tmdl/ChesapeakeBay/tmdlexec.html) for nutrient pollution in Chesapeake Bay tributaries. In May 2010, the EPA published their overall strategy for remediating the Chesapeake Bay, and they have committed to reducing nitrogen and phosphorus flows to the Bay sufficiently to enable 60% of the Bay watershed segments to meet water quality standards by 2025. At that time, 89 of the 92 Bay and tidal watershed segments were not in compliance with water quality standards (97% were out of compliance). EPA documents defined the overall mission as requiring an approximately 65-million-pound annual reduction from existing nitrogen (N) loading to the Chesapeake Bay by 2025, of which 35 million pounds was allocated to Pennsylvania. Importantly, the 3-year compliance milestones were established as a part of the compliance program to add both short- and long-term accountability to state actions associated with reduced nutrient and sediment flows to the Chesapeake Bay. According to the EPA’s Interim Evaluation of Pennsylvania’s Milestone Progress published in June 2015, PA was 14.6 million pounds behind its 2014-2015 milestone commitments for nitrogen, a remarkably large deficit given the previously stated 2-million-pound deficit from the 2012-2013 water year. EPA has placed PA’s agriculture and urban/suburban sectors under a “Backstop Actions Level”, the highest level of EPA oversight. EPA has also stated that if load reductions remain off track, EPA may consider seeking additional (and expensive) pollutant reductions from the wastewater sector. In an effort to get back on track and hold off federal intervention, PA unveiled a purported “comprehensive strategy” to "reboot" the state's efforts to improve water quality in January 2016. The reboot strategy relied upon a mix of enhanced farm compliance and enforcement activities along with the promotion of additional best management practices (BMP). This proposed strategy has been met with skepticism about its efficacy/practicality and resistance within the agricultural community. While many of these reboot efforts are continuing today, the PADEP Secretary resigned in May 2016 and PA appears to have slowed implementation efforts recently while seeking alternative approaches to reduce PA’s nitrogen pollution to the Chesapeake Bay. The EPA has continued to reject PA’s proposed plans related to the Chesapeake Bay clean-up mandate as inadequate. Recent reports indicate that PA is in need of 32 million pounds of nitrogen reductions to meet its requirements. Litigation has been initiated against PA and the EPA by neighboring states to compel performance by PA and enforcement by the EPA. Pennsylvania, Kreider Farms, and Nutrient Credits Bion’s activities in Pennsylvania (“PA”) commenced with the Kreider 1 2G Tech dairy system in the Chesapeake Bay watershed in 2008. This retrofit installation was designed and intended primarily to reduce nitrogen and phosphorus releases and ammonia emissions from the dairy waste streams to generate tradable nutrient reduction credits as part of a nutrient credit trading program through the PA Department of Environmental Protection (‘PADEP’). While this project was not a commercial success (due to PA’s failure to implement a viable long-term credit trading market), it demonstrated that Bion’s manure treatment technology can generate low-cost verified credits and provided the basis of a 2013 PA Legislative Budget and Finance Committee report (updated in 2018) that supports the use of manure technologies to provide low-cost alternatives to meet Bay mandates. The original Kreider agreements also provided for Bion to develop a waste treatment/renewable energy production facility to treat the waste from Kreider's approximately 6+ million chickens (planned to expand to approximately 9-10 million) (and potentially other poultry operations and/or other waste streams)('Kreider Renewable Energy Facility' or ' Kreider 2 Project'). On May 5, 2016, the Company executed a stand-alone joint venture agreement (‘JVA’) with Kreider Farms covering all matters related to development and operation of a system to treat the waste streams from Kreider's poultry facilities in Bion PA2 LLC ("PA2"). Bion anticipates that it will execute an updated JVA with Kreider Farms during the current fiscal year which will include utilization of Bion’s Gen3Tech and other matters. The Company continues its pre-development work related to the details of the Kreider 2 Project. For more information regarding the history and background of the Kreider 2 Project, please review our Forms 10-K for the years from 2008 through 2021. The Company believes that Pennsylvania is potentially ‘ground zero’ in the long-standing clean water battle between agriculture and the further regulation of agriculture relative to nutrient impacts. The ability of Bion and other technology providers to achieve verified reductions from agricultural non-point sources can resolve