BION ENVIRONMENTAL TECHNOLOGIES INC 10-K

Item 9A. Controls and Procedures. Disclosure Controls and Procedures As of June 30, 2024, under the supervision and with the participation of the Company’s President and Principal Financial Officer (the same person), management has evaluated the effectiveness of the design and operations of the Company’s disclosure controls and procedures. Based on that evaluation, the President and Principal Financial Office concluded that the Company’s disclosure controls and procedures were not effective as of June 30, 2024 as a result of the material weakness in internal control over financial reporting discussed below. Changes in Internal Control over Financial Reporting There were no changes in internal control over financial reporting that occurred during the last fiscal quarter covered by this report that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. Management’s Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in the Securities Exchange Act of 1934 Rule 13a-15(f). Our Chief Executive Officer and Principal Financial Officer (the same person) conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control – Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO Framework”) and the related guidance provided in Internal Control Over Financial Reporting – Guidance for Smaller Public Companies, also issued by the Committee of Sponsoring Organizations. Based on this evaluation, management has concluded that our internal control over financial reporting was not effective as of June 30, 2024. Our President and Principal Financial Officer concluded we have a material weakness due to our control environment, and one condition caused by this is an inadequate of segregation of duties as well as a lack of timely review and approval of related party transactions and a second condition is the a lack of timely review and approval of capitalized internal costs and interest. Our size has prevented us from being able to employ sufficient resources to enable us to have an adequate level of supervision and segregation of duties within our internal control system. There is one person involved in the processing of the Company's accounting and banking transactions and a single person with overall supervision and review of the cash disbursements and receipts and the overall accounting process. Therefore, while there are some compensating controls in place, it is difficult to ensure effective segregation of accounting duties. While we strive to segregate duties as much as practicable, there is an insufficient volume of transactions to justify additional full time staff. As a result of this material weakness, we have implemented remediation procedures whereby in May 2006 we engaged an outside accounting and consulting firm with SEC and US GAAP experience to assist us with the preparation of our financial statements, evaluation of complex accounting issues and the implementation of systems to improve controls and review procedures over all financial statement and account balances. In December of 2021, there was a change made to a new outside accounting and consulting firm. We believe that this outside consultant's review improved our disclosure controls and procedures. If this review is effective throughout a period of time, we believe it will help remediate the segregation of duties material weakness. However, we may not be able to fully remediate the material weakness unless we hire more staff. We will continue to monitor and assess the costs and benefits of additional staffing. This annual report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s independent registered public accounting firm pursuant to rules of the SEC that permit the Company to provide only management’s report on internal control in this annual report. Bank account hacking On June 23, 2023, an officer of the Company with personal accounts with Signature Bank was hacked and $75,000 was transferred from the Company’s accounts at Signature Bank to the officer’s personal accounts. The bank was notified and all Company accounts were placed on hold. Subsequently, the funds were released and transferred back to the Company prior to June 30, 2023 the end of the fiscal year and there were no losses incurred. The Company has reviewed the authorized individuals on all accounts and further limited access to its bank accounts after the hacking incident. ITEM 9B. OTHER INFORMATION Insider Trading Arrangements and Policies During the quarter ended June 30, 2024, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement” as each term is defined in Item 408(a) of Regulation S-K. 39 PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE. Our directors, executive officers and significant employees/consultants, along with their respective ages and positions are as follows: Name Age Position Directors and Officers: Craig Scott 64 Chief Executive Officer and Director Jon Northrop 81 Director William Rupp 63 Director Greg Schoener 56 Chief Operating Officer and Director Salvatore Zizza 78 Director Robert Weerts 72 Director Edward T. Schafer 78 Director Turk Stovall 48 Director Stephen Craig (Craig) Scott ( 64) has been associated with Bion since 1993. Since that time he has been responsible for business and industry intelligence and analysis. He was with Bion full-time from 1996 to 2000, then periodically as a consultant through 2005. Craig rejoined Bion in 2006 and has held several senior positions, including Director of Communications, SVP – Capital Markets, and Head of Business Development. As of June 2024, he joined Bion’s Board of Directors and was subsequently named Interim Chief Executive Officer. Craig studied business and communications at Montana State and Denver-Metro Universities. Jon Northrop (81) has served as our Secretary and a Director since March of 2003. Since September 2001 he has been self employed as a consultant with a practice focused on business buyer advocacy. Mr. Northrop is one of our founders and served as our Chief Executive Officer and a Director from our inception in September 1989 until August 2001. Before founding Bion Technologies, Inc., he served in a wide variety of managerial and executive positions. He was the Executive Director of Davis, Graham & Stubbs, one of Denver’s largest law firms, from 1981 to 1989. Prior to his law firm experience, Mr. Northrop worked at Samsonite Corporation’s Luggage Division in Denver, Colorado, for over 12 years. His experience was in all aspects of manufacturing, systems design and implementation, and planning and finance, ending with three years as the Division’s Vice President, Finance. Mr. Northrop has a bachelor’s degree in physics from Amherst College, Amherst, Massachusetts (1965), an MBA in Finance from the University of Chicago, Chicago, Illinois (1969), and spent several years conducting post graduate research in low energy particle physics at Case Institute of Technology, Cleveland. Gregory (Greg) Schoener ( 56) currently serves as the Chief Operating Officer and as a director of the company since June 1, 2024.He is a successful business owner and operator, serving the construction industry in Houston, Texas. Mr. Schoener has broad management experience in the medical field as well as the construction industry. Mr. Schoener is a Bion Shareholder since 2020. William (Bill) Rupp (63) has served as a director of the company since February 15, 2023.He is a ‘meat industry leader’ who served as President of JBS Beef from 2010-2016 with responsibility for the leadership of JBS’s North American Beef business. He was CEO of Meyer Natural Foods from 2009-2010. Mr. Rupp served in various management roles for Cargill Beef from 1983 until 2009 where he was President from 1998-2008 with responsibility for Cargill’s global beef business with operations in US, Canada, Argentina, and Australia. He graduated from the University of South Dakota with a B.S. in Business Administration in 1983. Mr. Rupp also serves on the boards of Sustainable Beef, DecisionNext, Superior Lamb and Lumachain. Salvatore J. Zizza (78) Salvatore Zizza has served as a director of Bion since February 15, 2023. He is presently President of Zizza & Associates Corp. a private holding company which invests in various industries and retired Chairman of BAM (Bethlehem Advanced Materials), which designs and manufactures high-temperature furnaces for sale and for its own use in the processing of specialty carbon, graphite and ceramic materials for semiconductor and aerospace applications, and Chairman of Bergen Cove Realty Inc., with substantial holdings in residential real estate. Mr. Zizza serves as Director & Chairman of Trans-Lux Corporation, a full-service provider of integrated multimedia systems for today’s communications environments (since 2018) and served on board since 2009. Mr. Zizza bought NICO Construction Company, Inc., in 1978 and was President and CFO until 1985 when NICO merged with The LVI Group Inc., a (NYSE), listed company. Prior to joining The LVI Group Inc., Mr. Zizza was an independent financial consultant and had been a lending officer of Chemical Bank. Mr. Zizza is also an investor in numerous private companies and real estate holdings. Mr. Zizza currently holds directorship positions at nineteen (19) Gabelli/GAMCO funds and trusts. He has been associated with this family of investment funds for over thirty (30) years. He received a Baccalaureate/Political Science, St. John’s University (1967) and a Master of Business Administration, St. John’s University (1972). In 2007 Mr. Zizza received a Doctor of Commercial Sciences (Honorary) from St. John’s University. 40 Robert (Bob) Weerts (72) Bob Weerts has been a member of The Company’s Board of Directors since July currently serves Director of the company since June 27, 2024.He is a successful entrepreneur from Winnebago, Minnesota where he serves on the City Council. He founded and operates Erosion Control Plus, that serves county, state and federal highway projects; Blue Valley Sod, serving the upper Midwest since 1987; Green Energy & Development, active in recycling and composting and Bedrock Ready Mix. He is actively involved with Umpqua Energy and was a founding member/Chairman of the Corn Plus Ethanol Plant. Edward T. Schafer (78) Edward Schafer previously served the Company’s senior management team as Executive Vice Chairman and has been a member of the Company’s Board of Directors since January 1, 2011. Mr. Schafer had served as a consultant to Bion since July 2010. Mr. Schafer served as a director of Continental Resources (NYSE-CLR) 2011-2016. He also chairs the Board of Directors of Dynamic Food Ingredients. In addition, he has served on the Board of Governors of Amity Technology LLP since 2009. Mr. Schafer served as a trustee of the Investors Real Estate Trust (NASDAQGS-IRET) from September 2009 to October 2011. He also served as a trustee of the IRET from September 2006 through December 2007, when he resigned from the IRET’s Board to serve as Secretary of the U.S. Department of Agriculture under President George W. Bush. Mr. Schafer, a private investor, is a two-term former Governor of North Dakota. He served as Chief Executive Officer of Extend America, a telecommunications company, from 2001 to 2006, and he has been a member of the Boards of RDO Equipment Co., a privately-owned agricultural and construction equipment company (August 2001 to July 2003) and the University of North Dakota Foundation (June 2005 to December 2007). Since 2019 Mr. Schafer has served on the Board of Directors of Cellular Biomedicine Group (NASDAQ: CBMG) and is Chairman of its Audit Committee. Mr. Schafer serves as a board member of the Center for Innovation at the University of North Dakota and is an adjunct professor at North Dakota State University. Mr. Schafer is a past chair of the Republican Governors Association, the Midwestern Governors’ Association, the Interstate Oil and Gas Compact, the Western Governors’ Association and served as the 29 th United States Secretary of Agricultural from 2008 to 2009. Mr. Schafer holds a master’s degree in business administration from the University of Denver. Mr. Schafer brings the following experience, qualifications, attributes and skills to the Company: general business management, budgeting and strategic planning experience from his service as Chief Executive Officer of Extend America and extensive government, regulatory, strategic planning, budgeting administrative and public affairs experience from his service as Governor of North Dakota and Secretary of the US Department of Agriculture. Turk Stovall (48) Turk Stovall has been a member of The Company’s Board of Directors since June 27, 2024. Mr. Stovall is a fifth-generation Montana rancher and CEO/owner of Stovall Ranching Companies and Yellowstone Cattle Feeders. Mr. Stovall has held management positions with Certified Angus Beef, and North Platte Feeders. Mr. Stovall serves as Second VP of the Montana Stockgrowers Association and has served on the Cattleman’s Beef Board by appointment of the US Secretary of Agriculture. Mr. Stovall earned a BS in Animal Science from Montana State; an MS in Animal Science from Oklahoma State and an MBA from Purdue. 41 Family Relationships There are currently no family relationships among our Directors and Executive Officers. Compliance with Section 16(a) of the Exchange Act Section 16(a) of the Exchange Act requires our officers and directors, and stockholders owning more than ten percent of a registered class of our equity securities, to file reports of ownership and changes in ownership with the Securities and Exchange Commission. The Company is not aware of any persons who failed to timely file reports under this section. Involvement in Legal Proceedings To the best of our knowledge, during the past five years, none of the following occurred with respect to our directors or executive officers: (1) any bankruptcy petition filed by or against any business of which one of them was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; (2) any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); (3) being subject to any order, judgment or decree of any court of competent jurisdiction, permanently or temporarily inquiring, barring, suspending or otherwise limiting involvement in any type of business, securities or banking activities; and (4) being found by a court of competent jurisdiction, the SEC or the CFTC to have violated Federal or state securities or commodities laws. Audit Committee The Company has no audit committee and is not now required to have one, or an audit committee financial expert. Code of Ethics To date, the Company has not adopted a code of business conduct and ethics applicable to its officers, directors or accounting officer. 42 Advisory Group The Company, which has only five full-time employees/consultants (all of whom are effectively ‘department heads’), has utilized many outside parties as consultants and contract workers for various roles to augment our management capabilities and expertise. Over the last year the Company has begun to establish a more formal ‘advisory’ relationship with some of these people to insure their availability for consultation by our senior management (separate from specific consulting engagements). At present, a) William Rupp (meat and beef industry), b) Matthew Lamb (agriculture/animal husbandry/dairy), c) Stanley Rapp (government affairs), d) Dennis Tristao (agricultural tech, engineering and agricultural/environmental policy), e) Dennis Bracht (organic seed, corn/feed grain cultivation and related matters), f) Steve Sands (former executive with performance Food Group), Chris Cook (head of business development for Syngenta), and g) Lily Edwards-Callaway, PhD (animal health and welfare expert), have accepted roles as members of our Advisory Group. The Company anticipates that additional persons will be added to this group over time. ITEM 11. EXECUTIVE COMPENSATION. The Company does not have a compensation committee due to its small size and limited resources. The Board of Directors directly reviews and authorizes all compensation matters. SUMMARY COMPENSATION TABLE The following table sets forth the compensation paid to, or accrued for, each of our current executive officers during each of our last two fiscal years. Name and Principal Position Fiscal Year Salary (1) Bonus Stock Awards Option Awards (2) Non-Equity Incentive Plan Compensation Nonqualified Deferred Compensation Earnings Other Compensation Total Mark A. Smith (3) 2024 $ 210,000 $ — $ — — — — — $ 210,000 President and Chief 2023 $ 300,000 $ — $ — — — — — $ 300,000 Financial Officer Brightcap/Dominic Bassani (4) 2024 $ 134,333 $ — $ — — — — — $ 134,333 VP - Special Projects & Strategic 2023 $ 372,000 $ — $ — — — — — $ 372,000 Planning and Chief Operating Officer William O'Neill 2024 $ 247,500 $ — $ — — — — — $ 247,500 Chief Executive Officer (5) 2023 $ 270,000 $ — $ — — — — — $ 270,000 (1) Includes compensation paid by Bion Environmental Technologies, Inc. and our wholly owned subsidiaries. (2) Reflects the dollar amount expensed by the Company during the applicable fiscal year for financial statement reporting purposes pursuant to ASC 718. (3) Since October 2016, the Company approved a month-to-month contract extension with Smith which included a monthly deferred salary of $18,000 and the right to convert up to $300,000 of deferred compensation, at his sole election, at $0.75 per share until December 31, 2022 (which date was extended to January 15, 2025). Smith also has the right to convert his deferred compensation in whole or in part, at this sole election, at any time in an amount at "market" or into securities sold in the Company's most current/recent private offering. During fiscal year 2021 the Company paid Smith $13,460 for payroll taxes on his deferred compensation conversions which was treated as salary. During the fiscal year 2024, Smith’s compensation was reduced to $10,000 per month as of January 1, 2024 and Smith deferred $190,000 due to cash restraints of the company. Note: Mr. Smith retired effective July 31, 2024, and his salary ceased accruing at that time. (4) On February 10, 2015, Mr. Bassani agreed to an extension to continue his employment through December 31, 2017 at an annual salary of $372,000 effective January 1, 2015. During October 2016, Bassani was granted the right to convert up to $125,000 of his deferred compensation, at his sole election, at $0.75 per share which was expanded on April 27, 2017 to the right to convert up to $300,000). During February 2018, the Company agreed to the material terms of a binding two-year extension agreement. Bassani's annual salary will remain at $372,000 and the Company granted Bassani 2,000,000 fully vested options at $0.75 per share with an expiry date of December 31, 2024 which contain a 90% exercise price adjustment and the options may be extended for an additional 5 years at $0.01 per share per extension year. Note: Mr. Bassani passed away on November 11, 2023, and his salary ceased accruing at that time. (5) On May 1, 2022 William O'Neill joined the Company with an annual salary of $420,000 which includes $10,000 monthly deferred compensation to be paid at the discretion of the Board. There is an additional $1,500 per month health insurance allowance. Terms of the contract are thirty-seven months. O'Neill was previously paid as a contractor through Identifoods. O’Neill resigned as of May 31, 2024. Total payments for the years ended June 30, 2024 and June 2023, respectively were $20,000 and $318,000. 