Annual Report for Fiscal Year Ending June 30, 2026 (Form 10-K)

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

Statements made in this Form 10-K that are not historical or current facts, which represent the Company's expectations or beliefs including, but not limited to, statements concerning the Company's operations, performance, financial condition, business strategies, and other information, involve substantial risks and uncertainties. The Company's actual results of operations, most of which are beyond the Company's control, could differ materially. These statements often can be identified by the use of terms such as "may," "will," "expect," "believe," anticipate," "estimate," or "continue" or the negative thereof. We wish to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Any forward-looking statements represent management's best judgment as to what may occur in the future. However, forward looking statements are subject to risks, uncertainties and important factors beyond our control that could cause actual results and events to differ materially from historical results of operations and events and those presently anticipated or projected.

These factors include potential conflicts of interest related to the BLG loan group, its control by one of Bion's Directors and key management, and its security position in the Company's IP (see Note 5 Note payable - related party (BLG)), adverse economic conditions, entry of new and stronger competitors, inadequate capital and limited ability to obtain financing, needed personnel and equipment, unexpected costs, failure (or delay) to gain product certifications and/or regulatory approvals in the United States (or particular states) or foreign countries, loss (permanently or for any extended period of time) of the services of members of the Company's small core management team and failure to obtain access to new markets. Additional risks and uncertainties that may affect forward looking statements about Bion's business and prospects include: i) the possibility that markets for eco-friendly/sustainable beef, organic and low-carbon fertilizer products, and clean fuels will be slow to develop (or not develop at all), ii) the possibility that competitors will develop more comprehensive and/or less expensive environmental solutions, viii) delays in market awareness of Bion and our Systems, iv) uncertainties and costs increases related to research and development efforts to update and improve Bion's technologies and applications thereof, and/or v) delays and/or costs exceeding expectations relating to Bion's development of Projects and vi) failure of marketing strategies, each of which could have both immediate and long term material adverse effects by placing us behind our competitors and requiring expenditures of our limited resources.

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

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

BUSINESS OVERVIEW AND PLAN

The Company has been under substantial financial and management stress over the past six (6) years. Covid-related delays during technology pilot development at Buflovak in New York, followed by post-Covid supply chain disruptions during construction of our demonstration facility at Fair Oaks, led to extreme difficulties in raising needed funds. These delays prevented us from meeting our project development and related capital timelines, and were further compounded by the death (following extended illness) of Dominic Bassani, who most recently served as our COO from May 2022 after serving as our CEO for the prior decade, the subsequent resignation of Bill O'Neill, Dominic's replacement at the CEO position, effective May 31, 2024, followed by the retirement of Mark A. Smith, the Company's President, General Counsel and Chief Financial Officer, effective July 31, 2024.

Until May 2024 (prior to Mr. O'Neill's departure), Bion was focused on building multiple integrated beef projects as described below.

At the end of May 2024, a new core leadership team was installed (see Item 10) that pivoted Bion away from large integrated livestock projects to devote almost all its resources on the bolt-on business opportunity: using the ARS as a standalone ammonia control solution for others' biogas production facilities that simultaneously supply us with feedstock from which to produce our unique fertilizer products. A short-term funding strategy was implemented (see Note 5 BLG and Shareholder Note Group) while longer term capital solutions were pursued; these efforts are ongoing. We have implemented extreme cost savings measures: maintaining only mission-critical operations and funding. These measures will continue until we can execute a larger financing or obtain other sources of capital, such as a potential strategic investor/partner or license agreement.

Our leadership team believes, despite the difficulties Bion has faced, the Company is now ready for successful commercial launch, having accomplished the following:

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Capital structure cleanup and significant debt settled

Settlement agreements were executed with legacy principals that substantially simplified the capital structure and reduced potential dilution (see Notes 6 & 8, Giveback and Settlement Agreements);

Settlement agreements were executed with creditors related to the Fair Oaks demonstration facility (see Notes 8, 11, Item 3, Hamstra and North Prairie Holdings Settlements).

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Technology now commercial-ready

Completed optimization; value proposition proven; ready for final design (see Platform and Development below).

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Strong fertilizer demand demonstrated

Several non-binding offtake commitments for AB10 nitrogen fertilizer have been executed. Letters of support for a federal grant application were received that exceed the anticipated initial commercial project's production capacity (see below: Gen3Tech Platform, 2. Fertilizers: Organic and 'Low Carbon').

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Demonstrated developers/operators demand for ammonia control solutions

There is tremendous uncertainty over RNG policy and pricing. Optimizing existing facilities has become a key focus for the biogas/RNG industry that is actively seeking comprehensive resource recovery. Bion believes its ARS and AB10 represent the best ammonia recovery value proposition available today.

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Built a strong core team to execute a commercial strategy

Bion has added key talent in engineering, agronomy, project management, and marketing.

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Built key relationships: engineering, finance, fertilizer distribution

Bion has proven to be a serious and respected solutions provider that has attracted the attention of a wide range of stakeholders in engineering, finance, agriculture, and fertilizer.

During the past two years, Bion has worked to establish itself as a credible and capable participant in the livestock waste treatment, renewable energy, and sustainable agriculture markets. Management believes its ARS technology has the potential to fundamentally change the economics of manure and digestate management by recovering nitrogen as a high-value organic fertilizer rather than treating it as waste. These successes coincide with long term trends in sustainable agriculture, renewable fuels, and the circular economy that favor Bion's business opportunities. Bion leadership believes this confluence of events positions the Company, assuming it continues to align with appropriate strategic partners and obtains sufficient financing, to exploit a unique and growing opportunity at the intersection of agriculture, renewable energy, the environment, U.S. food security and public health, and consumer demand.