the current stalemate and enable implementation of constructive solutions that benefit all stakeholders, providing a mechanism that ensures that taxpayer funds will be used to achieve the most beneficial result at the lowest cost, regardless of source. All sources, point and non-point, rural and urban, will be able to compete for taxpayer-funded nitrogen reductions in a fair and transparent process; and since payment from the tax and rate payers would now be performance-based, these providers will be held financially accountable. A bipartisan 2013 Pennsylvania legislative study projected that creating a competitive bidding program to procure verified nitrogen reductions to meet federal Chesapeake Bay mandates, regardless of source , could reduce the state’s tax- and ratepayer-funded compliance costs by up to 80 percent (approximately $1.5B annually). The legislative study was updated in 2018 to reflect new policies. The updated report projected savings of up to 90 percent. As discussed in the original study, much of the savings were due to low-cost high-impact manure control projects (Bion’s technology figured prominently in the report). Senate Bill 575, which was supported by legislative leadership, national livestock interests and other key stakeholders (and is consistent with US EPA policies), which would have established a competitive procurement program and unlock some of these opportunities in PA was passed during June 2019 by the Pennsylvania Senate voted 33 to 17 but one effect of the Covid-19 pandemic crisis has been that PA funding for new initiatives is largely ‘on hold’ at the present time. Bion anticipates that after passage of a similar bill in the future (of which there is no assurance), PA will establish a competitively-bid market for nutrient credits within twelve months after legislative passage and being signed into law by the Governor. 17 In a 2017 Letter of Expectation to PA’s Department of Environmental Protection, US EPA demonstrated its support of a procurement strategy to engage the private sector - as long as the Credits are verified. It is noteworthy that US EPA and national livestock industry representatives agree on this strategy. Such a procurement strategy is also consistent with USDA and EPA support of ‘Private Partnerships’ and OMB’s guidance that supports acquiring verified results vs. financing projects with uncertain outcomes and taxpayer risks. Not surprisingly, the primary opponents of this strategy are the entrenched interests of the clean water status quo, although how much longer they can avoid accountability for a failing strategy remains to be seen. We believe that such strategies that may be developed in Pennsylvania and the Chesapeake Bay, if implemented, are likely to serve as a model for the 40 other states now seeking solutions to similar water quality problems. Today, most states face a similar issue---unfunded federal clean water mandates. Pennsylvania’s proposed competitive bidding program provides an opportunity to significantly reduce the cost to PA (and a model for other states to utilize in the future) in meeting such mandates. Kreider Poultry Joint Venture, Pennsylvania and Chesapeake Bay Initiatives It is possible that the Kreider 2 poultry waste treatment Project, which was in its early development and pre-permitting phase but is now ‘on hold’, will become one of our large-scale JV Projects if a workable market for nutrient reduction credits develops in PA, of which there is no assurance. If constructed, the Kreider 2 Project will utilize our Gen3Tech platform to treat the waste stream from Kreider Farm’s large poultry operations (possibly together with waste from other nearby poultry operations and/or other waste streams) (and the dairy waste stream previously treated in the Kreider 1 system) to generate renewable energy, marketable nutrient reduction credits and co-products (including nitrogen in organic and/or non-organic forms). It is targeted to treat the waste stream from approximately 9 million birds, in modules, when fully developed. To date the market for long-term nutrient reduction Credits in Pennsylvania has been very slow to develop and the Company’s activities have been negatively affected by such lack of development. However, Bion is confident that if and when these markets are established, the Credits it produces will be competitive in the credit trading markets, based on its cost to remove nitrogen from the livestock waste stream, compared to the cost to remove nitrogen through various other treatment activities. Bion anticipates that it would be able to profitably develop the Kreider 2 project if it is able sell nutrient credits generated at the Kreider 2 facilities (and subsequent projects) at prices are in the range of $6-$12 (or higher) per pound of nitrogen reduction, under long-term contracts, of which there is no assurance. Bion further believes that with the studies and