43 Employment Agreements: Stephen Craig Scott (“Scott”) was appointed interim CEO on June 1, 2024. Scott has held various positions as employee/consultant with the Company since 1993 including Director of Communications, SVP – Capital Markets and Head of Business Development. On October 25, 2023, Scott entered into an agreement with the Company which included provisions for a monthly salary of $14,000 of which $2,000 is deferred. During the year ended June 30, 2024, Scott deferred substantial portions of his monthly salary to help the Company conserve cash. For the year ended June 30, 2024 and 2023, Scott was paid $64,000 and $144,000 respectively. Gregory (Greg) Schoener (“Schoener”) currently serves as the interim COO of the company and as a Director since June 1, 2024. Schoener currently has no agreement with the Company and is not receiving any compensation. Mark A. Smith (“Smith”) has held the positions of Executive Chairman, Director, President and General Counsel of Company and its subsidiaries under various agreements and terms from March 2003 (details regard earlier years and periods between 2003 and 2020 may be found in the Company’s prior Forms 10-K and other SEC filings) until his retirement on July 31, 2024. Pursuant to the extension agreements after expiration of agreements during the prior decades, Smith continued his agreement to: i) defer his cash compensation ($18,000 per month) until the Board of Directors re-instates cash payments to all employees and consultants who are deferring their compensation. Due to expiration of his most recent extension, Mr. Smith served the Company on a month-to –month basis through his retirement. On April 29, 2022, Smith’s nominal monthly salary was increased to $25,000, of which $5,000 was to be deferred each month, but, in actuality, much or all of his salary was deferred over recent years and then converted into securities of the Company by Smith. Mr. Smith may provide some transition related services for the Company on a consulting basis over the course of the current year. Dominic Bassani (“Bassani”) served in senior management positions with the Company (as a full-time consultant) from 2001 until his death during 2023. See prior Forms 10-K for detailed summaries regarding his agreements and compensation (much of which was deferred) and/or taken in the form of securities of the Company. 44 William O’Neill (“O’Neill”) joined as the Company’s Chief Executive Officer (“CEO”) effective May 1, 2022. O’Neill had previously been working with the Company as a consultant and had been employed by the Company as its CEO during 2010-2011. The Company and O’Neill have entered into a thirty-seven (37) month employment agreement (subject to Board renewal for the final two (2) years during the 13th month) with compensation of $25,000 cash and $10,000 deferred compensation per month. An entity affiliated with O’Neill was issued 1,000,000 Incentive Warrants exercisable at $1.00 per share until April 30, 2026 of which up to 700,000 Incentive Warrants were cancellable until O’Neill’s agreement was re-affirmed at 13 months and/or fails to serve the entire contract term thereafter. These warrants each have a 75% exercise price adjustment if the terms set forth therein are met. As set forth in the Employment Agreement, the Company and Wise Up Foods LLC (“WUF”) (an entity founded by O’Neill with which he continues to serve as a Director and of which O’Neill and his family members are majority owners) sets forth the intent to form “… a strategic alliance and committed to collaborate on projects each company has in their respective pipelines. WUF and Bion will work together to use/create technology that will deliver the consumer verified sustainable results produced by Bion’s technology and technology platform. The key to the strategic relationship is each company’s commitment to deliver real and verified results to the consumer – free of marketing hype and greenwashing…”. O’Neill elected not to complete his term and resigned from all positions effective May 31, 2024. As a result, 500,000 options that we not vested were forfeited and 304,743 warrants were cancel based on the terms of his contract. Bassani, Smith and Schafer have each agreed (multiple times) to extend the maturity date of the outstanding 2020 Convertible Obligations and 2015 Convertible Notes (“CVObligations”) set forth in the paragraphs above from December 31, 2017 (initial maturity date) to January 15, 2025 (current maturity date) which is also the maturity date of all CV Obligations after adjustment. Effective May 4, 2020 the Company agreed that all options and warrants owned (or subsequently acquired by conversion of CvObligations) by its officers, directors and key employees and consultants (including Craig Scott, Jon Northrop (director), Bassani, Smith and Schafer) and their donees be amended to: a) lower the exercise price to $0.75 for any options/warrants with higher exercise prices and b) extend the expiration dates to December 31, 2024. Subsequently, it was agreed that if any of the CVObligations are converted, the warrants in units received will be exercisable through a date 3 years after conversion date with exercise price adjustment provision effective two years after the date on which the converted portion of the CVObligations (as adjusted, if applicable) was accrued. Other Agreements The Company has declared contingent deferred stock bonuses to its key employees and consultants at various times throughout the years. The stock bonuses were contingent upon the Company’s stock price exceeding a certain target price per share, and the grantees still being employed by or providing services to the Company at the time the target prices are reached. During the year ended June 30, 2017, pursuant to agreement with the employees and a consultant who had been granted the outstanding contingent stock bonuses, the Company cancelled all 117,500 outstanding contingent stock bonuses. In consideration for the cancellations, the Company granted 109,500 fully vested options to these employees and a consultant to purchase common stock of the Company at $1.00 per share until December 31, 2024 (including recent extensions). 45 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END The following table sets forth the number of shares of common stock covered by outstanding stock option awards that are exercisable and unexercisable, and the number of shares of common stock covered by unvested restricted stock awards for each of our directors and named executive officers as of June 30, 2024. Outstanding Equity Awards at Fiscal Year-End Option Awards Stock Awards Name Number of Securities Underlying Unexercised Options (#) Exercisable Number of Securities Underlying Unexercised Options (#)Unexercisable Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) Option Exercise Price ($) Option Expiration Date Number of Shares or Units of Stock That Have Not Vested (#) Market Value of Shares or Units of Stock That Have Not Vested Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested Brightcap/ Dominic Bassani (2) 100,000 — — 0.75 2025 — — — — Edward Schafer (1) 25,000 — — 0.60 2024 — — — — Edward Schafer (1) 300,000 — — 0.75 2024 — — — — Edward Schafer (1) 600,000 — — 0.75 2024 — — — — Edward Schafer (2) 190,000 — — 0.75 2024 — — — — Edward Schafer (1) 50,000 — — 1.20 2026 — — — — Edward Schafer (1) 50,000 — — 1.00 2025 — — — — Craig Scott (3) 175,000 — — 0.60 2024 — — — — Craig Scott (3) 995,000 — — 0.75 2024 — — — — Craig Scott (3) 100,000 — — 1.00 2025 — — — — Craig Scott (3) 100,000 — — 0.75 2026 — — — — Craig Scott (3) 100,000 — — 1.20 2026 — — — — Craig Scott (3) 75,000 — — 2.00 2026 — — — — Jon Northrop (3) 100,000 — — 0.60 2026 — — — — Jon Northrop (3) 317.500 — — 0.75 2026 — — — — Jon Northrop (3) 50,000 — — 1.00 2026 — — — — Jon Northrop (3) 25,000 — — 1.20 2026 — — — — Jon Northrop (3) 25,000 — — 2.00 2026 — — — — Salvatore Zizza (3) 50,000 — — 2.00 2026 — — — — William Rupp (3) 50,000 — — 2.00 2026 — — — — (1) Options are subject to a 75% execution/exercise price adjustment upon notice of intent to exercise under certain conditions. (2) Options are subject to a 90% execution/exercise price adjustment upon notice of intent to exercise under certain conditions. (3) Options are subject to a 50% execution/exercise price adjustment upon notice of intent to exercise under certain conditions. 46 Director Compensation Members of the Board of Directors do not currently receive any cash compensation for their services as Directors, but are entitled to be reimbursed for their reasonable expenses in attending meetings of the Board. However, it is the Company's intention to begin to pay cash compensation to Board members at some future date (probably during the current fiscal year). DIRECTOR COMPENSATION The following table sets forth certain information regarding the compensation paid to directors during the fiscal year ended June 30, 2024: Director Compensation Name Fees earned or paid in Cash ($) Stock Awards ($) Option Awards ($)(1) Non-equity incentive plan compensation ($) Nonqualified deferred compensation earnings ($) All other compensation ($) Total ($) Craig Scott — — — — — — — Jon Northrop — — — — — — — Greg Schoener — — — — — — — Edward Schafer — — — — — — — Salvatore Zizza — — — — — — — Robert Weerts — — — — — — — William Rupp — — — — — — — Turk Stovall — — — — — — — (1) Reflects the dollar amount expensed by the Company during the applicable fiscal year for financial statement reporting purposes pursuant to ASC 718. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS As of August 1, 2024, the Registrant had 57,236,479 shares of common stock issued and 56,532,170 shares of common stock outstanding. (balance of 704,309 shares are owned by Centerpoint, the Company’s majority-owned subsidiary). The following table sets forth certain information regarding the beneficial ownership of our common stock as of August 1, 2024 by: ● each person that is known by us to beneficially own more than 5% of our common stock; ● each of our directors; ● each of our executive officers and significant employees; and ● all our executive officers, directors and significant employees as a group. Under the rules of the Securities and Exchange Commission, beneficial ownership includes voting or investment power with respect to securities and includes the shares issuable under stock options, warrants and convertible securities that are exercisable/convertible within sixty (60) days of August 1, 2024. Those shares issuable under stock options, warrants and/or convertible securities are deemed outstanding for computing the percentage of each person holding options, warrants and/or convertible securities but are not deemed outstanding for computing the percentage of any other person. The percentage of beneficial ownership schedule ‘Entitled to Vote’ is based upon 56,532,170 shares outstanding as of August 1, 2024. The address for those individuals for which an address is not otherwise provided is c/o Bion Environmental Technologies, c/o PO Box 323, Old Bethpage, NY 11804. To our knowledge, except as indicated in the footnotes to this table and pursuant to applicable community property laws, the persons named in the table have sole voting power and investment power with respect to all shares of common stock listed as owned by them. 47 Name and Address Number Percent of Class Outstanding Entitled To Vote Centerpoint Corporation (1) c/o PO Box 323 Old Bethpage, NY 11604 704,309 1.2 % — Dominic Bassani Estate (2) 64 Village Hills Drive Dix Hills, NY 11746 11,168,793 16.8 % 17 % Mark A. Smith (3) 401 N. Riverside Beach #408 Pompano Beach, FL 33062 5,421,275 9.4 % 9.5 % Christopher B. Parlow (4) 23 Longbow Drive Commack, NY 11725 8,254,807 12.7 % 12.8 % Danielle Lominy (5) c/o Dominic Bassani Estate 64 Village Hill Drive Dix Hills, NY 11746 8,244,803 12.7 % 12.8 % Edward Schafer (6) c/o PO Box 323 Old Bethpage, NY 11804 3,039,138 5.0 % 5.1 % Gregory W. Schoener (7) c/o Po Box 323 Old Bethpage New York, NY 11804 1,000,000 1.7 % 1.8 % Robert Weerts (8) c/o Po Box 323 Old Bethpage New York, NY 11804 400,000 0.6 % 0.7 % Turk Stovall (9) c/o PO Box 323 Old Bethpage NY 11804 0.0 0.0 % 0.0 % Craig Scott (10) 3131 North Daffodil Dr. Billings, MT 59102 3,109,648 5.2 % 5.2 % Jon Northrop (11) 59 Chestnut Street Westfield, NY 14787 638,135 1.1 % 1.1 % Salvatore Zizza (12) 641 Lexington Avenue, 20th Floor New York, NY 10022 155,112 0.3 % 0.3 % William Rupp (13) PO Box 536 Loveland, CO 80539 125,000 0.2 % 0.2 % All executive officers and directors as a group (10 persons) 8,467,033 21.5 % 21.8 48 (1) Centerpoint Corporation is currently majority owned by the Company. Under Colorado law, Centerpoint Corporation is not entitled to vote these shares unless otherwise ordered by a court. These shares of common stock may be distributed to the shareholders of Centerpoint Corporation at a future date pursuant to a dividend declared during July 2004. The shares distributed to Bion, if any, will be cancelled immediately upon receipt. (2) Includes 535,221 shares, 1,215,000 shares underlying warrants held directly by Linda Bassani, and 909,747 shares held in IRA accounts. Also included are the shares set forth below owned (directly and indirectly) by Mr. Bassani’s daughter, Danielle Lominy (formerly Danielle Bassani) who resides within her residence and are included in Mrs. Bassani’s beneficial ownership for purposes of the calculation including: a) 570,000 shares directly b) 646,458 shares underlying warrants owned directly; and c) Danielle Lominy is the 50% beneficiary of the Dominic Bassani 2019 Irrevocable Trust (“2019Trust”) which owns: i) 3,000,000 warrants to purchase shares of the Company’s common stock and, as a result, Danielle Lominy is the beneficial owner of 1,500,000 shares underlying warrants and ii) $459,277.02 principal amount of the Company’s Adjusted 2020 Convertible Obligation (“CVObligation”) which is convertible @ $.0953 into 4,819,277 shares and 3,214,458 warrants and, as a result, Danielle Lominy is the beneficial owner of 2,409,639 shares underlying conversion of the Adjusted CVObligation and 1,607,229 shares underlying the warrants issuable on conversion of the Adjusted CVObligation. The total also includes: a) 747,998 shares of common stock and 498,915 underlying warrants that could be issued on the conversion (at the election of The Bassani Estate) of a convertible note in the amount of $373,999, (convertible @ $0.50 price) and b) 273,639 shares of common stock that could be issued on the conversion (at the election of The Bassani Estate) of a convertible note in the amount of $164,183.00 (convertible @ $0.60 price) and c) 222,962 shares of common stock that could be issued on the conversion (at the election of The Bassani Estate) of Adjusted Convertible Note in the amount of $7,906.66 (convertible @$.115 price) and d) 31,985 shares of common stock that could be issued on the conversion (at the election of The Bassani Estate) of deferred compensation in the amount of $11,834.15. Mrs. Bassani disclaims ownership of 1,511,477 shares underlying warrants held by the Danielle Christine Bassani Trust, which is separately itemized herein. Mrs. Bassani’s adult daughter Danielle Lominy (formerly Danielle Bassani), who resides within her residence, is the beneficiary of the Danielle Christine Bassani Trust and Mrs. Bassani is not one of the trustees of the trust. Mrs. Bassani further disclaims beneficial ownership of shares and warrants owned by various other family members (including Christopher Parlow who is itemized separately), none of whom live with her or are her dependents, and such shares are not included in this calculation. (3) Includes 2,850,422 shares held directly by Mr. Smith, and 62,535 shares held by Mr. Smith in an IRA. Also includes 1,626,123 shares held by Mr. Smith’s wife and 53,756 shares held in his wife’s IRA. Also includes 12,681 shares of common stock held by held by LoTayLingKyur Foundation and 86,754 shares of common stock held by LoTayLingKyur LLC which is controlled by Mr. Smith and his wife. Also includes 242,152 shares and 242,152 warrants underlying units that could be issued on the conversion by Mr. Smith of his 2020 Convertible Obligation in the aggregate amount of $121,075.58. Mr. Smith has the option to convert this amount into units with each unit consisting of 1 share of common stock and 1 warrant exercisable at $0.75 per share. The conversion price will be $.50 per unit. Also includes 244,700 shares of common stock that could be issued on the conversion (at the election of Mr. Smith) of deferred compensation in the amount of $80,751. Does not include shares and warrants owned by various other family members of which Mr. Smith disclaims beneficial ownership. (4) Includes 2,005 shares held directly by Christopher Parlow, 65,000 shares held jointly with wife, 250,000 shares owned by the Christopher Parlow Trust and 50,000 shares owned by Christopher Parlow’s minor daughters. Also includes 1,614,000 shares underlying warrants held by the Christopher Parlow Trust, 147,154 shares underlying warrants held jointly with wife, 150,000 warrants held directly by Mr. Parlow and 459,780 shares underlying warrants held by Mr. Parlow’s minor daughters. In addition, Christopher is the 50% beneficial owner of the Dominic Bassani 2019 Irrevocable Trust (“2019 Trust”) which owns 3,000,000 warrants to purchase shares of the Company’s common stock and as a result, Christopher Parlow is the beneficial owner of 1,500,000 shares underlying exercise of the warrants. Additionally, the 2019 Trust owns $459,277.02 principal amount of the Company’s Adjusted 2020 Convertible Obligations (“CVObligation”) which is convertible @$.0953 into 4,819,277 shares and 3,214,458 warrants. As a result, Christopher Parlow is the beneficial owner of 2,409,639 shares underlying conversion of the CVObligation and 1,607,229 shares underlying the warrants issuable on conversion of the CVObligation. (5) Includes 170,000 shares held directly by Danielle Lominy (formerly Danielle Bassani), 1,511,477 shares underlying warrants held by The Danielle Christine Bassani Trust, 400,000 shares owned by the Danielle Bassani Trust, 311,458 shares underlying warrants, 105,000 shares underlying warrants owned jointly with husband and 230,000 shares underlying warrants owned by Danielle Lominy’s minor daughter. In addition, Danielle is the 50% beneficial owner of the Dominic Bassani 2019 Irrevocable Trust (“2019 Trust”) which owns 3,000,000 warrants to purchase shares of the Company’s common stock and, as a result Danielle Lominy is the beneficial owner of 1,500,000 shares underlying exercise of the warrants. Additionally, the 2019 Trust owns $459,277.02 principal amount of the Company’s Adjusted 2020 Convertible Obligation (“CVObligation”) which is convertible @ $.0953 into 4,819,277 shares and 3,214,458 warrants. As a result, Danielle Lominy is the beneficial owner of 2,409,639 shares underlying conversion of the CVObligation and 1,607,229 shares underlying the warrants issuable on conversion of the CVObligation (6) Includes 158,254 shares held directly by Mr. Schafer, options to purchase 1,215,000 shares and warrants to purchase 23,934 shares. Also includes 1,070,021 shares and 535,011 warrants underlying units that could be issued on the conversion by Mr. Schafer of his Adjusted Convertible Obligation in the amount of $101,973. Mr. Schafer has the option to convert this amount into units with each unit consisting of 1 share of common stock and ½ warrant exercisable at $0.75 per share. The conversion price is $.0953 per unit. Also includes 36,918 shares of common stock that could be issued on the conversion (at the election of Mr. Schafer) by Mr. Schafer of his Adjusted September 2015 convertible note in the amount of $4,245.47. The conversion price will be $.115 per share. (7) Includes 700,000 shares held directly by Mr. Schoener and warrants to purchase 300,000 shares. (8) Includes 400,000 shares held directly by Mr. Weerts. (9) As of August 1, 2024, Mr. Stovall does not own any Bion Securities. (10) Includes 478,444 shares held directly by Mr. Scott, 4,000 shares held by his spouse, 1,545,000 shares underlying options and 573,747 shares underlying warrants held directly by Mr. Scott. The also includes 508,457 shares of common stock that could be issued on the conversion (at the election of Mr. Scott) of deferred compensation in the amount of $188,128.82. (11) Includes 120,635 shares held directly by Mr. Northrop and options to purchase 517,500 shares held by Mr. Northrop. Does not include shares or options owned by the adult children of Mr. Northrop nor his former wife. (12) Includes 105,112 shares of common stock and 50,000 shares of common stock underlying options held directly by Mr. Zizza. (13) Includes 50,000 shares of common stock underlying options and 75,000 shares of common stock underlying warrants held directly by Mr. Rupp. 49 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE. Other than the employment/consulting agreements, deferred compensation arrangements and conversions of debt described above in Item 1 Business and Item 11 Executive Compensation, there are no related party transactions. Four directors of the Company (Jon Northrop, Ed Schaefer, Salvatore Zizza and William Rupp) are considered to be independent directors. ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES. Audit Fees In January 2017 the Company engaged Eide Bailly LLP as its independent registered public accounting firm. The aggregate fees billed for the fiscal year ended June 30, 2023 by Eide Bailly LLP for professional services rendered for the audit of the Company's annual financial statements and reviews of interim financial statements included in the Company's quarterly reports on Form 10-Q (and related matters) were $54,325. In December 2022 the Company engaged Haynie & Company as its independent registered public accounting firm. The aggregate fees billed for the fiscal year ended June 30, 2023 by Haynie & Company for professional services rendered for the audit of the Company’s annual financial statements and reviews of the interim financial statements included in the Company’s quarterly reports on Form 10-Q (and related matters) were $71,000. The aggregate fees billed for the fiscal year ended June 30, 2024 by Haynie & Company for professional services rendered for the audit of the Company’s annual financial statements and reviews of the interim financial statements included in the Company’s quarterly reports on Form 10-Q (and related matters) were $83,000. Audit Related Fees There were no fees billed by Eide Bailly LLP for audit-related fees in each of the last two fiscal years ended June 30, 2023. There were no fees billed by Haynie & Company for audit-related fees in the last fiscal year ended June 30, 2024. Tax Fees The aggregate fees billed for tax services rendered by Eide Bailly LLP for tax compliance and related services for the fiscal year ended June 30, 2023 was nil. The aggregate fees billed for tax services rendered by Haynie & Company for tax compliance and related services for the year ended June 30, 2024 was $18,000. All Other Fees None. Audit Committee Pre-Approval Policy Under provisions of the Sarbanes-Oxley Act of 2002, the Company's principal accountant may not be engaged to provide non-audit services that are prohibited by law or regulation to be provided by it, and the Board of directors (which serves as the Company's audit committee) must pre-approve the engagement of the Company's principal accountant to provide audit and permissible non-audit services. The Company's Board has not established any policies or procedures other than those required by applicable laws and regulations. 50 PART IV ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES (a) Exhibits Exhibit Number Description and Location 3.1 Amended and Restated Articles of Incorporation of Bion Environmental Technologies, Inc., filed with the Secretary of State of the State of Colorado on April 11, 2022. (Incorporated by reference to Exhibit 3.1 filed with Form 8-K filed on April 12, 2022). 3.2 Amended and Restated Bylaws. (Incorporated by reference to Exhibit 3.2 filed with Form 8-K filed on January 4, 2022). 10.1 Subscription Agreement dated January 10, 2002 between Bion Environmental Technologies, Inc. and Centerpoint Corporation regarding issuance of stock in exchange for cash and claims regarding Aprilia (Incorporated by reference to Exhibit 10.1 filed with Form 10SB12G on November 14, 2006). 10.2 Agreement dated March 15, 2002 and effective January 15, 2002 between Bion Environmental Technologies, Inc. and Centerpoint Corporation regarding purchase of warrant and management agreement (Incorporated by reference to Exhibit 10.2 filed with Form 10SB12G on November 14, 2006). 10.3 Agreement dated February 12, 2003 between Bion Environmental Technologies, Inc. and Centerpoint Corporation canceling provisions of the Subscription Agreement by and between Bion Environmental Technologies, Inc. and Centerpoint Corporation (Incorporated by reference to Exhibit 10.3 filed with Form 10SB12G on November 14, 2006). 10.4 Promissory Note and Security Agreement between Bion Environmental Technologies, Inc. and Bright Capital, LLC (Incorporated by reference to Exhibit 10.4 filed with Form 10SB12G on November 14, 2006). 10.5 Letter Agreement with Bright Capital, Ltd. (Incorporated by reference to Exhibit 10.8 filed with Form 10SB12G on November 14, 2006). 10.6 Amended Agreement with Centerpoint Corporation dated April 23, 2003 (Incorporated by reference to Exhibit 10.10 filed with Form 10SB12G on November 14, 2006). 10.7 Promissory Note and Conversion Agreement between Bion Environmental Technologies, Inc. and Mark A. Smith related to deferred compensation (Incorporated by reference to Exhibit 10.21 filed with Form 10SB12G on November 14, 2006). 10.8 Promissory Note and Conversion Agreement between Bion Environmental Technologies, Inc. and Bright Capital, Ltd. related to deferred compensation (Incorporated by reference to Exhibit 10.22 filed with Form 10SB12G on November 14, 2006). 10.9 Employment agreement with Mark A. Smith (Incorporated by reference to Exhibit 10.23 filed with Form 10SB12G on November 14, 2006). 10.10 Employment agreement with Bright Capital, Ltd. (Incorporated by reference to Exhibit 10.25 filed with Form 10SB12G on November 14, 2006). 10.11 Employment agreement with Jeff Kapell (Incorporated by reference to Exhibit 10.26 filed with Form 10SB12G on November 14, 2006). 10.12 Employment agreement with Jeremy Rowland (Incorporated by reference to Exhibit 10.27 filed with Form 10SB12G on November 14, 2006). 10.13 Office lease at 641 Lexington Avenue, 17th Floor, New York (Incorporated by reference to Exhibit 10.28 filed with Form 10SB12G on November 14, 2006). 10.14 2006 Consolidated Incentive Plan (Incorporated by reference to Exhibit 10.29 filed with Form 10SB12G on November 14, 2006). 10.15 Memo to Dominic Bassani & Bright Capital, Ltd. dated October 16, 2006 regarding Change in Title/Status of DB/Amendment to Brightcap Agreement (Incorporated by reference to Exhibit 10.30 filed with Form 10SB12G on November 14, 2006). 10.16 Promissory Note and Conversion Agreement for Mark Smith, dated January 1, 2007 (Incorporated by reference to Exhibit 10.31 filed with Form 10SB12G/A on February 1, 2007). 10.17 Promissory Note and Conversion Agreement for Bright Capital, Ltd., dated January 1, 2007 (Incorporated by reference to Exhibit 10.35 filed with Form 10SB12G/A on February 1, 2007). 10.18 Extension Agreement dated March 31, 2007 between the Company and Mark A Smith (Incorporated by reference to Exhibit 10.1 filed with Form 8-K filed on April 3, 2007) 10.19 Form of Note dated March 31, 2007 in the amount of $151,645.89 in favor of Mark A. Smith (Incorporated by reference to Exhibit 10. 2 filed with Form 8-K filed on April 3, 2007) 10.20 Form of Note dated March 31, 2007 in the amount of $455.486.30 in favor of Bright Capital, Ltd. (Incorporated by reference to Exhibit 10.4 filed with Form 8-K filed on April 3, 2007) 10.21 Memorandum of Understanding with Kreider Farms (Incorporated by reference to Exhibit 99.1 filed with Form 8-K filed on February 27, 2008) 10.22 Subscription Agreement from Bright Capital, Ltd. (Incorporated by reference to Exhibit 99.1 filed with Form 8-K filed on June 3, 2008) 51 10.23 Amendment to 2006 Consolidated Incentive Plan (Incorporated by reference to Exhibit 99.2 filed with Form 8-K filed on June 3, 2008) 10.24 Agreement between the Company and Mark A. Smith dated May 31, 2008 (Incorporated by reference to Exhibit 99.3 filed with Form 8-K filed on June 3, 2008). 10.25 2007 Series AB Convertible Promissory Note (Incorporated by reference to Exhibit 99.1 filed with Form 8-K filed on June 19, 2008). 10.26 Promissory Note between Bion Environmental Technologies, Inc. and Dominic Bassani (Incorporated by reference to Exhibit 10.2 filed with Form 8-K filed on September 30, 2008). 10.27 Promissory Note between Anthony Orphanos and Bion dated October 30, 2008, Guaranteed by Dominic Bassani (Incorporated by reference to Exhibit 10.3 filed with Form 8-K filed on November 13, 2008). 10.28 Addendum to Settlement Agreement and Release Stipulation from Bion, Bion Dairy and Mark Smith dated October 31, 2008 (Incorporated by reference to Exhibit 10.4 filed with Form 8-K filed on November 13, 2008). 10.29 Kreider Farms Agreement (September 25, 2008): REDACTED (Incorporated by reference to Exhibit 10.1 filed with Form 10-Q filed on November 14, 2008). 10.30 Amendment #3 to 2006 Consolidated Incentive Plan (Incorporated by reference to Exhibit 10.2 filed with Form 8-K filed on January 6, 2009). 10.31 Agreement between Bright Capital, Ltd. and Dominic Bassani and Bion effective January 11, 2009 (Incorporated by reference to Exhibit 10.1 filed with Form 8-K filed on January 15, 2009). 10.32 Agreement between Mark A. Smith and Bion effective January 12, 2009 (Incorporated by reference to Exhibit 10.2 filed with Form 8-K filed on January 15, 2009). 10.33 Orphanos Extension Agreement dated January 13, 2009 (Incorporated by reference to Exhibit 10.3 filed with Form 8-K filed on January 15, 2009). 10.34 Lease Agreement between Ronald Kreider and Kreider Farms and Bion PA 1 LLC dated June 26, 2009 (Incorporated by reference to Exhibit 10.1 filed with Form 8-K filed on July 2, 2009). 10.35 Capitalization Agreement between Bion Companies and Bion PA 1 LLC dated June 30, 2009 (Incorporated by reference to Exhibit 10.2 filed with Form 8-K filed on July 2, 2009). 10.36 Extension Agreement with Mark A. Smith. (Incorporated by reference to Exhibit 10.1 filed with Form 8-K filed on August 18, 2010). 10.37 Agreement with Edward Schafer (Incorporated by reference to Exhibit 10.2 filed with Form 8-K filed on August 18, 2010). 10.38 Accepted Funding Offer (base loan agreement) (without exhibits) with PENNVEST for Kreider Farms Project Loan -- effective November 3, 2010 (Incorporated by reference to Exhibit 10.1 filed with Form 8-K filed on November 3, 2010). 10.39 Short Form Agreement (Incorporated by reference to Exhibit 10.1 filed with Form 8-K filed on November 22, 2010). 10.40 Resume of William O’Neill. (Incorporated by reference to Exhibit 10.2 filed with Form 8-K filed on November 22, 2010). 10.41 Loan & Security Agreement with Milestone Bank (Incorporated by reference to Exhibit 10.2 filed with Form 8-K filed on December 6, 2010). 10.42 O'Neill Employment Agreement (dated December 22, 2010) (Incorporated by reference to Exhibit 10.1 filed with Form 8-K filed on December 6, 2010). 10.43 Schafer Employment Agreement (dated December 21, 2010) (Incorporated by reference to Exhibit 10.2 filed with Form 8-K filed on December 6, 2010). 10.44 Biography of Edward T. Schafer (Incorporated by reference to Exhibit 10.3 filed with Form 8-K filed on December 6, 2010). 10.45 Kreider Farms Clarification Agreement (Incorporated by reference to Exhibit 10.3 filed with Form 8-K filed on March 16, 2011). 10.46 Resignation of William O’Neill (effective May 13, 2011) (Incorporated by reference to Exhibit 10.1 filed with Form 8-K filed on May 13, 2011). 10.47 PADEP Certification of Kreider Poultry Credits (Incorporated by reference to Exhibit 10.1 filed with Form 8-K filed on June 1, 2011). 10.48 Bassani/Bright Capital Extension Agreement (executed August 31, 2011) (Incorporated by reference to Exhibit 10.2 filed with Form 8-K filed on September 2, 2011). 10.49 Smith Extension Agreement (executed August 31, 2011) (Incorporated by reference to Exhibit 10.1 filed with Form 8-K filed on September 2, 2011). 10.50 Bloom Employment Agreement (executed September 30, 2011) (Incorporated by reference to Exhibit 10.1 filed with Form 8-K filed on October 4, 2011). 52 10.51 Extension/Conversion Agreement with Smith and Bassani (dated March 31, 2012) (Incorporated by reference to Exhibit 10.1 filed with Form 8-K filed on April 4, 2012). 10.52 Memorialization of extension of Maturity of Bassani convertible deferred compensation (dated July 31, 2012) (Incorporated by reference to Exhibit 10.1 filed with Form 8-K filed on August 3, 2012). 10.53 Memorialization of Smith Extension Agreement (dated August 14, 2012) (Incorporated by reference to Exhibit 10.1 filed with Form 8-K filed on August 21, 2012). 10.54 Memorialization of Bassani Extension Agreement (dated August 14, 2012) (Incorporated by reference to Exhibit 10.2 filed with Form 8-K filed on August 21, 2012). 10.55 Memorialization of Schafer Agreement (dated August 21, 2012) (Incorporated by reference to Exhibit 10.3 filed with Form 8-K filed on August 21, 2012). 10.56 Board Ratification dated May 5, 2013 (Incorporated by reference to Exhibit 10.1 filed with Form 10-Q filed on May 14, 2013). 10.57 Demand Promissory Note dated May 13, 2013 (Incorporated by reference to Exhibit 10.2 filed with Form 10-Q filed on May 14, 2013). 10.58 Pennvest Demand Letter (dated September 25, 2014) (Incorporated by reference to Exhibit 10.92 filed with Form 10-K filed on September 26, 2014). 10.59 Extension Agreement with Mark A. Smith (w/o exhibits) (February 10, 2015) (Incorporated by reference to Exhibit 10.1 filed with Form 10-Q filed on February 11, 2015). 10.60 Extension Agreement with Dominic Bassani (w/o exhibits) (February 10, 2015) (Incorporated by reference to Exhibit 10.2 filed with Form 10-Q filed on February 11, 2015). 10.61 Agreement with Edward Schafer (w/o exhibits) (February 10, 2015) (Incorporated by reference to Exhibit 10.3 filed with Form 10-Q filed on February 11, 2015). 10.62 Convertible Promissory Note between the Company and Dominic Bassani dated September 8, 2015 (Incorporated by reference to Exhibit 10.96 filed with Form 10-K filed on September 22, 2015). 10.63 Convertible Promissory Note between the Company and Edward Schafer dated September 8, 2015 (Incorporated by reference to Exhibit 10.97 filed with Form 10-K filed on September 22, 2015). 10.64 Convertible Promissory Note between the Company and Anthony Orphanos dated September 8, 2015 (Incorporated by reference to Exhibit 10.98 filed with Form 10-K filed on September 22, 2015). 10.65 Kreider Poultry Joint Venture Agreement (May 5, 2016) (Incorporated by reference to Exhibit 10.1 filed with Form 10-Q filed on May 9, 2016). 10.66 Bassani Warrant Purchase effective August 1, 2018 (Incorporated by reference to Exhibit 10.100 filed with Form 10-K filed on September 24, 2019). 10.67 Smith Warrant Purchase effective August 1, 2018 (Incorporated by reference to Exhibit 10.101 filed with Form 10-K filed on September 24, 2019). 10.68 Amendment #9 to 2006 Consolidated Incentive Plan, as amended (Incorporated by reference to Exhibit 10.102 filed with Form 10-K filed on September 24, 2019). 10.69 Lease (executed September 23, 2021) (Incorporated by reference to Exhibit 10.1 filed with Form 8-K filed on September 29, 2021). 10.70 Subsidiaries of the Registrant (Incorporated by reference to Exhibit 21 filed with Form 10SB12G on November 14, 2006). 10.71 Buflovak/Hebeler Purchase Order (January 28, 2022)(without Technical Details and Standard Terms and Conditions) (Incorporated by reference to Exhibit 10.1 filed with Form 8-K filed on February 1, 2022) 10.72 Agreement with BioNTech SE re sale/purchase of domain name <biontech.com> (Incorporated by reference to Exhibit 10.1 filed with Form 8-K filed on March 25, 2022) 10.73 Bion Environmental Technologies, Inc. 2021 Equity Incentive Award Plan. (Incorporated by reference to Exhibit 10.1 filed with Form 8-K filed on January 4, 2022). 