information now available to other states that are (or will shortly be) facing these same decisions, a cost-benefit analysis will make it clear from the outset that competitive bidding for nutrient reduction credits from alternative approaches can provide dramatically lower-cost solutions than traditional strategies. Bion has a long-standing relationship with Kreider Farms, including a 2016 joint venture agreement related to these potential facilities. Kreider has already made a significant investment in upgrading its poultry facilities to maximize the treatment and recovery efficiencies that can be achieved with Bion’s technology. Note, however, that the Kreider 2 project is dependent, in part, on development of a substantial competitively-bid market for long-term commercial sale of the nutrient reduction credits produced at Kreider 2 (or another form of payment for ecosystem services). If/when a viable competitive procurement program for nutrient credits or similar program is implemented in PA, we intend to move forward on the development of the initial portions of the Kreider 2 Project during the subsequent year. Certain matters related to Kreider 2 are discussed at “Kreider Poultry Joint Venture and Pennsylvania and Chesapeake Bay Initiatives”. The Kreider 2 poultry waste treatment facility in PA could become one of our initial Gen3Tech Retrofit Projects outside of the sustainable beef segment. However, Bion intends that it will only refocus its attention on PA and select a site for the Kreider 2 Project and/or its initial Integrated Project (and possibly additional Projects) after PA adopts a competitively-bid nutrient credit purchase/procurement program (or similar program). Until such time as policy change such that the CAFO Retrofit Opportunity business model is feasible, Bion will remain focused on beef projects and standalone opportunities with sufficient economic drivers that they are not dependent on nutrient credits. See the extended additional discussion regarding these matters in our Annual Reports on Form 10-K for the years ended June 30, 2023, and 2021, and prior years. Going Concern: The Company’s consolidated financial statements have been prepared assuming the Company will continue as a going concern. The Company incurred a net loss of $11,691,000 and $3,189,000 for the years ended June 30, 2024, and 2023, respectively. At June 30, 2024, the Company has a working deficit and a stockholders’ equity of approximately $5,883,000 and $5,809,000, respectively. During the year ended June 30, 2024, a one time, non-recurring, non-cash charge of $9,460,425 was incurred by the Company at in connection with a write-down of the capitalized carrying value of the Initial Project (at Fair Oaks, Indiana) because the Initial Project is: i) largely a research & development facility and ii) is located on land subject to a short term lease. This charge reduced the Company shareholders’ equity to ($5,809,000) and resulted in a loss of $11,691,115 for the 2024 fiscal year. During the year ended June 30, 2023, the Company had debt modifications that resulted in a one time /non-recurring, non-cash reduction of debt of $3,522,000 and an increase in equity. The Company’s lack of revenue and/or operating profits, together with the low likelihood of generating positive cash flow and/or net income during the next 12-24 months, raise substantial doubt about the Company’s ability to continue as a going concern. For more detail regarding Going Concern, including Management’s Plans, see Note 1 of Notes to Financial Statements below. PRINCIPAL PRODUCTS AND SERVICES The Company’s focus is on implementing its Gen3Tech in JVs (as described above). Therefore, the category ‘PRINCIPAL PRODUCTS AND SERVICES’ is not applicable for the Company’s business. While the Company may implement some Gen3Tech systems on a contractual basis, and may, in the future, license or otherwise deploy our ARS as a standalone ammonia control solution, at this time our business does not involve the sale of our systems (or equipment) or long term direct operations/management of our systems (or equipment). 18 CORPORATE BACKGROUND The Company is a Colorado corporation organized on December 31, 1987. Our principal executive offices are located in the home offices of our senior executives. Our primary administrative office is now located at the residence of our Office Manager at 9 East Park Court, Old Bethpage, New York 11804, at which location most of the Company’s physical records and central computer reside. Our primary telephone number is 516-586-5643. We have no additional offices at this time as all employees and primary consultants work from their home offices. HISTORY AND DEVELOPMENT OF OUR BUSINESS Substantially all of our business and operations to date has been conducted through wholly-owned subsidiaries, Bion Technologies, Inc. (a Colorado corporation organized September 20, 1989), Bion Integrated