10.74 William O’Neill Employment Agreement (effective May 1, 2022) (without exhibits). (Incorporated by reference to Exhibit 10.1 filed with Form 8-K filed on May 3, 2022). 10.75 Letter of Intent with Ribbonwire Ranch (July 20, 2022). (Incorporated by reference to Exhibit 10.1 filed with Form 8-K filed on July 27, 2022). 10.76 Letter of Intent Transparency Wise LLC (Incorporated by reference to Exhibit 10.1 filed with Form 8-K filed on November 17, 2023). 10.77 Form of Bassani Family Agreement (Incorporated by reference to Exhibit 10.1 filed with Form 8-K filed on April 3, 2024). 10.78 Form of MAS Agreement (Incorporated by reference to Exhibit 10.1 filed with Form 8-K filed on April 3, 2024). 10.79 S. Craig Scott Resume (Incorporated by reference to Exhibit 10.1 filed with Form 8-K filed on June 4, 2024). 10.80 Gregory Schoener Background (Incorporated by reference to Exhibit 10.2 filed with Form 8-K filed on June 4, 2024). 10.81 Turk Stoval Resume (Incorporated by reference to Exhibit 10.1 filed with Form 8-K filed on June 20, 2024). 10.82 Bassani Family 20% Give Back List dated 6/30/2024 (Incorporated by reference to Exhibit 10.1 filed with Form 8-K filed on July 3, 2024). 10.83 OMRI Status Notification for Bion (Incorporated by reference to Exhibit 10.1 filed with Form 8-K filed on August 29, 2024). 31.1 Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002- Filed herewith electronically. 31.2 Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002- Filed herewith electronically. 32.1 Certification of Chief Executive Officer Pursuant to Section 18 U.S.C. Section 1350. Furnished* 32.2 Certification of Principal Financial Officer Pursuant to Section 18 U.S.C. Section 1350. Furnished* 101.INS Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) 101.SCH Inline XBRL Taxonomy Extension Schema Document 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) *This exhibit is being furnished rather than filed and shall not be deemed incorporated by reference into any filing, in accordance with Item 601 of Regulation S-K. 53 Report of Independent Registered Public Accounting Firm ( Haynie & Company , PCAOB ID: 457 ) F-2 Consolidated balance sheets F-4 Consolidated statements of operations F-5 Consolidated statements of changes in stockholders’ equity (deficit) F-6 Consolidated statements of cash flows F-7 Notes to consolidated financial statements F-8 - F-25 F- 1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Bion Environmental Technologies, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Bion Environmental Technologies, Inc. (the Company) as of June 30, 2024 and 2023 and the related consolidated statements of operations, changes in stockholders’ equity (deficit), and cash flows for each of the years in the two-year period ended June 30, 2024, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2024 and 2023, and the results of its operations and its cash flows for each of the years in the two-year period ended June 30, 2024, in conformity with accounting principles generally accepted in the United States of America. Going Concern The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has yet to generate any revenue and has suffered recurring losses from operations. These factors raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also discussed in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. F- 2 Equity Transactions As discussed in Note 6 and Note 7 to the financial statements, the Company has numerous equity-based agreements, including stock options and warrants issued for services and debt convertible into units (which include common stock and warrants). These agreements require management to estimate the value of options and warrants issued for services on the measurement date or include complicated calculations when debt is converted to equity. During the year ended June 30, 2024, the Company recorded stock-based compensation expense (including options, warrants, and units issued to employees and for services) of $85,994, warrant modifications of $150,206, and a $140,941 of debt converted to common stock. Our audit procedures required a significant amount of time performing procedures and evaluating audit evidence in connection with forming our overall opinion on the financial statements. Those procedures included gaining an overall understanding of the Company’s process for estimating fair value and the related calculations. We read the related equity-based agreements verifying the terms of each agreement to the Company’s calculations and ensuring the mathematical accuracy. We evaluated the assumptions used by management to develop their estimates and considered the relevant accounting guidance. /s/ Haynie & Company We have served as the Company’s auditor since 2023. Salt Lake City, Utah September 30, 2024 F- 3 BION ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS June 30, June 30, 2024 2023 ASSETS Current assets: Cash $ 52,212 $ 625,964 Prepaid expenses 16,723 16,785 Deposits and other assets 6,000 6,000 Total current assets 74,935 648,749 Operating lease right-of-use asset 36,622 93,875 Property and equipment, net (Note 3) 695 6,851,009 Total assets $ 112,252 $ 7,593,633 LIABILITIES AND EQUITY (DEFICIT) Current liabilities: Accounts payable and accrued expenses $ 2,703,651 $ 677,136 Deferred compensation (Note 4) 890,223 864,781 Convertible notes payable - affiliates (Note 5) 1,708,649 — Convertible bridge note payable (Note 5) 418,659 — Operating lease liability, current (Note 8) 36,431 75,000 Total current liabilities 5,757,613 1,616,917 Operating lease liability, long term (Note 8) — 29,068 Convertible notes payable (Note 5) 125,567 — Convertible notes payable - affiliates (Note 5) — 1,715,970 Total liabilities 5,883,180 3,361,955 Equity (deficit): Common stock, no par value, 250,000,000 shares authorized, 57,227,248 and 48,044,790 shares issued, respectively; 56,522,939 and 47,340,480 shares outstanding, respectively — — Additional paid-in capital 133,623,927 131,935,418 Subscription receivable - affiliates (Note 7) ( 504,650 ) ( 504,650 ) Accumulated deficit ( 138,927,778 ) ( 127,236,663 ) Total Bion's stockholders’ equity (deficit) ( 5,808,501 ) 4,194,105 Noncontrolling interest 37,573 37,573 Total equity (deficit) ( 5,770,928 ) 4,231,678 Total liabilities and (deficit) $ 112,252 $ 7,593,633 See notes to consolidated financial statements F- 4 BION ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS YEARS ENDED JUNE 30, 2024 AND 2023 2024 2023 Revenue $ — $ — Operating expenses: General and administrative (including stock-based compensation) 2,045,849 3,072,163 Depreciation 1,582 1,645 Research and development (including stock-based compensation) 23,416 82,759 Total operating expenses 2,070,847 3,156,567 Loss from operations ( 2,070,847 ) ( 3,156,567 ) Other (income) expense: Interest income ( 652 ) ( 5,836 ) (Gain) on disposal of assets 972 — Interest expense 159,523 38,384 Loss on asset impairment 9,460,425 — Total other expense 9,620,268 32,548 Net (loss) ( 11,691,115 ) ( 3,189,115 ) Net (loss) attributable to the noncontrolling interest — — Net (loss) applicable to Bion's common stockholders $ ( 11,691,115 ) $ ( 3,189,115 ) Net (loss) applicable to Bion's common stockholders per basic and diluted common share $ ( 0.22 ) ( 0.07 ) Weighted-average number of common shares outstanding: Basic and diluted 51,995,654 45,038,479 See notes to consolidated financial statements F- 5 BION ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) YEARS ENDED JUNE 30, 2024 AND 2023 Bion's Stockholders' Series A Preferred Stock Series C Preferred Stock Common Stock Additional Subscription Receivables for Accumulated Noncontrolling Total Shares Amount Shares Amount Shares Amount paid-in capital Shares deficit interest equity/(deficit) Balances, July 1, 2022 — $ — — $ — 43,758,820 $ — 123,620,046 $ ( 504,650 ) $ ( 124,047,548 ) $ 37,573 $ ( 894,579 ) Sale of units — — — — 1,321,530 — 1,906,230 — — — 1,906,230 Sale of common stock — — — — 2,000,000 — 2,000,000 — — — 2,000,000 Warrants exercised for common shares — — — — 175,114 — 131,335 — — — 131,335 Issuance of units for services — — — — 82,259 — 130,000 — — — 130,000 Issuance of warrants for services — — — — — — 62,563 — — — 62,563 Conversion of debt and liabilities — — — — 1,542,514 — 186,462 — — — 186,462 Vesting of options for employees and services — — — — — — 249,744 — — — 249,744 Commissions on sale of units — — — — — — ( 86,400 ) — — — ( 86,400 ) Modification of warrants - non-cash comp — — — — — — 154,932 — — — 154,932 Modification of warrants - interest — — — — — — 72,589 — — — 72,589 Debt modification — — — — — — 3,507,917 — — — 3,507,917 Net loss — — — — — — — — ( 3,189,115 ) — ( 3,189,115 ) Balances, June 30, 2023 — $ — — $ — 48,880,237 $ — $ 131,935,418 $ ( 504,650 ) $ ( 127,236,663 ) $ 37,573 $ 4,231,678 Sale of units — — — — 593,589 — 610,742 — — — 610,742 Warrants exercised for common shares — — — — 38,000 28,500 28,500 Warrants exercised under cashless exercise — — — — 6,131,945 — — — — — — Options exercised under cashless exercise — — — — 3,661 — — — — — — Issuance of units for services — — — — 89,847 — 112,321 — — — 112,321 Issuance of warrants for services — — 5,000 5,000 Vesting of options for employees and services — — — — — — ( 18,315 ) — — — ( 18,315 ) Vesting of warrants for employees and services — — — — — — ( 13,012 ) — — — ( 13,012 ) Debt Modification — — — — — — ( 33,720 ) — — — ( 33,720 ) Giveback of convertible liabilities and debt from affiliates — — — — — — 726,236 726,236 Conversion of debt and liabilities — — — — 1,489,969 — 140,951 — — — 140,951 Modification of warrants — — — — — — 150,206 — — — 150,206 Commissions on sale of units — — — — — — ( 20,400 ) — — — ( 20,400 ) Net loss — — — — — — ( 11,691,115 ) — ( 11,691,115 ) Balances, June 30, 2024 — $ — — $ — 57,227,248 $ — $ 133,623,927 $ ( 504,650 ) ( 138,927,778 ) $ 37,573 $ ( 5,770,928 ) See notes to consolidated financial statements F- 6 BION ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED JUNE 30, 2024 AND 2023 2024 2023 CASH FLOWS FROM OPERATING ACTIVITIES Net (loss) $ ( 11,691,115 ) $ ( 3,189,115 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation expense 1,582 1,645 Impairment of assets 9,460,425 — Accrued interest on loans payable, deferred compensation and other 159,523 38,384 Stock- based compensation ( 16,325 ) 249,744 Stock-based compensation for services 112,321 130,000 Modification of warrants — 154,932 Warrants issued for compensation for services 5,000 62,563 Decrease in prepaid expenses 62 140,765 (Decrease) in deposits in other assets — ( 5,000 ) Increase (decrease) in accounts payable and accrued expenses 345,410 ( 879,618 ) Decrease (increase) in operating lease assets and liabilities ( 10,384 ) 27,116 Increase in deferred compensation 784,332 340,000 Net cash used in operating activities ( 849,169 ) ( 2,928,584 ) CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property and equipment ( 869,398 ) ( 3,557,059 ) Disposal of property and equipment 973 — Net cash used in investing activities ( 868,425 ) ( 3,557,059 ) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from sale of units 610,742 3,906,230 Proceeds from sale of warrants — 131,335 Commissions on sale of warrants ( 20,400 ) ( 86,400 ) Proceeds from convertible bridge loan 400,000 — Proceeds from convertible notes loan 125,000 Proceeds from exercise of warrants 28,500 — Net cash provided by financing activities 1,143,842 3,951,165 Net decrease in cash ( 573,752 ) ( 2,534,478 ) Cash at beginning of year 625,964 3,160,442 Cash at end of year $ 52,212 $ 625,964 Supplemental disclosure of cash flow information: Cash paid for interest $ — $ — Non-cash investing and financing transactions: Adjustment for debt modification $ — $ 3,507,917 Adjustment for debt modification from giveback agreements $ 17,734 — Adjustment for deferred compensation modification from giveback agreements $ 708,502 — Conversion of debt and liabilities into common units $ 140,951 $ 186,462 Conversion of debt and liabilities into notes payable $ — $ 23,943 Conversion of deferred compensation to notes payable $ 80,767 $ 90,000 Capitalized interest in property and equipment $ 62,163 $ 179,984 Purchase of property and equipment for accounts payable $ 1,681,105 $ 220,052 See notes to consolidated financial statements F- 7 BION ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 2024 AND 2023 1. BUSINESS AND ORGANIZATION : Nature of Operations Bion Environmental Technologies, Inc.'s ("Bion," "Company," "We," "Us," or "Our") was incorporated in 1987 in the State of Colorado. Our patented and proprietary technology was developed to provide advanced waste treatment and resource recovery for large-scale livestock production facilities (also known as “Concentrated Animal Feeding Operations” or “CAFOs"). Our Gen3Tech can largely mitigate the environmental problems of CAFOs, while simultaneously improving operational/ resource efficiencies by recovering high-value co-products from the waste stream, including renewable energy and nutrients. Bion is focused on the ‘feeder’ space of the livestock production/value chain, primarily in the beef industry because we believe it faces the most challenges of all the livestock sectors and can benefit the most from the application of Bion’s technology and business strategy. We believe that the best opportunity for the Company to prove its sustainable beef concept at this time is with the Stovall Ranch JV in Montana. In June 2024, Bion formed a strategic relationship with Turk Stovall and Stovall Ranching Companies. Bion and Stovall have agreed to establish a JV, to be led by Mr. Stovall, with the goal of developing a 15,000-head sustainable beef project at Stovall’s Yellowstone Cattle Feeders (‘YCF’) location in Shepherd, 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. Advancing the Stovall-Bion JV project is our primary focus, although we are also expending resources evaluating our ARS as a standalone ammonia control solution. Going Concern The Company’s consolidated financial statements have been prepared assuming the Company will continue as a going concern. The Company is not currently generating any significant revenues. Further, the Company’s anticipated revenues, if any, from existing JVs and proposed projects will not be sufficient to offset operating and capital costs (for Projects) for a minimum of two to five years. Further, there are no assurances that the Company will ultimately be successful in its efforts to develop and construct its Projects and market its Systems; but, it is certain that the Company will require substantial funding from external sources. Given the unsettled state of the current credit and capital markets for companies such as Bion, there is no assurance the Company will be able to raise the funds it needs on reasonable terms. The aggregate effect of these factors raises substantial doubt about the Company’s ability to continue as a going concern. During the year ended June 30, 2024, a one-time, non-recurring, non-cash charge of $ 9,460,425 was incurred by the Company in connection with a write-down of the capitalized carrying value of the Initial Project (at Fair Oaks, Indiana) because the Initial Project was recently reclassified as largely a research & development facility and is located on land subject to a short term lease (as described above in Item 7, Management’s Discussion and Analysis). This charge reduced the Company shareholders’ equity to ($ 5,808,501 ) and resulted in a loss of $ 11,691,115 for the 2024 fiscal year. Current liabilities were approximately $ 5.8 million and $ 1.6 million at June 30, 2024 and 2023, respectively, the increase of approximately $ 4.2 million was largely due to an increase in ‘accounts payable and accrued expenses’ and debt moving from long term to current liabilities. Similarly, the Company’s cash on hand decreased from approximately $ 626,000 to approximately $ 52,000 over the same period. The Company’s extreme difficulty in obtaining needed funds during the entire 2024 fiscal year has continued throughout the first quarter of the current fiscal year to date. 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. The constraints on available resources have had, and continue to have, negative effects on the pace and scope of the Company’s efforts to operate and develop its business. The Company has had to delay payment of trade obligations and has had to economize in many ways that have potentially negative consequences. If the Company is able to raise needed funds during the remainder of the current fiscal year (and subsequent periods), of which there is no assurance, management will not need to consider deeper cuts (including additional personnel cuts) and/or curtailment of ongoing activities including research and development activities. The Company will need to obtain additional capital to fund its operations and technology development, to satisfy existing creditors, to develop Projects. The Company anticipates that it will seek to raise from $ 20,000,000 to $ 80,000,000 or more debt and/or equity through joint ventures, strategic partnerships and/or sale of its equity securities (common, preferred and/or hybrid) and/or debt (including convertible) securities, and/or through use of ‘rights’ and/or warrants (new and/or existing) and/or through other means during the next twelve months. However, as discussed above, there is no assurance, especially in light of the difficulties the Company has experienced in many recent years and the extremely unsettled capital markets that presently exist for small pre-revenue companies like us, that the Company will be able to obtain the funds that it needs to stay in business, complete its technology development or to successfully develop its business and Projects. Ultimately, in the event the Company cannot secure additional financial resources, or complete a strategic transaction in the longer term, the Company may need to curtail or suspend its operational plans or current initiatives, or potentially liquidate its business interests, and investors may lose all or part of their investment. F- 8 BION ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 2024 AND 2023 The accompanying consolidated financial statements do not include any adjustments relating to the recoverability or classification of assets or the amounts and classification of liabilities that may result should the Company be unable to continue as a going concern. The following paragraphs describe management’s plans with regard to these conditions. Management’s Plan To help alleviate short-term cash needs and continue current operations, three affiliates of the Company (Greg Schoener, Interim COO & Director; Turk Stovall, Director; Bob Weerts, Director) and two shareholders (one of whom is the brother of Greg Schoener) have agreed to advance to the Company, through a newly formed LLC, up to $ 500,000 in consideration of a secured convertible promissory note. It is anticipated that additional investors will join the LLC, and that the funds available to Bion will increase, although there can be no assurance they will. The note instrument and agreements have not been executed at this time because terms and other details have not been finalized yet; however, the group has begun advancing money to the Company. 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. To date, the Company has primarily raised funds through private placements with accredited investors, often conducted through FINRA-registered broker/dealers. However, the Company anticipates, moving forward, it will need to raise capital using a combination of financial instruments and sources, that could also include strategic and/or institutional investors, including family offices and private equity, brokered equity or debt offerings with both public and private investors, and banks and other ag lending institutions, among others, although there can be no assurance it will be successful. Many of these financing options may involve dilution, potentially substantial, for current shareholders. Management intends to augment its access to capital by adding one or more staff members (or consultants) with experience in the capital markets, as well as utilizing its current contacts and relationships in the capital markets. Bion is currently in discussions with several potential strategic partners in renewable energy – RNG and solar – and clean fuels, as well as reducing the carbon footprint of livestock production, especially beef. Some of these candidates have expressed an interest in investing in Bion and JV projects, and management believes that Bion will receive an investment from such a partner (as well as from other strategic partners from other parts of the value chain), although there can be no assurance that it will. Bion is now evaluating both European and U.S. renewable energy/ clean fuels developers, operators, and investors to determine the best fit for moving forward with AD/RNG development for its own beef project(s), access to clean fuels value chains for its low-carbon fertilizers, animal waste treatment for others, both here and in the EU, as well as a development partner in industrial and municipal opportunities. Bion believes that such a relationship would entail a direct investment in Bion, licensing fee, or some other ‘up front’ financial benefit to Bion. The Company continues to explore sources of additional financing to satisfy its current operating requirements and future growth needs. The Company has faced substantial demand for capital and operating expenditures for the fiscal year 2024 that we anticipate will increase during the 2025 fiscal year and periods thereafter as we move toward commercial implementation of our 3G Tech and development of JVs (including costs associated with additions of personnel to carry out the business activities of the Company). As a result, the Company has faced, and continues to face, significant cash flow management challenges due to material working capital constraints. To partially mitigate these working capital constraints, the Company's core senior management and some key employees and consultants have been deferring most of their cash compensation and/or are accepting compensation in the form of securities of the Company and members of the Company's senior management have from time-to-time made loans to the Company in the past and may do so in future periods. To help alleviate short-term cash needs for continued operations, three affiliates of the Company (Greg Schoener, Interim COO & Director; Turk Stovall, Director; Bob Weerts, Director) and two shareholders (one of whom is the brother of Greg Schoener) have agreed to advance to the Company, through a newly formed LLC, up to $ 500,000 in consideration of a secured convertible promissory note. It is anticipated that others will join the LLC, although there can be no assurance they will. The note instrument and agreements have not been executed at this time because terms and other details have not been finalized yet; however, the group has begun advancing money to the Company. As of the date of the filing of this report, the aggregate sum of $ 201,564 has been advanced to the Company, together with express directions on what items were to be paid with such funds. When a final agreement is executed, it will be attached as an exhibit to a Form 8-K. THERE IS NO ASSURANCE THAT THE COMPANY WILL REACH OR APPROACH THE GOALS/TARGETS SET FORTH ABOVE. REACHING SUCH GOALS/TARGETS WILL REQUIRE RESOLUTION OF THE COMPANY’S EXISTING FINANCIAL DIFFICULTIES AND ACCESS TO VERY LARGE AMOUNTS OF CAPITAL (EQUITY AND DEBT) AS EACH BEEF PROJECT MODULE IS PROJECTED TO COST IN EXCESS OF $50 MILLION (DEBT/EQUITY/GRANTS) TO CONSTRUCT AND WILL REQUIRE MOBILIZATION OF SUBSTANTIAL PERSONNEL, TECHNICAL RESOURCES AND MANAGEMENT SKILLS. THE COMPANY DOES NOT POSSESS EITHER THE FINANCIAL OR PERSONNEL RESOURCES INTERNALLY AND WILL NEED TO SOURCE SUCH RESOURCES FROM OUTSIDE ITSELF. F- 9 BION ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 2024 AND 2023 2. SIGNIFICANT ACCOUNTING POLICIES Principles of consolidation : The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Bion Integrated Projects Group, Inc., Bion Technologies, Inc., BionSoil, Inc., Bion Services, Bion PA2 LLC and Bion 3G-1 LLC (“3G1”); and its 58.9% owned subsidiary, Centerpoint Corporation (“Centerpoint”). All significant intercompany accounts and transactions have been eliminated in consolidation. Cash and cash equivalents : The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash and cash equivalents. As of June 30, 2024 and June 30, 2023 there are no cash equivalents. Property and equipment: Property and equipment are stated at cost and are depreciated, when placed into service, using the straight-line method over the estimated useful lives of the related assets, generally three to twenty years. The Company capitalizes all direct costs and all indirect incrementally identifiable costs related to the design and construction of its Integrated Projects such as consulting fees, internal salaries and benefits and interest. The Company reviews its property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment loss would be recognized based on the amount by which the carrying value of the assets or asset group exceeds its estimated fair value and is recognized as a loss from operations. Patents: 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. F- 10 BION ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 2024 AND 2023 Stock-based compensation : The Company follows the provisions of Accounting Standards Codification (“ASC”) 718, which generally requires that share-based compensation transactions be accounted and recognized in the statement of operations based upon their grant date fair values. Derivative Financial Instruments : Pursuant to ASC Topic 815 “Derivatives and Hedging” (“Topic 815”), the Company reviews all financial instruments for the existence of features which may require fair value accounting and a related mark-to-market adjustment at each reporting period end. Once determined, the Company assesses these instruments as derivative liabilities. The fair value of these instruments is adjusted to reflect the fair value at each reporting period end, with any increase or decrease in the fair value being recorded in results of operations as an adjustment to fair value of derivatives. Options : The Company has issued options to employees and consultants under the 2006 Plan to purchase common shares of the Company. Options are valued on the grant date using the Black-Scholes option-pricing model. The expected volatility is based on the historical price volatility of the Company’s common stock. The dividend yield represents the Company’s anticipated cash dividend on common stock over the expected term of the stock options. The U.S. Treasury bill rate for the expected term of the stock options was utilized to determine the risk-free interest rate. The expected term of stock options represents the period of time the stock options granted are expected to be outstanding based upon management’s estimates. Warrants : The Company has issued warrants to purchase common shares of the Company. Warrants are valued using a fair value based method, whereby the fair value of the warrant is determined at the warrant issue date using a market-based option valuation model based on factors including an evaluation of the Company’s value as of the date of the issuance, consideration of the Company’s limited liquid resources and business prospects, the market price of the Company’s stock in its mostly inactive public market and the historical valuations and purchases of the Company’s warrants. When warrants are issued in combination with debt or equity securities, the warrants are valued and accounted for based on the relative fair value of the warrants in relation to the total value assigned to the debt or equity securities and warrants combined. Concentrations of credit risk : The Company's financial instruments that are exposed to concentrations of credit risk consist of cash. The Company's cash is in demand deposit accounts placed with federally insured financial institutions and selected brokerage accounts. Such deposit accounts at times may exceed federally insured limits. The Company has not experienced any losses on such accounts. Noncontrolling interests : In accordance with ASC 810, “Consolidation”, the Company separately classifies noncontrolling interests within the equity section of the consolidated balance sheets and separately reports the amounts attributable to controlling and noncontrolling interests in the consolidated statements of operations. In addition, the noncontrolling interest continues to be attributed its share of losses even if that attribution results in a deficit noncontrolling interest balance. Fair value measurements : Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal or most advantageous market. The Company uses a fair value hierarchy that has three levels of inputs, both observable and unobservable, with use of the lowest possible level of input to determine fair value. Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 – observable inputs other than Level 1, quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, and model-derived prices whose inputs are observable or whose significant value drivers are observable; and Level 3 – assets and liabilities whose significant value drivers are unobservable. F- 11 BION ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 2024 AND 2023 Observable inputs are based on market data obtained from independent sources, while unobservable inputs are based on the Company’s market assumptions. Unobservable inputs require significant management judgment or estimation. In some cases, the inputs used to measure an asset or liability may fall into different levels of the fair value hierarchy. In those instances, the fair value measurement is required to be classified using the lowest level of input that is significant to the fair value measurement. Such determination requires significant management judgment. The fair value of cash and accounts payable approximates their carrying amounts due to their short-term maturities. The fair value of the loan payable is indeterminable at this time due to the nature of the arrangement with a state agency and the fact that it is in default. The fair value of the redeemable preferred stock approximates its carrying value due to the dividends accrued on the preferred stock which are reflected as part of the redemption value. The fair value of the deferred compensation and convertible notes payable - affiliates are not practicable to estimate due to the related party nature of the underlying transactions. Lease Accounting : The Company accounts for leases under ASC 842, Leases (“ASC 842”). Accordingly, the Company will determine whether an arrangement contains a lease at the inception of the arrangement. If a lease is determined to exist, the term of such lease is assessed based on the date on which the underlying asset is made available for the Company’s use by the lessor. The Company’s assessment of the lease term reflects the non-cancelable term of the lease, inclusive of any rent-free periods and/or periods covered by early-termination options which the Company is reasonably certain of not exercising, as well as periods covered by renewal options which the Company is reasonably certain of exercising. The Company also determines lease classification as either operating or finance at lease commencement, which governs the pattern of expense recognition and the presentation reflected in the consolidated statements of operations over the lease term. For leases with a term exceeding 12 months, a lease liability is recorded on the Company’s consolidated balance sheet at lease commencement reflecting the present value of its fixed minimum payment obligations over the lease term. A corresponding right-of-use (“ROU”) asset equal to the initial lease liability is also recorded, adjusted for any prepaid rent and/or initial direct costs incurred in connection with execution of the lease and reduced by any lease incentives received. For purposes of measuring the present value of its fixed payment obligations for a given lease, the Company uses its incremental borrowing rate, determined based on information available at lease commencement, as rates implicit in its leasing arrangements are typically not readily determinable. The Company's incremental borrowing rate reflects the rate it would pay to borrow on a secured basis and incorporates the term and economic environment of the associated lease. Revenue Recognition : The Company currently does not generate revenue and if and when the Company begins to generate revenue the Company will comply with the provisions of ASC 606 “Revenue from Contracts with Customers”. Income (Loss) per share : Basic income (loss) per share amounts are calculated using the weighted average number of shares of common stock outstanding during the period. Diluted income (loss) per share assumes the conversion, exercise, or issuance of all potential common stock instruments, such as options or warrants, unless the effect is to reduce the income (loss) per share or increase the earnings per share. During the years ended June 30, 2024 and 2023, the basic and diluted income (loss) per share was the same, as the impact of potential dilutive common shares was anti-dilutive. The following table represents the warrants and options (as if exercised) and convertible securities (as if converted) that have been excluded from the calculation of basic income (loss) per share: Schedule of basic income (loss) per share June 30, 2024 June 30, 2023 Warrants 17,147,725 22,543,765 Options 5,001,600 12,006,600 Convertible debt 9,340,750 9,922,769 F- 12 BION ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 2024 AND 2023 The following is a reconciliation of the denominators of the basic and diluted income (loss) per share computations for the years ended June 30, 2024 and 2023. Schedule of reconciliation of the denominators of the basic and diluted income (loss) per share Year ended June 30, 2024 Year ended June 30, 2023 Shares issued – beginning of period 48,880,237 43,758,820 Shares held by subsidiaries (Note 6) ( 704,309 ) ( 704,309 ) Shares outstanding – beginning of period 48,175,928 43,054,511 Weighted average shares issued during the period 3,819,726 1,983,968 Diluted weighted average shares – end of period 51,995,654 45,038,479 Use of estimates : In preparing the Company’s consolidated financial statements in conformity with accounting principles generally accepted in the United States of America, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Recent Accounting Pronouncements : The Company continually assesses any new accounting pronouncements to determine their applicability. When it is determined that a new accounting pronouncement affects the Company’s financial reporting, the Company undertakes a study to determine the consequences of the change to its consolidated financial statements and assures that there are proper controls in place to ascertain that the Company’s consolidated financial statements properly reflect the change. 