Projects Group, Inc. ("Projects Group") (formerly Bion Dairy Corporation through August 2008 and originally Bion Municipal, Inc., a Colorado corporation organized July 23, 1999) and Bion Services Group, Inc. ("Services Group") (formerly Bion International, Inc., a Colorado corporation organized July 23, 1999) and BionSoil, Inc. (a currently inactive Colorado corporation organized June 3, 1996). Bion is also the parent of Bion PA 2 LLC (a Colorado entity organized June 24, 2010) (“PA2”) and Bion 3G-1, LLC (a Colorado entity organized on September 23, 2021). In January 2002, Bion entered into a series of transactions whereby the Company became a 57.7% (now 58.9%) owner of Centerpoint Corporation (a Delaware corporation organized August 9, 1995) ("Centerpoint"). Bion was formerly the parent of Bion PA 1 LLC (a Colorado entity organized August 14, 2008) (“PA1”) which was dissolved on December 29, 2021. Although we have been conducting business since 1989, we determined that we needed to redefine how we could best utilize our technology during 2003 and again in 2015. From 2003 through early 2008, we primarily worked on technology improvements and applications and in furtherance of our business model of Integrated Project development. During 2008 we re-commenced pursuing active commercial transactions involving installation of our 2G Tech for CAFO waste treatment and related environmental remediation and initiation of pre-development modeling and pre-development work to prepare for our initial Integrated Projects. Commencing during 2015, the Company focused its efforts largely on the development of our Gen3Tech platform which was largely completed during 2021. We are now focused primarily on development of JVs and Projects based on implementation of our Gen3Tech platform (and business model) in the industry segments discussed above. Our original systems were wastewater treatment systems for dairy farms and food processing plants. The basic design was modified in late 1994 to create Nutrient Management Systems ("NMS") that produced organic soil products as a byproduct of remediation of the waste stream when installed on large dairy or swine farms. Through June 30, 2002, we sold and subsequently installed, in the aggregate, approximately 30 of these first iteration of Bion’s systems in 7 states, of which we believe a few may still in operation in 3 states. We discontinued marketing of our first-generation NMS systems during fiscal year 2002 and turned control and ownership of the first-generation systems over to the farms on which they were installed over the following two years. We were unable to produce a business model based on the first-generation systems that would generate sufficient revenues to create a profitable business. While continuing to market and operate the first-generation systems, during the second half of calendar year 2000, we began to focus our activities on developing the next generation of the Bion technology. We no longer operate or own any of the first-generation NMS systems. As a result of our research and development efforts, the core of our current technology was re-developed during fiscal years 2001-2004. We designed and tested Systems that used state-of-the-art, computerized, real-time monitoring and system control with the potential to be remotely accessed for both reporting requirements and control functions. These Systems were smaller and faster than our first-generation NMS systems. The initial versions of our second generation of Bion Systems were designed to harvest solids used to produce organic fertilizer and soil amendments or additives (the "BionSoil(R) products") in a few weeks as compared to six to twelve months with our first-generation systems. During 2003-2004 we designed, installed and began testing a commercial scale, second generation Bion System as a temporary modification or retrofit to a waste lagoon on a 1,250-milking cow dairy farm in Texas, known as the DeVries Dairy. In December 2004, Bion published an independently peer-reviewed report, with data from the DeVries project demonstrating a reduction in nutrients (nitrogen and phosphorus) of approximately 75% and air emissions of approximately 95%. Through 2007 the demonstration project at the DeVries Dairy in Texas also provided Bion with the opportunity to explore mechanisms to best separate the processed manure into streams of coarse and fine solids, with the coarse cellulosic solids/biomass supporting generation of renewable energy and the fine solids potentially becoming the basis of organic fertilizer products and/or a high-protein animal feed ingredients. On-going research was also carried out on various aspects of nutrient releases and atmospheric emissions. Bion discontinued operation of the DeVries demonstration research system during 2008. During the 2005-2008 period, Bion focused on completing development of its 2G Tech platform and business model. As such, we did not pursue near term sales and revenue opportunities, such as retrofitting existing CAFO's with interim versions of our waste management solutions, because such efforts would have diverted scarce management and financial resources and negatively impacted our ability to complete development of an integrated technology platform in support of large-scale sustainable Projects. 19 From 2009 (when development of our Gen3Tech platform began) through 2021, Bion actively pursued business opportunities in three broad areas 1) Bion systems to retrofit of existing CAFO’s (some of which may generate verified nutrient credits and revenues from the production of renewable energy and byproducts) (“Retrofits”), and 2) development of new state-of-the-art large scale waste treatment facilities, potentially in conjunction with new CAFOs developed in strategic locations that were not previously possible due to environmental constraints in strategic locations (“Projects”) (some of these may be “closed loop’ Integrated Projects that were not previously possible due to environmental constraints as described below), and 3) licensing and/or joint venturing of Bion’s technology (primarily) outside North America. Bion is now primarily pursuing JVs related to these opportunities within the United States and internationally based on our Gen3Tech as described above. A significant focus during this period was the development of Kreider 1 and advocating for private sector solutions to the Chesapeake Bay nutrient problems, as described above. Significant time and resources were expended by the Company in pursuit of this opportunity; however, due to opposition from the entrenched clean water status quo, Bion determined that the credit market would not develop on a timeline that was feasible for Bion. Bion PA1, the Company’s wholly-owned subsidiary that was established to pursue the Kreider/PA/Chesapeake Bay Opportunity, was dissolved on December 29, 2021.. For more information regarding the history and background of PA1, please review our Form 10-K Annual Reports for the years from 2008 through 2023, including the Notes to the Financial Statements included therein. From 2021 to present, Bion has focused on implementing our technology in the beef cattle industry, as described above. These efforts have included technology development, including a pilot facility followed by our demonstration facility, patent filings, organic initiatives, and adding to our staff and advisory group. COMPETITION: There are a significant number of potential competitors in the industries in which Bion is working, including livestock waste treatment, renewable energy production, fertilizer manufacturing, and the production of sustainable beef products. There are a host of competitors working in the livestock waste treatment space. One efficient way to assess competition in these spaces is to review the Newtrient, LLC catalogue which is produced by an organization created by the dairy industry to help farmers, technology providers, manure-based product developers and other stakeholders assess manure related challenges and opportunities. Many of the technologies reviewed by and organized by Newtrient in their catalog, such as Bion, address manure streams in addition to dairy. The potential competition has increased with the growing governmental and public concern focused on pollution due to CAFO waste. Waste treatment lagoons which depend on anaerobic microorganisms ("anaerobic lagoons" or “ADs”) are the most common traditional treatment process for animal waste on large farms within the swine and dairy industries. Additionally, many beef feedlots, poultry facilities and dairy farms simply scrape and accumulate manure for later field application. Both lagoon and scrape/pile manure storage approaches are coming under increasing regulatory pressure due to associated odor, nutrient management and water quality issues and are facing possible phase-out in some states. Although we believe that Bion’s comprehensive solution is the most economically and technologically viable solution for the current problems, other alternative (though partial) solutions do exist, including, for example, synthetic lagoon covers (which are placed on the top of the water in the lagoon to trap the gases), stand-alone ADs (a tank which uses anaerobic microorganisms to break down the waste to produce methane), multistage and solids separators (processes which separate large solids from fine solids), as well as various thermal waste-to-energy technologies. Additionally, many efforts are underway to develop and test new technologies, particularly in the beef cattle space There is a growing industry associated with the production of fertilizer products produced from nutrients captured in CAFO manure streams. Many technology firms, including Bion, have figured out how to generate nonsynthetic products which are certified for organic production, which enables a higher valuation. Bion and its competitors are working hard to improve the production efficiency of these products while establishing markets and reducing production costs. Bion, as documented in its patents, has invented a non-synthetic process to produce ammonium nitrogen fertilizer in solid and liquid forms. To our understanding, no other manure nutrient technology firm has figured out a way to match our development of a solid ammonium nitrogen fertilizer. 