3. PROPERTY AND EQUIPMENT : Property and equipment consist of the following: Schedule of property and equipment June 30, 2024 June 30, 2023 Computers and office equipment 12,607 15,156 Initial Project: construction in process 0 6,847,760 Property and equipment, gross 12,607 6,862,916 Less accumulated depreciation ( 11,912 ) ( 11,907 ) Property and equipment, net $ 695 $ 6,851,009 The 3G1 project (“Initial Project”) began in July of 2021, with a lease signed on land October 1, 2021 (Note 8). Once the lease commenced the Company moved into construction phase. The balance for the Initial Project construction in process includes $ 74,144 and $ 211,984 for capitalized interest and $ 135,648 and $ 135,648 in non-cash compensation as of June 30, 2024 and 2023, respectively. Management previously believed that the Initial Project had reached the point where it could be appropriately deemed ‘placed in service’ at January 1, 2024. However, discussions with the key technical and engineering personnel involved at the Initial Project during the recently concluded quarter convinced management that such a characterization was premature as some key modules had not yet been completed and/or fully tested. Additionally, due to some recent equipment break-downs, the Initial Project is currently in maintenance mode rather than conducting operations while the Company awaits required replacement parts and subsequent repairs. This process has been slowed by the Company’s ongoing difficulties in raising needed funds for its activities. The Company’s Board of Directors re-evaluated the classification/status of the Initial Project as part of the Company’s annual review process and determined that the Initial Project had been ‘placed in service’ at the June 30, 2024 fiscal year end. Further, after extensive discussion, it was determined that ‘carrying value’ of the Initial Project on the Company balance sheet as of that date be reduced to $ 0 in order to conform to the applicable accounting literature and guidance that the Company’s management had received because the Initial Project is: i) largely a research & development facility and ii) is located on land subject to a short term lease. As a result, a large ‘one time/non-recurring’ ‘non-cash’ charge of $ 9,460,425 has been taken by the Company at June 30, 2024. Depreciation expense was $ 1,582 and $ 1,645 for the years ended June 30, 2024 and 2023, respectively. F- 13 BION ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 2024 AND 2023 4. DEFERRED COMPENSATION : The Company owes deferred compensation to various employees, former employees and consultants totaling $ 890,223 and $ 864,781 as of June 30, 2024 and 2023, respectively. Included in the deferred compensation balances as of June 30, 2024, are $ 160,133 owed Craig Scott (“Scott”), the Company’s current CEO, $ 367,500 , owed William O’Neill (“O’Neill”), the Company’s former CEO (until May 31, 2024), $ 11,834 owed the estate/heirs of Dominic Bassani (“Bassani”), the Company’s recently deceased former Chief Operating Officer (who was Chief Executive Officer until through April 30, 2022) (NOTE: Dominic Bassani passed away on November 11, 2023.), and $ 75,748 owed Mark A. Smith (“Smith”), the Company’s recently retired President, respectively. The sums owed to Bassani and Smith are owed pursuant to extension agreements effective January 1, 2015, whereby unpaid compensation earned after January 1, 2015, accrues interest at 4 % per annum and can be converted into shares of the Company’s common stock at the election of the employee during the first five calendar days of any month. The conversion price shall be the average closing price of the Company’s common stock for the last 10 trading days of the immediately preceding month. The deferred compensation owed Bassani and Smith as of June 30, 2023 was $ 527,058 and $ 20,167 , respectively. O’Neill is owed a balance of $ 367,500 and $ 140,000 at June 30, 2024 and 2023, respectively, pursuant to his 2021 employment agreement. There is no interest accrual or conversion rights related to the deferred balance. O’Neill terminated his service to the Company prior to the full term of his agreement. The Company owes deferred compensation to Craig Scott of $ 160,133 and $ 53,612 at June 30, 2024 and 2023, respectively, with similar conversion terms as those described above for Bassani and Smith, with the exception that the interest accrues at 0% to 3% per annum. The Company also owes various consultants and an employee, pursuant to various agreements, for deferred compensation of $ 202,509 and $ 51,444 as of June 30, 2024 and 2023, respectively, with similar conversion terms as those described above for Bassani and Smith, with the exception that the interest accrues at 0% to 3% per annum. The Company also owes a former employee $ 72,500 , which is not convertible and is non-interest bearing. Bassani and Smith have each been granted the right to convert up to $ 300,000 of deferred compensation balances at a price of $ 0.75 per share until January 15, 2025 into common shares (to be issued pursuant to the 2006 Plan). Smith also has the right to convert all or part of his deferred compensation balance into the Company’s securities (to be issued pursuant to the 2006 Plan) “at market” and/or on the same terms as the Company is selling or has sold its securities in its then current (or most recent if there is no current) private placement. Smith also received the right to transfer future deferred compensation to his 2020 Convertible Obligation at his election but such right is no longer in force. The Company recorded interest expense of $ 30,379 ($ 25,893 with related parties) and $ 19,983 ($ 17,716 with related parties) for the years ended June 30, 2024 and 2023, respectively. 5. CONVERTIBLE NOTES PAYABLE : Adjusted 2020 Convertible Obligations and Adjusted September 2015 Convertible Notes Effective February 1, 2023, three (3) directors/officers of the Company agreed to adjust the provisions of long term convertible obligations (including most of the 2020 Convertible Obligations and September 2015 Convertible Notes --- see below) owed to them by the Company in a manner which reduced the indebtedness of the Company by 80% (approximately $3.47 million, in aggregate while equitably maintaining existing conversion rights). The debt modification was treated as an equity transaction because the modifications were with affiliates that are related parties. F- 14 BION ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 2024 AND 2023 Mark A. Smith (the Company’s President)(“Smith”), Dominic Bassani (the Company’s Chief Operating Officer) (“Bassani”) ( NOTE : Dominic Bassani passed away on November 11, 2023.) and Ed Schafer (Director)(“Schafer”), adjusted/reduced the principal owed to them by $ 1,109,649 , $ 1,939,670 and $ 424,873 , respectively. Subsequent to the adjustment, the adjusted portion of the 2020 Convertible Obligations were renamed Adjusted 2020 Convertible Obligations and the adjusted portion of the September 2015 Convertible Notes were renamed Adjusted September 2015 Convertible Notes. The Adjusted 2020 Convertible Obligations of Smith, Bassani and Schafer are convertible into Units (consisting of 1 share and from one half (1/2) to one (1) warrant) at prices of $ .0946 , $ .0953 , and $ .0953 , respectively, and the Adjusted September 2015 Convertible Notes may be converted at the sole election of the noteholders into restricted common shares of the Company at a conversion price of $ 0.115 per share. The adjusted conversion prices slightly reduce the securities to be issued on conversion of each instrument from the amount receivable under the unadjusted instruments. The Adjusted 2020 Convertible Obligations and Adjusted September 2015 Convertible Notes do not accrue any interest until their maturity date (January 15, 2025). After the adjustment, the Company owed Smith, Bassani (and trust) and Schafer $ 262,154 , $ 434,016 and $ 96,364 , respectively, of Adjusted 2020 Convertible Obligations and Bassani and Schafer, respectively, $ 24,230 and $ 4,012 of Adjusted September 2015 Convertible Notes. As of June 30, 2024, the Adjusted 2020 Convertible Obligation balances, including accrued interest, owed Bassani (and his donees), Smith and Edward Schafer were $ 459,277 , nil 0 0 and $ 101,973 , respectively. As of June 30 2023, the Adjusted 2020 Convertible Obligation balances, including accrued interest, owed Bassani (and his donees), Smith and Edward Schafer were $ 441,446 , $ 130,180 and $ 98,014 , respectively. As of June 30, 2024 the Adjusted September 2015 Convertible Notes balances, including accrued interest, owed Bassani Family Trusts and Schafer were $ 7,907 and $ 4,246 , respectively. As of June 30, 2023 the Adjusted September 2015 Convertible Notes balances, including accrued interest, owed Bassani Family Trusts and Schafer were $ 24,645 and $ 4,081 , respectively. 2020 Convertible Obligations The 2020 Convertible Obligations (which combined/replaced prior convertible instruments dating to 2017 (or earlier), which accrue interest at either 4 % per annum or 4 % compounded quarterly and effective January 1, 2020 are due and payable on July 1, 2024. The 2020 Convertible Obligations (including accrued interest, plus all future deferred compensation added subsequently), are convertible, at the sole election of the holder, into Units consisting of one share of the Company’s common stock and one half to one warrant to purchase a share of the Company’s common stock, at a price of $ 0.50 per Unit until July 1, 2024. The maturity date of the notes has been extended to January 15, 2025. The original conversion price of $ 0.50 per Unit approximated the fair value of the Units at the date of the agreements; therefore, no beneficial conversion feature exists. Management evaluated the terms and conditions of the embedded conversion features based on the guidance of ASC 815-15 “Embedded Derivatives” to determine if there was an embedded derivative requiring bifurcation. An embedded derivative instrument (such as a conversion option embedded in the deferred compensation) must be bifurcated from its host instruments and accounted for separately as a derivative instrument only if the “risks and rewards” of the embedded derivative instrument are not “clearly and closely related” to the risks and rewards of the host instrument in which it is embedded. Management concluded that the embedded conversion feature of the deferred compensation was not required to be bifurcated because the conversion feature is clearly and closely related to the host instrument, and because of the Company’s limited trading volume that indicates the feature is not readily convertible to cash in accordance with ASC 815-10, “Derivatives and Hedging”. Effective February 1, 2023, a large portion of the 2020 Convertible Obligations were adjusted as set forth herein. As of June 30, 2024, the remaining unadjusted portion of the 2020 Convertible Obligation balances, including accrued interest, owed Bassani Family Trusts (and his donees) and Smith, were $ 373,999 and $ 121,076 , respectively. As of June 30, 2023, the remaining unadjusted portion of the 2020 Convertible Obligation balances, including accrued interest, owed Bassani Family Trusts, Smith and Schafer were $ 361,321 , $ 36,432 and nil, 0 respectively. During the year ended June 30, 2024, Smith elected to convert $ 140,951 of his Adjusted 2020 Convertible Obligation into 1,489,969 units at $ 0.0946 per unit, with each unit consisting of one share of the Company’s restricted common stock and one warrant to purchase one share of the Company’s restricted common stock for $ 0.75 per share until July 2026. The Company recorded interest expense of $ 16,558 and $ 102,478 for the years ended June 30, 2024 and 2023, respectively. The Company capitalized $ 62,162 and $ 179,981 related to the Initial Project for the years ended June 30, 2024 and 2023, respectively. Effective February 1, 2023, three (3) directors/officers of the Company agreed to adjust the provisions of long-term convertible obligations (including most of the 2020 Convertible Obligations and September 2015 Convertible Notes) owed to them by the Company in a manner which reduced the indebtedness of the Company by 80% (approximately $ 3.47 million, in aggregate) while equitably maintaining existing conversion rights. Because the modifications where with affiliates that are related parties, the debt modification was treated as an equity transaction. The Company recorded a deemed dividend for the reductions. F- 15 BION ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 2024 AND 2023 Mark A. Smith (the Company’s President) (“Smith”), Dominic Bassani (the Company’s Chief Operating Officer) (“Bassani”) (NOTE: Dominic Bassani passed away on November 11, 2023. See Note 9) and Ed Schafer (Director) (“Schafer”), adjusted/reduced the principal owed to them by $ 1,109,649 , $ 1,939,670 and $ 424,873 , respectively. Subsequent to the adjustment, the adjusted portion of the 2020 Convertible Obligations were renamed Adjusted 2020 Convertible Obligations (see above and Note 6.). September 2015 Convertible Notes During the year ended June 30, 2016, the Company entered into September 2015 Convertible Notes with Bassani, Schafer and a Shareholder which replaced previously issued promissory notes. The September 2015 Convertible Notes bear interest at 4% per annum, have maturity dates of July 1, 2024, and may be converted at the sole election of the noteholders into restricted common shares of the Company at a conversion price of $ 0.60 per share. As the conversion price of $0.60 approximated the fair value of the common shares at the date of the September 2015 Convertible Notes, no beneficial conversion feature exists. The maturity date of the notes has been extended to January 15, 2025 for Bassani and July 1, 2025 for the other note holders. The balances of the September 2015 Convertible Notes as of June 30, 2024, including accrued interest owed Bassani, Schafer and Shareholder, are $ 164,183 , nil 0 and $ 475,990 , respectively. As of June 30, 2023, the remaining unadjusted portion of the 2015 Convertible Notes balances including accrued interest, were $ 183,628 , $ 4,081 , and $ 460,873 , respectively. The Company recorded interest expense of $ 20,317 and $ 23,381 for the year ended June 30, 2024 and 2023, respectively. Effective February 1, 2023, three (3) directors/officers of the Company agreed to adjust the provisions of long term convertible obligations (including the September 2015 Convertible Notes owned by Bassani and Schafer) owed to them by the Company in a manner which reduced the indebtedness of the Company by 80% (approximately $3.52 million, in aggregate) while equitably maintaining existing conversion rights. Mark A. Smith (the Company’s President), Dominic Bassani (the Company’s Chief Operating Officer)(and a family Trust) and Ed Schafer (Director), adjusted/reduced the principal owed to them by $ 1,109,649 , $ 1,939,670 and $ 424,873 , respectively. Subsequent to the adjustment, the adjusted portion of the Notes were renamed Adjusted September 2015 Convertible Notes. The Adjusted September 2015 Convertible Notes may be converted at the sole election of the noteholders into restricted common shares of the Company at a conversion price of $0.115 per share. As of June 30, 2024, the Adjusted September 2015 Convertible Notes balances, including accrued interest, owed Bassani Family Trusts and Schafer were $ 7,907 and $ 4,246 , respectively. The debt modification was treated as an equity transaction because the modifications were with affiliates that are related parties. See above. Convertible Bridge Loan/Default On September 28, 2023, in order to partially mitigate the problems discussed above, the Company entered into an agreement for a $ 1,500,000 bridge loan and executed documents including a convertible promissory note (“Note”) and a binding subscription agreement (“Subscription”) (collectively the Note and the Subscription are the “Bridge Loan Agreements”) with SEB LLC, a non-affiliated party (“Lender”). The Bridge Loan Agreements require the Lender to loan the Company $ 1,500,000 in six monthly tranches of $ 250,000 commencing October 2023. All sums advanced under the Bridge Loan Agreements (and accrued interest thereon) would due and payable (with interest accrued at 9 % per annum) on October 1, 2024 if not previously converted into securities of the Company. The Note is convertible at $ 1.00 per unit, at the sole election of the Lender, into units consisting of one share of the Company’s common stock and a warrant to purchase one half share. 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 but the larger transaction was never completed. The funds were used primarily to re-initiate operations at the Initial Project. The Default (which is continuing) has created substantial problems for and materially damaged the Company and rendered the Company unable to meet its current creditor obligations on a timely basis. The Company is currently evaluating its rights regarding the Default by the Lender. This situation has contributed to the substantial increase in the Company’s ‘Current Liabilities’ including ‘accounts payable’ over recent periods. See Consolidated Financial Statements and ‘Management’s Discussion and Analysis’. The Company has engaged in discussion/negotiation with its larger creditors (including its largest creditor--- the primary contractor on the Initial Project) but has been unable to reach agreements regarding payments due to the uncertainty as to if, when and how much funding the Company will be able to raise in future periods. As a result, the Company’s largest creditor---the general contractor for the Initial Project --- has filed a mechanics lien in Indiana (and its largest sub-contractor has sent notices related to its intention to file a mechanics lien) and other creditors are threatening to commence litigation and other creditors are threatening to commence litigation and/or repossess/remove leased equipment). The Company recorded interest expense of 18,659 and nil 0 for the years ended June 30, 2024 and 2023, respectively. F- 16 BION ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 2024 AND 2023 May 2024 Convertible Notes During the year ended June 30, 2016, the Company entered into May 2024 Convertible Notes with five individuals. The May 2024 Convertible Notes bear interest at 6% per annum, have maturity dates of December 31, 2025 , and may be converted at the sole election of the noteholders into one restricted common shares and one warrant of the Company at a conversion price of $ 1.00 per unit. As the conversion price of $1.00 approximated the fair value of the common shares at the date of the May 2024 Convertible Notes, no beneficial conversion feature exists. The balances of the May 2024 Convertible Notes as of June 30, 2024, including accrued interest owed is $ 125,567 . The Company recorded interest expense of $ 567 and nil 0 for the year ended June 30, 2024 and 2023, respectively. 