20 Competition in the renewable energy generation space is growing in the agricultural sector, predominantly from the growth in anaerobic digestion (AD) projects designed to reduce odors and generate revenues from captured energy and reduced carbon footprints. AD projects are primarily associated with the dairy sector as the manure is mostly already captured and therefore there are minimal infrastructure projects required to add on AD technology. We intend to evaluate the use of our technology as a ‘bolt-on’ behind dairy ADs once we have complete data from our Initial Project. Therefore, such ‘competitors may be turned into customers for Bion. We are predominantly focused on generating AD projects at beef cattle finishing operations, an area in which very few ADs have been implemented. There is growing competition in that space even though most current beef feedlots do not engage in the type of efficient manure collection assumed to be a prerequisite for AD economics. Roller compacted concrete (RCC) is one new type of beef cattle finishing approach that enables AD integration, however it is Bion’s position that integrating RCC finishing with post AD nutrient control is unlikely, as the reactive nitrogen portion of the manure escapes to the environment before collection. Bion has also engaged with solar photovoltaic (PV) developers to install PV panels on barn roofs, and there is some competition in that space, but again not much in the beef cattle finishing sector. There is competition in the space of production of sustainable beef products. A number of ranches and beef producers are working with various third-party certification organizations to document the sustainable practices that are being implemented. Bion is working in a similar manner. All investments in this area are subject to competition and decisions made by consumers---including ‘how much will a consumer pay for truly sustainable beef products vs. standard conventional feedlot produced beef?’ Our ability to compete is dependent upon favorable regulatory conditions, our ability to obtain required approvals and permits from regulatory and other authorities and upon our ability to introduce and market our Systems in the appropriate industry and geographic segments. There are many companies that are already selling products to satisfy demand in the sectors of these markets we are trying to enter. Many of these companies have established marketing and sales organizations and customer commitments, are supporting their products with advertising, sometimes on a national basis, and have developed brand name recognition and customer loyalty in many cases. Because Bion systems offer a comprehensive waste treatment solution that is designed to produce/augment up to four separate and distinct revenue streams, the Company believes that it has the ability to be competitive in each of the sectors from which it derives revenue. 21 DEPENDENCE ON ONE OR A FEW MAJOR CUSTOMERS In our JVs/Projects (including Integrated Projects) business segment, we will most likely be dependent upon one or a few major customers/partners/joint venturers since a relatively limited number of JVs and/or Projects (including Integrated Projects) will be developed by the Company. We anticipate initially developing, owning interests in, and operating only one or a small number of Projects commencing during 2024 and, thereafter, developing a limited number of Projects at a time. Thus, at least for the near future, our revenues will be dependent on a relatively small number of major Projects, participants and/or customers. PATENTS We are the sole owner of six United States patents. Additionally, Bion has two United States patent applications pending and has three international patent applications currently pending. Patent Numbers and date of issue: United States Currently Issued: (1) 8,287,734: Method for Treating Nitrogen in Waste Streams: (OCN) Jere Northrop & James W. Morris (Exp 3/20/31) (2) 10,106,447: Process to Recover Ammonium Bicarbonate from Wastewater: Morton Orentlicher & Mark M. Simon. (Exp. 9/14/2035) (3) 10,604,432: Process to Recover Ammonium Bicarbonate from Wastewater; Dominic Bassani, Steve Pagano, Morton Orentlicher & Mark M. Simon. (Exp 6/29/2037) (4) 10,793,458: Process to Recover Ammonium Bicarbonate from Wastewater; Dominic Bassani, Steve Pagano, Morton Orentlicher & Mark M. Simon. (Exp 9/14/2035) (5) 11,254,581: Process to Recover Ammonium Bicarbonate from Wastewater; Dominic Bassani, Morton Orentlicher, Mark M. Simon & Steve Pagano. (Exp 9/14/2035) (6) 11,858,823: Process to Recover Ammonium Bicarbonate from Wastewater; Dominic Bassani, Morton Orentlicher, Mark M. Simon & Steve Pagano. (Exp 9/14/2035) We are also the sole owner of, or possess the contractual right to acquire exclusive patent rights to, a pending United States provisional patent application, a pending United States utility patent application and three international applications as set forth below: United States Currently Pending: (1) 63/512,361 (provisional): Methods For Recovering Ammonium Compounds From A Waste Stream; Dominic Bassani & Steve Pagano. (Exp 7/08/2025) (2) 17/589,037: Process to Recover Ammonium Bicarbonate from Wastewater; Dominic Bassani, Steve Pagano, Morton Orentlicher & Mark M. Simon. International Applications Currently Pending: (1) EP 18943551.4: Process to recover ammonium bicarbonate from wastewater; Dominic Bassani, Steve Pagano, Morton Orentlicher & Mark M. Simon. (2) CA3123802A1: Process to recover ammonium bicarbonate from wastewater; Dominic Bassani, Steve Pagano, Morton Orentlicher & Mark M. Simon. (3) MX/a/2021/007358: Process to recover ammonium bicarbonate from wastewater; Dominic Bassani, Steve Pagano, Morton Orentlicher & Mark M. Simon. In addition to such factors as innovation, technological expertise and experienced personnel, we believe that a strong patent position is increasingly important to compete effectively in the businesses on which we are focused. It is likely that we will file applications for additional patents in the future. There is, however, no assurance that any such patents will be granted. 22 The Company has elected to expense all costs and filing fees related to obtaining patents (resulting in no related asset being recognized in the Company’s consolidated balance sheets) because the Company believes such costs and fees are immaterial (in the context of the Company’s total costs/expenses) and have no direct relationship to the value of the Company’s patents. It may become necessary or desirable in the future for us to obtain patent and technology licenses from other companies relating to technologies that may be employed in future products or processes. To date, we have not received notices of claimed infringement of patents based on our existing processes or products, but due to the nature of the industry, we may receive such claims in the future. We generally require all of our employees and consultants, including our management, to sign a non-disclosure and invention assignment agreements upon employment with us. It may become necessary or desirable in the future for us to obtain patent and technology licenses from other companies relating to technologies that may be employed in future products or processes. To date, we have not received notices of claimed infringement of patents based on our existing processes or products, but due to the nature of the industry, we may receive such claims in the future. We generally require all of our employees and consultants, including our management, to sign a non-disclosure and invention assignment agreements upon employment with us. RESEARCH AND DEVELOPMENT Current research and development work is focused on completion of the development and ongoing improvement of our ARS (the initial version of which is ready for implementation in an appropriate Project) and Gen3Tech, with emphasis on increased recovery of valuable co-products (including nutrients in organic and/or non-organic forms, production of renewable energy, with related renewable energy and/or environmental credits). Bion believes its Gen3Tech will produce significantly greater value from the CAFO waste stream through the recovery of a concentrated natural nitrogen fertilizer and pipeline-quality natural gas. Bion is also currently evaluating the ARS for its potential to provide standalone ammonia control solutions at facilities that recover biogas from organic waste streams. See discussion of Initial Project above. During the years ended June 30, 2024, and June 30, 2023, respectively, we expended approximately $23,000 and $79,000. (excluding non-cash stock-based compensation) on research and development activities related to our technology platform applications in support of large-scale, economically and environmentally sustainable Projects and Retrofits. Since the 2018 fiscal year, Bion’s research and development has been primarily focused on development work to complete and further refine development of our Gen3Tech which will have the capacity to process dry, poultry CAFO waste streams in addition to wet dairy/beef/swine CAFO waste streams and increase our ability to recover marketable by-products from the waste stream remediation including renewable natural gas and nitrogen products (organic and non-organic). Some work has also involved modifying and adding unit