6. STOCKHOLDERS’ EQUITY : Write down of carry value of Initial Project Effective June 30, 2024, at the same time the Initial Project was deemed placed in service, the Board of Directors determined that the capitalized carrying value of the Initial Project on the Company balance sheet as of that date be reduced to $ 0 in order to conform to the applicable accounting practices, because the Initial Project was recently reclassified as largely a research & development facility and is located on land subject to a short term lease (as described above in Item 7, Management’s Discussion and Analysis). As a result, a large ‘one time/non-recurring’ ‘non-cash’ charge of $ 9,460,425 has been taken by the Company at that date which charge reduced the Company shareholders’ equity to ($ 5,808,501 ) and resulted in a loss of $ 11,691,115 for the 2024 fiscal year. “Give-back” Agreements to Additional Paid in Capital Effective April 1, 2024 the Company entered into two material definitive agreements regarding voluntary surrender for cancellation of securities of the Company (and related matters) by: 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”)(see Exhibit 10.1)(“Bassani Family Agreement”), and b) Mark A. Smith, President of the Company and a director (see Exhibit 10.2)(“MAS Agreement”). The Bassani Family and Smith entered into these agreements with the intention of mitigating dilution to shareholders as new, successor management is added to the Company’s management team. The “giveback” agreements were treated as equity transactions because the forfeitures were with affiliates that are related parties. The Bassani Family has agreed to surrender not less than approximately 20% of its Company holdings (as of December 2023), which surrender will increase to approximately 30% based on certain financing performances set forth in Exhibit 10.1. The Bassani Family elected to surrender deferred compensation of $ 652,252 (for 770,792 shares), $ 17,734 of partial surrender of the 2015 adjusted replacement note (for 154,208 shares) and 4,025,000 options as of June 30, 2024, the Company’s fiscal year end. The Bassani Family Agreement also sets forth requirements regarding conversion of convertible notes held by members of the Bassani Family after the security surrender. See Exhibit 10.1 for the material terms of the contemplated transactions. MAS has agreed to surrender approximately 30% of his Company holdings (as of December 2023). Immediately upon the effectiveness of the MAS Agreement, he cancelled all Company options held by him ( 2,425,000 , in aggregate) and waived $ 56,250 of accrued deferred compensation (convertible into 75,000 shares of the Company’s common stock). The MAS Agreement also sets forth requirements regarding conversion of convertible notes held by MAS after the security surrender and references the planned retirement of MAS on or before May 15, 2024. See Exhibit 10.2 for the material terms of the contemplated transactions. Subsequently, and effective June 27, 2024, the Board of Directors of the Company agreed to amend the terms of the agreements dated April 1, 2024. The amendments solely extend any dates of certain required conversions and/or exercises (and related promissory note maturity dates and warrant expiration dates), if any, that were earlier than January 15, 2025, to said date. No changes were made regarding any ‘givebacks’ of securities of the Company. Series B Preferred stock: Since July 1, 2014, the Company had 200 shares of Series B redeemable convertible Preferred stock outstanding with a par value of $ 0.01 per share, convertible at the option of the holder at $ 2.00 per share, with dividends accrued and payable at 2.5% per quarter. The Series B Preferred stock is mandatorily redeemable at $ 100 per share by the Company three years after issuance and accordingly was classified as a liability. The 200 shares had reached their redemption date and the Company approved the redemption of the Series B preferred stock during the year ended June 30, 2022. The 200 shares of Series B redeemable convertible Preferred stock were redeemed for $ 41,000 , which included the $ 21,000 in accrued dividend payable. During the years ended June 30, 2024, and 2023, the Company declared dividends of nil 0 and nil 0 respectively. The dividends are classified as a component of operations as the Series B Preferred stock is presented as a liability in these consolidated financial statements. There is no liability at June 30, 2024. F- 17 BION ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 2024 AND 2023 Common stock: Holders of common stock are entitled to one vote per share on all matters to be voted on by common stockholders. In the event of liquidation, dissolution or winding up of the Company, the holders of common stock are entitled to share in all assets remaining after liabilities have been paid in full or set aside and the rights of any outstanding preferred stock have been satisfied. Common stock has no preemptive, redemption or conversion rights. The rights of holders of common stock are subject to, and may be adversely affected by, the rights of the holders of any outstanding series of preferred stock or any series of preferred stock the Company may designate in the future. Centerpoint holds 704,309 shares of the Company’s common stock. These shares of the Company’s common stock held by Centerpoint are for the benefit of its shareholders without any beneficial interest. During the year ended June 30, 2024, the Company entered into subscription agreements to sell units for $ 1.60 per unit, with each unit consisting of one share of the Company’s restricted common stock and one-half warrant to purchase shares of the Company’s restricted common stock for $ 2.40 per share with an expiry date of 6/30/2024 and pursuant thereto, the Company issued 28,589 units for total proceeds of $ 45,742 . See ‘ Warrants ’ below. During the year ended June 30, 2024, the Company entered into subscription agreements to sell 565,000 units at a price of $ 1.00 , with each unit consisting of one share of the Company’s restricted common stock and one half warrant to purchase one share of the Company’s restricted common stock for $ 1.25 per share with an expiry date of December 31, 2024, and pursuant thereto, the Company issued 565,000 units for total proceeds of $ 565,000 . See ‘ Warrants ’ below. During the year ended June 30, 2024, 38,000 warrants were exercised to purchase 38,000 shares of the Company’s common stock at $ 0.75 per share for total proceeds of $ 28,500 . During the year ended June 30, 2024, Smith elected to convert $ 140,951 of principal from his Adjusted 2020 Convertible note into 1,489,969 Units; each unit consisting of one share and one warrant with the exercise price of $.75 until July 21, 2026. Each of these warrants carry an exercise bonus of 75 %. During the year ended June 30, 2024, the Company issued 89,847 shares of the Company’s common stock to non-affiliate consultants for services. The Shares were issued at various prices between $ 0.82 to $ 1.55 per share pursuant to the terms of the applicable for a value of $ 112,321 for the services provided. During the year ended June 30, 2024, the Company issued 3,661 shares of the Company’s common stock upon cashless exercise of 5,000 outstanding options held by an affiliate of the Company. During the year ended June 30, 2024, the Company issued 3,607,165 shares of the Company’s common stock upon cashless exercise of 4,241,034 outstanding warrants held by non-affiliates of the Company. During the year ended June 30, 2024, the Company issued 2,524,780 shares of the Company’s common stock upon cashless exercise of 2,927,197 outstanding warrants held by affiliates of the Company. Warrants: As of June 30, 2024, the Company had approximately 17.1 million warrants outstanding, with exercise prices from $ 0.60 to $ 2.40 and expiring on various dates through November 9, 2026. The weighted-average exercise price for the outstanding warrants is $ 0.69 , and the weighted-average remaining contractual life as of June 30, 2024 is .61 years. During the year ended June 30, 2024, Smith elected to convert $ 140,951 of principal from his Adjusted 2020 Convertible Note into 1,489,969 Units; each unit consisting of one share and one warrant with the exercise price of $ .75 until July 21, 2026. Each of these warrants carry an exercise bonus of 75 %. During the year ended June 30, 2024, the Company issued 3,607,165 shares of the Company’s common stock upon cashless exercise of 4,241,034 outstanding warrants held by non-affiliates of the Company. During the year ended June 30, 2024, the Company issued 2,524,780 shares of the Company’s common stock upon cashless exercise of 2,927,197 outstanding warrants held by affiliates of the Company. F- 18 BION ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 2024 AND 2023 During the year ended June 30, 2024, the Company entered into subscription agreements to sell 28,589 units at a price of $ 1.60 , with each unit consisting of one share of the Company’s restricted common stock and one half warrant to purchase one share of the Company’s restricted common stock for $ 2.40 per share with an expiry date of June 30, 2024, and pursuant thereto, the Company issued 28,589 units for total proceeds of $ 45,742 . On September 26, the Company’s Board of Directors, due to a misunderstanding related to a private placement (memorandum of March 2023) and the securities sold thereunder, adjusted the units sold in the offering by substituting 1,003,590 warrants with an exercise price of $ 1.25 per share for 501,795 previously issued warrants effective October 1, 2023 . During the year ended June 30, 2024, the Company approved the modification of existing warrants held by brokers, which extended certain expiration dates. The modifications resulted in interest expense of $ 135,207 and non-cash compensation of $ 15,000 . During the year ended June 30, 2024, the Company issued 282,500 warrants for the subscription agreements to sell 565,000 units at a price of $ 1.00 , with each unit consisting of one share of the Company’s restricted common stock and one half warrant to purchase one share of the Company’s restricted common stock for $ 1.25 per share with an expiry date of December 31, 2024, and pursuant thereto, the Company issued 565,000 units for total proceeds of $ 565,000 . During the year ended June 30, 2024, 38,000 warrants were exercised to purchase 38,000 shares of the Company’s common stock at $ 0.75 per share for total proceeds of $ 28,500 . During the year ended June 30, 2024, the Company issued 50,000 warrants to a consultant for services. The warrants were issued for a total value of $ 5,000 . During the year ended June 30, 2024, 223,625 warrants expired. Effective May 1, 2022, an entity affiliated with William O’Neill (“O’Neill”) was issued 1,000,000 Incentive Warrants exercisable at $ 1.00 per share until April 30, 2026 of which up to 700,000 Incentive Warrants could be cancelled if O’Neill was not renewed at 13 months and/or fails to serve the entire contract term thereafter. These warrants each have a 75 % exercise price adjustment provision if the terms set forth therein are met. 304,743 warrants were cancelled as of May 31, 2024, resulted in non-cash compensation credit of $ ( 22,856 ) and venting expense of $ ( 11,918 ) for the year ended June 30, 2024. Stock options: On April 7, 2022 the Company’s shareholders approved the Bion Environmental Technologies, Inc. 2021 Equity Incentive Award Plan (the “ Equity Plan ”). The Equity Plan provides for the issuance of options (and/or other securities) to purchase up to 30,000,000 shares of the Company’s common stock. The Equity Plan was adopted and ratified by Board of Directors on April 8, 2022. Terms of exercise and expiration of options/securities granted under the Equity Plan may be established at the discretion of the Board of Directors, but no option may be exercisable for more than ten years. No grants have been made pursuant to the Equity Plan as of the date of this report. The Company’s 2006 Consolidated Incentive Plan, as amended during the year ended June 30, 2021 (the “2006 Plan”), provides for the issuance of options (and/or other securities) to purchase up to 36,000,000 shares of the Company’s common stock. Terms of exercise and expiration of options/securities granted under the 2006 Plan may be established at the discretion of the Board of Directors, but no option may be exercisable for more than ten years. The 2006 Plan will be maintained to service grants already made thereunder (together with new grants, if any, to employees and consultants who already has received grants pursuant to its terms). On March 15, 2023, the Company granted 30,000 options under the 2006 Plan to two consultants. The options vested equally in thirds on March 20, 2023, June 20, 2023 and September 30, 2023. On May 9, 2023, the Company granted 500,000 options under the 2006 Plan to Bill O’Neill. 250,000 of these options vest on June 1, 2024 and 250,000 options vest on June 1, 2025; all options expire on June 30, 2026. O’Neill resigned on May 31, 2024, as the options did not vest and were forfeited the Company reversed all previous expenses of $ 178,179 . The Company recorded compensation expense related to employee stock options of $ ( 18,314 ) and $ 249,744 for the year ended June 30, 2024 and 2023, respectively. The Company granted nil 0 and 805,000 options for the year ended June 30, 2024 and 2023, respectively. During the year ended June 30, 2024, the Company issued 3,661 shares of the Company’s common stock upon cashless exercise of outstanding options. F- 19 BION ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 2024 AND 2023 A summary of option activity under the 2006 Plan for years ended June 30, 2024 and 2023 is as follows: Schedule of option activity under the plan Options Weighted- Average Exercise Price Weighted- Average Remaining Contractual Life Aggregate Intrinsic Value Outstanding at July 1, 2022 11,201,600 80 2.7 4,429,263 Granted 805,000 — Exercised — — Forfeited — — Expired — — Outstanding at July 1, 2023 12,006,600 $ 0.85 1.83 $ 5,085,659 Granted — — Exercised ( 5,000 ) — Forfeited ( 6,950,000 ) — Expired ( 50,000 ) — Outstanding at June 30, 2024 5,001,600 $ 0.84 0.85 $ — The total fair value of stock options that vested during the years ended June 30, 2024 and 2023 was $ 2,730 and $ 249,744 , respectively. As of June 30, 2024, the Company had no unrecognized compensation cost related to stock options. 7. SUBSCRIPTION RECEIVABLE - AFFILIATES : As of June 30, 2024, the Company has three interest bearing, secured promissory notes with an aggregate principal amount of $ 428,250 ($ 534,683 , including interest) from Bassani which were received as consideration for purchases of warrants to purchase 5,565,000 shares, in aggregate, of the Company’s restricted common stock, which warrants have an exercise price of $ 0.75 (with a 75% exercise price adjustment provision) and have expiry dates ranging from December 31, 2024 (now extended to January 15, 2025) to December 31, 2025 (subject to extension rights) secured by portions of Bassani Family Trust’s 2020 Convertible Obligation and Bassani Family Trust’s September 2015 Convertible Notes. The secured promissory notes are payable January 15, 2025. As of June 30, 2024, the Company has an interest bearing, secured promissory note for $ 30,000 ($ 37,085 including interest) from Smith as consideration to purchase warrants to purchase 300,000 shares of the Company’s restricted common stock, which warrants are exercisable at $ 0.60 (with a 75% exercise price adjustment provision) and had expiry dates of December 31, 2024 (now extended to January 15, 2025). The promissory note bears interest at 4 % per annum and is secured by $ 30,000 original principal ($ 37,886 including interest) of Smith’s 2020 Convertible Obligations. The secured promissory note is payable on January 15, 2025. As of June 30, 2024, the Company has an interest bearing, secured promissory note for $ 19,400 ($ 24,549 including interest) from Scott as consideration to purchase warrants to purchase 485,000 shares of the Company’s restricted common stock, which warrants are exercisable at $ 0.75 (with a 90% exercise price adjustment provision) and have expiry dates of December 31, 2024 (now extended to December 31, 2026). The promissory note bears interest at 4 % per annum and is secured by the warrants (which 400,000 were gifted subject to the security interest). As of June 30, 2024, the Company has one interest bearing, secured promissory note with an aggregate principal amount of $ 27,000 ($ 34,166 including interest) from one employee as consideration to acquire warrants to purchase 570,000 shares of the Company’s restricted common stock, which warrants are exercisable at $ 0.75 (with a 90% exercise price adjustment provision) and have expiry dates of December 31, 2024 (now extended to December 31, 2026). (The promissory note bears interest at 4 % per annum and is secured by a perfected security interest in the warrants, and are payable on December 31, 2026). These secured promissory notes are recorded as “Subscription receivable—affiliates” on the Company’s balance sheet pending payment. F- 20 BION ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 2024 AND 2023 8. COMMITMENTS AND CONTINGENCIES : A: Employment/Consulting (and related) agreements: Stephen Craig Scott (“Scott”) was appointed interim CEO effective June 1, 2024. Scott had previously been working with the Company as an employee/consultant since 1993 in various positions including Director of Communications, SVP- Capital Markets and Head of Head of Business Development. On October 25, 2023, Scott entered into an agreement with the Company which included provisions for a monthly salary of $ 14,000 of which $ 2,000 is deferred. During the year ended June 30, 2024, Scott deferred substantial portions of his monthly salary to help the Company conserve cash. For the year ended June 30, 2024 and 2023, Scott was paid $ 64,000 and $ 144,000 respectively. William O’Neill (“O’Neill”) was hired as the Company’s Chief Executive Officer (“CEO”) effective May 1, 2022 and he elected not to complete his contractual term and ended his service with the Company effective May 31, 2024. O’Neill had previously been working with the Company as a consultant and had been employed by the Company as its CEO during 2010-2011. (Upon the hiring of O’Neill, Bassani, CEO of the Company from 2011, assumed the position of COO while retaining existing operational management responsibilities and working with O’Neill on ‘commercialization’ of the Company’s technology and work related to JVs (and other transactions) based on the Company’s Gen3 Technology and related matters until his recent death. Bassani’s compensation arrangements with the Company were not altered in the context of the change of positions.) The Company and O’Neill entered into a thirty-seven (37) month employment agreement with compensation of $ 25,000 cash and $ 10,000 deferred compensation per month. The cash payment is paid $ 12,500 to O’Neill and $12,500 to an entity affiliated with O’Neill. An entity affiliated with O’Neill was issued 1,000,000 Incentive Warrants exercisable at $1.00 per share (a 75% exercise price adjustment provision if the terms set forth therein are met) until April 30, 2026 of which up to 304,743 Incentive Warrants have been cancelled due to O’Neill’s failure to serve the entire contract term. O’Neill was not paid, from October 31, 2023 until his resignation, deferring part or all of his cash compensation due to the Company’s financial crisis described in multiple places herein, and $ 157,500 was accrued during that period. Until his retirement on July 31, 2024, Smith held the positions of Director, President, Interim Chief Financial Officer and General Counsel of Company (and its subsidiaries) under various agreements (and extensions) and terms since March 2003. On October 10, 2016, the Company approved a month-to-month contract extension with Smith which included provisions for i) a monthly salary of $ 18,000 (deferred until the Board of Directors re-instated cash payments to all employees and consultants who are deferring compensation), ii) the right to convert up to $ 300,000 of his deferred compensation, at his sole election, at $ 0.75 per share, until December 31, 2024, and iii) the right to convert his deferred compensation in whole or in part, at his sole election, at any time in any amount at “market” or into securities sold in the Company’s current/most recent private offering at the price of such offering to third parties. Smith agreed effective July 29, 2018 to continue to serve the Company under the same basic terms on a month-to-month basis. On May 1, 2022 Smith’s compensation was increased to $ 25,000 per month of which $5,000 per month was deferred. Smith deferred substantial portions of his monthly compensation to help the Company conserve cash. For the years ended June 30, 2024 and 2023, Smith was paid $ 20,000 and $ 200,000 , respectively, of cash compensation. Smith was paid, deferring part or all of his cash compensation, since October 31, 2023, due to the Company’s financial crisis described in multiple places herein and $ 130,000 has been accrued during that period until June 30, 2024. From no later than March 31, 2005, the Company had various agreements with Dominic Bassani (and/or Brightcap which provided his services during some of the years) (NOTE: Dominic Bassani passed away on November 11, 2023. ) who was serving as the Company’s Chief Operating Officer (‘COO’) at the time of his passing and formerly served as the Company’s Chief Executive Officer (‘CEO’) for the prior decade (any reference to Brightcap or Bassani for all purposes are referring to the same individual). The Board appointed Bassani as the Company's CEO effective May 13, 2011. On February 10, 2015, the Company executed an Extension Agreement with Bassani pursuant to which Bassani extended the term of his service to the Company to December 31, 2017 (with the Company having an option to extend the term an additional six months.) Pursuant to the Extension Agreement, Bassani continued to defer his cash compensation ($ 31,000 per month) until the Board of Directors re-instated cash payments to all employees and consultants who were deferring their compensation. During October 2016 Bassani was granted the right to convert up to $ 125,000 of his deferred compensation, at his sole election, at $ 0.75 per share, until March 15, 2018 (which was expanded on April 27, 2017, to the right to convert up to $ 300,000 of his deferred compensation, at his sole election, at $ 0.75 per share, until June 30, 2024 (including extensions). During February 2018, the Company agreed to the material terms for a binding two-year extension agreement for Bassani’s services as CEO. Bassani’s salary remained $ 31,000 per month, which accrued in part during periods when the Board determined there was not adequate cash available. Additionally, the Company agreed to pay or accrue $ 2,000 per month to be applied to life insurance premiums (which sums were accrued as liabilities). On August 1, 2018, in the context of extending his agreement to provide services to the Company on a full-time basis through December 31, 2022) plus 2 years after that on a part-time basis, the Company received an interest bearing secured promissory note for $ 300,000 from Bassani as consideration to purchase warrants to purchase 3,000,000 shares of the Company’s restricted common stock, which warrants are exercisable at $0.60 and have expiry dates of June 30, 2025. The promissory note is secured by a portion of Bassani’s 2020 Convertible Obligations and, as of June 30, 2024, the principal and accrued interest was $ 373,099 . For the years ended June 2024 and 2023, Brightcap was paid $ 20,000 and $ 300,000 , respectively, of cash compensation. Effective April 1, 2024 the Company entered into two material definitive agreements regarding voluntary surrender for cancellation of securities of the Company (and related matters) by: 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”)(see Exhibit 10.1)(“Bassani Family Agreement”), and b) Mark A. Smith, President of the Company and a director (“MAS”)(see Exhibit 10.2)(“MAS Agreement”), as described in multiple places herein. F- 21 BION ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 2024 AND 2023 B: Initial Project: On January 28, 2022 Bion Environmental Technologies, Inc. (‘Bion’), on behalf of Bion 3G1 LLC (‘3G1’), a wholly-owned subsidiary, entered into a Purchase Order Agreement with Buflovak and Hebeler Process Solutions (collectively ‘Buflovak’) in the amount of $ 2,665,500 (and made the initial 25 % payment ($ 666,375 ) for the core of the ‘Bion System’ portion (without the crystallization modules which will be ordered and fabricated pursuant to subsequent agreements) of the previously announced 3G Tech Initial Project. This Purchase Order encompassed the core of Bion’s 3G Technology. The Company received progress billing in March 2022 and June 2022 for the second and third 25 % installments, both of which have been paid as of the filing date. On January 17, 2023 the Company received an invoice from Buflovak for $ 533,100 which was paid on March 1, 2023 and on April 24, 2023 the Company received an invoice from Buflovak for $ 83,275 which was paid on May 2, 2023 bringing the aggregate payments to $ 2,615,500 as of the date of this filing . On July 26, 2023 the Company received the final invoice for $ 50,000 , $ 16,666 was paid on January 2, 2024 leaving a balance of $ 33,334 . In addition to the Purchase Order, through June 30, 2024 the Company has incurred additional costs of $ 6,794,925 on the Initial Project for capitalized interest and costs, non-cash compensation, equipment and consulting fees. $ 7,369,529 has been paid and $ 1,681,105 has been billed and not yet paid. Buflovak has worked with the Company on design and testing of its 3G Tech over several years. The basic design for the Initial Project’s Bion System is complete, fabrication and delivery of equipment from Buflovak from the Purchase Order Agreement has been largely completed and assembly/construction is in process. 3G1 is working in concert with Integrated Engineering Services, the primary site engineering firm for the facility, on the integration of all project components/modules at the Initial Project site. Additional agreements have been entered into various professional services providers (engineers, surveyors, utilities, etc.) for work related to the Initial Project. The Company has incurred costs of $ 8,406,434 on t he Initial Project, not including capitalized labor and interest. Management previously believed that the Initial Project had reached the point where it could be appropriately deemed ‘placed in service’ at January 1, 2024. However, discussions with the key technical and engineering personnel involved at the Initial Project during the recently concluded quarter convinced management that such a characterization was premature as some key modules had not yet been completed and/or fully tested. Additionally, due to some recent equipment break-downs, the Initial Project was in maintenance mode at that time (and not conducting operations), while the Company awaited required replacement parts and subsequent repairs. This process was slowed by the Company’s ongoing difficulties in raising needed funds for its activities. The Company’s Board of Directors re-evaluated the classification/status of the Initial Project as part of the Company’s annual review process and determined that the Initial Project had been ‘placed in service’ at the June 30, 2024, fiscal year end. Further, after extensive discussion, it was determined that the ‘carrying value’ of the Initial Project on the Company balance sheet as of that date be reduced to $0 in order to conform to accepted accounting practices, because the Initial Project was recently reclassified as largely a research & development facility and is located on land subject to a short term lease (as described above in Item 7, Management’s Discussion and Analysis). As a result, a large ‘one time/non-recurring’ ‘non-cash’ charge of $ 9,460,425 has been taken by the Company at that date which charge reduced the Company shareholders’ equity to ($ 5,808,501 ) and resulted in a loss of $ 11,691,115 for the 2024 fiscal year. F- 22 BION ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 2024 AND 2023 C: Lease: The Company entered into an agreement on September 23, 2021, to lease approximately four acres of land near Fair Oaks, Indiana, for the development site of its Initial Project. The future minimum lease payment under noncancelable operating lease with terms greater than one year as of June 30, 2024: Schedule of future minimum lease payment From July 2024 to December 2024 56,250 Undiscounted cash flow 56,250 Less imputed interest ( 2,274 ) Total 53,976 The weighted average remaining lease term and discounted rate related to the Company’s lease liability as of June 30, 2024 were 0.5 years and 10%, respectively. The Company’s lease discount rate is generally based on the estimates of its incremental borrowing rate as the discount rates implicit in the Company’s lease cannot be readily determined. The Company has not made lease payments since October 16, 2023 and owes $ 50,000 in lease payments at June 30, 2024. D: Litigation (and related matters): 1) Convertible Bridge Loan/Default On September 28, 2023, in order to partially mitigate the problems discussed in the going concern, the Company entered into an agreement for a $ 1,500,000 bridge loan and executed documents including a convertible promissory note (“Note”) and a binding subscription agreement (“Subscription”) (collectively the Note and the Subscription are the “Bridge Loan Agreements”) with SEB LLC, a non-affiliated party (“Lender”). The Bridge Loan Agreements require the Lender to loan the Company $ 1,500,000 in six monthly tranches of $ 250,000 commencing October 2023. All sums advanced under the Bridge Loan Agreements (and accrued interest thereon) would due and payable (with interest accrued at 9 % per annum) on October 1, 2024 if not previously converted into securities of the Company. The Note is convertible at $ 1.00 per unit, at the sole election of the Lender, into units consisting of one share of the Company’s common stock and a warrant to purchase one half share. The initial $ 250,000 tranche was received by the Company on October 5, 2023. However, no further funds were received by the Company from the Lender. During early November 2023 the Lender informed the Company verbally that it did not intend to fulfill its obligations pursuant to the Bridge Loan Agreements and since such time the Lender has been in default (“Default”). On May 10, 2024 the Company received $150,000 from affiliates of the Bridge Loan Lender on terms not yet finalized and included in an agreement. 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. This situation has contributed to the substantial increase in the Company’s ‘Current Liabilities’ including ‘accounts payable’ over recent periods. See Consolidated Financial Statements and ‘Management’s Discussion and Analysis’. The Company has engaged in discussion/negotiation with its larger creditors (including its largest creditor--- the primary contractor on the Initial Project) but has been unable to reach agreements regarding payments due to the uncertainty as to if, when and how much funding the Company will be able to raise in future periods. As a result, the Company’s largest creditor---the general contractor for the Initial Project --- has filed a mechanics lien in Indiana (and its largest sub-contractor has sent notices related to its intention to file a mechanics lien) and other creditors are threatening to commence litigation and other creditors are threatening to commence litigation and/or repossess/remove leased equipment). 2) Creditor Matters As is described in the Company’s Consolidated Financial Statements included herein and discussed in the Notes to the Consolidated Financial Statements, the Company has had on-going difficulties raising needed funds for its operations/activities over the past 2 years which has rendered the Company unable to meet its current creditor obligations on a timely basis. This situation includes a substantial increase in the Company’s ‘Current Liabilities’ including ‘accounts payable’ over recent periods. The Company has engaged in discussion/negotiation with its larger creditors (including its largest creditor--- the primary contractor on the Initial Project) but has been unable to reach agreements regarding payments due to the uncertainty as to if, when and how much funding the Company will be able to raise in future periods. As a result, the Company’s largest creditor---the general contractor for the Initial Project --- has filed a mechanics in Indiana (and its largest sub-contractor has sent notices related to its intention to file a mechanics lien) and other creditors are threatening to commence litigation and/or repossess/remove leased equipment. The Company currently is not involved in any other material litigation or similar events. F- 23 BION ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 2024 AND 2023 9. INCOME TAXES : The reconciliation between the expected federal income tax benefit computed by applying the Federal statutory rate to loss before income taxes and the actual benefit for taxes on loss for the years ended June 30, 2024 and 2023 is as follows: Schedule of effective income tax rate reconciliation 2024 2023 Expected income tax benefit at statutory rate $ ( 2,455,000 ) $ ( 670,000 ) State taxes, net of federal benefit ( 428,000 ) ( 117,000 ) Permanent differences and other 4,000 9,000 Expiration of net operating allowances 371,000 733,000 Change in valuation allowance 2,508,000 ( 45,000 ) Income tax benefit $ — $ — The Company has net operating loss carry-forwards (“NOLs”) for tax purposes of approximately $ 42,551,000 as of June 30, 2024. These NOLs expire on various dates through 2041. The utilization of the NOLs may be limited under Section 382 of the Internal Revenue Code. The Company’s deferred tax assets for the years ended June 30, 2024 and 2023 are estimated as follows: Schedule of deferred tax assets 2024 2023 NOL carryforwards (Federal and State) $ 8,936,000 $ 8,299,000 Stock-based compensation 5,451,000 5,459,000 Impairment 3,673,000 1,340,000 Business interest 377,000 338,000 Deferred compensation ( 641,000 ) 1,054,000 Capitalized research and development 49,000 66,000 Gross deferred tax assets 17,845,000 16,556,000 Valuation allowance ( 17,845,000 ) ( 16,556,000 ) Net deferred tax assets $ — $ — The Company has provided a valuation allowance of 100 % of its net deferred tax asset due to the uncertainty of generating future profits that would allow for the realization of such deferred tax assets. 10. 401(k) PLAN : The Company has adopted the Bion Technologies, Inc. 401(k) Profit Sharing Plan and Trust (the “401(k) Plan”), a defined contribution retirement plan for the benefit of its employees. The 401(k) Plan is currently a salary deferral only plan and at this time the Company does not match employee contributions. The 401(k) is open to all employees over 21 years of age and no service requirement is necessary. F- 24 BION ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 2024 AND 2023 11. SUBSEQUENT EVENTS : As is described in the Company’s Financial Statements included herein and discussed above in the Notes to the Financial Statements above and in Item 2, Management’s Discussion and Analysis, the Company has had on-going difficulties raising needed funds for its operations/activities over the past 2 years which has rendered the Company unable to meet its current creditor obligations on a timely basis. The Company has engaged in discussion/negotiation with its larger creditors (including its largest creditor--- the primary contractor on the Initial Project) but has been unable to reach agreements regarding payments due to the uncertainty as to if, when, and how much funding the Company will be able to raise in future periods. As a result, the Company’s largest creditor---the general contractor for the Initial Project --- has filed a mechanics in Indiana (and its largest sub-contractor has sent notices related to its intention to file a mechanics lien), other creditors are threatening to commence litigation and/or repossess/remove leased equipment and the Company is behind on its Lease payments related to the site of the Initial Project. On September 5, 2024, three members of the LLC (Subsequent Events, Aug 23, 2024, below) met with representatives of two of the largest creditors: the prime contractor and the property lessor. Discussions and ultimate resolution are ongoing and subject to Bion’s ability to raise capital in a timely manner. On July 15, 2024, the Company issued 9,231 shares of the Company’s common stock to non-affiliate consultants for services. The shares were issued at .65 per share pursuant to the terms of the applicable for a value of $ 6,000 for the services provided. Effective July 31, 2024, Mark A. Smith, Bion’s President, CFO, and General Counsel retired, as was planned for some time. Mr. Smith was responsible for a wide range of duties and his previous roles will need to be filled over the next several months, both by existing staff and new associates. On August 23, 2024, Bion announced that three affiliates of the Company (Greg Schoener, Interim COO & Director; Turk Stovall, Director; Bob Weerts, Director) and two shareholders (one of whom is the brother of Greg Schoener) have agreed to advance to the Company, through a newly formed LLC (LLC), up to $ 500,000 in consideration of a secured convertible promissory note. The note instrument and agreements have not been executed at this time because terms and other details have not been finalized yet; however, the group has begun advancing money to the Company. As of the date of the filing of this report, the aggregate sum of $ 201,564 to the Company together with express directions on what items were to be paid with such funds. When a final agreement is executed, it will be attached as an exhibit to a Form 8-K. F- 25 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunder duly authorized. BION ENVIRONMENTAL TECHNOLOGIES, INC. Dated: September 30, 2024 By: /s/ Stephen Craig Scott Stephen Craig Scott Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated: SIGNATURE TITLE DATE /s/ Stephen Craig Scott Chief Executive Officer September 30, 2024 Stephen Craig Scott and Director /s/ Jon Northrop Secretary and Director September 30, 2024 Jon Northrop /s/ Edward Schafer September 30, 2024 Edward Schafer Director /s/ William Rupp Director September 30, 2024 William Rupp /s/ Robert Weerts Director September 30, 2024 Robert Weerts /s/ Turk Stoval Director September 30, 2024 Turk Stovall /s/ Salvatore Zizza Director September 30, 2024 Salvatore Zizza