processes to our Gen3Tech platform with the objective of reducing capital costs and operating costs, while generating commercial equivalent by-products (and therefore, potential revenue streams) and significantly increasing environmental efficiency. As a result of these efforts (including their continuation during the current period), Bion made new (and supplemental) patent filing(s) during the 2019-2021 fiscal years related to our ARS. The Company anticipates completion of its pilot system and pre-commercial testing for its ARS by end of the current calendar year to support design finalization for our initial Gen3Tech systems. Our technology focus is to separate and aggregate the various “assets” in the waste stream and then to re-assemble them to maximize their economic value. Our current research and development efforts have been focused on developments that will minimize water removal requirements thereby significantly reducing the associated energy costs of operating the ARS . In addition, current efforts are focused on fertilizer and soil amendment products (organic and inorganic), water reuse, environmental and reduction credits (including but not limited to nutrient, carbon, sediment, water and pathogen reduction) while reducing capital costs and operating costs. Bion continues to focus on “normalizing” its technology platform for use on multiple species. This effort has required significant work and resource allocation on research regarding balancing the activities of each unit process so that its output enables the subsequent unit processes to maximize efficiency and discharge to the subsequent unit process in order to produce a feedstock cost effectively. The by-products of this series of unit processes (which include certain Bion proprietary elements) are then “reassembled” into products to maximize their economic value. To date, research and development results have supported our objectives. 23 Environmental Protection/Regulation and Public Policy In regards to Retrofits and development of Projects, we will be subject to extensive environmental (and other) regulations related to CAFO's, biofuel production and end product (e.g. fertilizer) producers. To the extent that we are a provider of systems and services to others that result in the reduction of pollution, we are not under direct enforcement or regulatory pressure. However, we are involved in the business of CAFO waste treatment and are impacted by environmental regulations in at least four different ways: • Our marketing and sales success depends, to a substantial degree, on the pollution clean-up requirements of various governmental agencies, from the Environmental Protection Agency (EPA) at the federal level to state and local agencies; • Our System design and performance criteria must be responsive to the changes in federal, state and local environmental agencies' effluent and emission standards and other requirements; • Our System installations and operations require governmental permits and/or other approvals in many jurisdictions; and • To the extent we own or operate Projects (including Integrated Projects with CAFO facilities and ethanol plants), those facilities will be subject to environmental regulations. Additionally, our activities are affected by many public policies and regulations (federal, state and local) related to other industries such as agriculture, food, energy, municipal waste and storm water treatment, watershed-wide mandates, and others. For example, the existing differences in the regulatory requirements for agriculture versus municipal wastewater clean-up currently in place have negatively impaired the development of viable markets for nutrient reduction credits. Bion system installations and operations may require verification and compliance with an assortment of voluntary regulatory programs, such as the USDA Organic and USDA Process Verified branding programs. Each of these programs has a series of compliance verification steps that need to be met in order to maintain proper standing for use of the USDA shield on packaging. EMPLOYEES As of September 1, 2024, we had five employees and primary consultants, all of whom are performing services for the Company on a full-time basis. The Company utilizes other consultants and professionals on an ‘as needed’ basis. Our future success depends in significant part on the continued service of our key personnel and the ability to hire additional qualified personnel. The competition for highly qualified personnel is intense, and there can be no assurance that we will be able to retain our key managerial and technical employees or that we will be able to attract and retain additional highly qualified technical and managerial personnel in the future. None of our employees is represented by a labor union, and we consider our relations with our employees to be good. None of our employees is covered by "key person" life insurance.