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 ARS PROJECT IS PROJECTED TO COST BETWEEN $8 MILLION AND $40 MILLION (DEBT/EQUITY/GRANTS), DEPENDING ON WHETHER IT IS A BOLT-ON OR AN INTEGRATED PROJECT, 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.

For expanded information regarding our 'HISTORY, BACKGROUND AND CURRENT ACTIVITIES', see discussion within the Notes (particularly Notes 1, 4, 5, and 8) included in this report, in Forms 8-K and Forms 10-Q filed earlier this year and Item 1 (and other sections) in our Annual Reports on Form 10-K filed in previous years.

CRITICAL ACCOUNTING POLICIES

Revenue Recognition

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

Stock-based compensation

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

Pursuant to ASC Topic 815 "Derivatives and Hedging" ("Topic 815"), the Company reviews all financial instruments for the existence of features which may require fair value accounting and a related mark-to-market adjustment at each reporting period end. Once determined, the Company assesses these instruments as derivative liabilities. The fair value of these instruments is adjusted to reflect the fair value at each reporting period end, with any increase or decrease in the fair value being recorded in results of operations as an adjustment to fair value of derivatives. As of June 30, 2026 and 2025, there are no derivative financial instruments.

Options:

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

Warrants:

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

Lease Accounting:

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

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

The Company has elected the short-term lease practical expedient available under ASC 842 for all asset classes. Under this election, for leases with a lease term of 12 months or less at commencement, and which do not include an option to purchase the underlying asset that the Company is reasonably certain to exercise, the Company does not recognize a lease liability or corresponding ROU asset on its consolidated balance sheets. Instead, lease payments associated with such short-term leases are recognized as expense in the consolidated statements of operations on a straight-line basis over the lease term.

YEAR ENDED JUNE 30, 2026 COMPARED TO THE YEAR ENDED JUNE 30, 2025

Revenue

Total revenues were nil for both the years ended June 30, 2026 and 2025.

General and Administrative

Total general and administrative expenses were $1,301,000 and $2,145,000 for the years ended June 30, 2026 and 2025, respectively.

Salaries and related payroll tax expenses were $356,000 and $368,000 for the years ended June 30, 2026 and 2025. Consulting costs were $266,000 and $198,000 in the years ended June 30, 2026 and 2025. The $68,000 increase in consulting costs is due to additional consultants brought in for fertilizer market access and business development. Investor relations expenses were $32,000 and $136,000 for the years ended June 30, 2026 and 2025, respectively, and the $104,000 decrease was due to less investor related activity during the fiscal year in order to conserve cash. Legal costs were $17,000 and $1,000 for the years ended June 30, 2026 and 2025, respectively. The increase of $16,000 was due to the legal costs associated with the litigation and settlements with Hamstra and Dilling.

Stock-based compensation for the years ended June 30, 2026 and 2025 were $125,000 and $844,000 respectively. The $719,000 decrease is primarily due to a lesser expense in 2026 for options and warrant modifications.

Depreciation

Total depreciation expense was nil and $1,000 for the years ended June 30, 2026 and 2025, respectively.

Research and Development

Total research and development expenses were $27,000 and $22,000 for the years ended June 30, 2026 and 2025, respectively.

Salaries and related payroll tax expenses were $6,000 and $6,000 for the years ended June 30, 2026 and 2025, respectively. Consulting costs were nil and nil for the years ended June 30, 2026 and 2025, respectively. Legal expenses were $21,000 and $15,000 for the years ended June 30, 2026 and 2025, respectively.

Loss from Operations

As a result of the factors described above, the loss from operations was $1,328,000 and $2,168,000 for the years ended June 30, 2026 and 2025 respectively.

Other (Income)/Expense

Other expense was $630,000 and $212,000 for the years ended June 30, 2026 and 2025, respectively.

Interest expense was $632,000 and $311,000 for the years ended June 30, 2026 and 2025, respectively. The increase in 2026 was due to the $284,000 interest expense in 2026 for a debt settlement with Hamstra.

Net Loss Attributable to the Noncontrolling Interest

The net loss attributable to the noncontrolling interest was nil and nil for the years ended June 30, 2026 and 2025, respectively.

Net Loss Attributable to Bion's Common Stockholders

As a result of the factors described above, the net loss attributable to Bion's stockholders was $1,958,000 and $2,380,000 for the years ended June 30, 2026 and 2025, respectively, and the net loss per basic common share was $0.03 and $0.04 for the years ended June 30, 2026 and 2025, respectively.

LIQUIDITY AND CAPITAL RESOURCES

The Company's consolidated financial statements for the year ended June 30, 2026 have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. The Report of our Independent Registered Public Accounting Firm on the Company's consolidated financial statements as of and for the year ended June 30, 2026 includes a "going concern" explanatory paragraph which means that the auditors stated that conditions exist that raise substantial doubt about the Company's ability to continue as a going concern.

Operating Activities

As of June 30, 2026, the Company had cash of approximately $3,700. During the year ended June 30, 2026, net cash used in operating activities was $806,000, primarily consisting of cash operating expenses related to salaries and benefits, and other general and administrative costs such as insurance, legal, accounting, consulting and investor relations expenses. Cash expenditures were offset in part by proceeds from financing activities, primarily in debt funding.

As previously noted, the Company is currently not generating significant revenue and accordingly has not generated cash flows from operations. The Company does not anticipate generating sufficient revenues to offset operating and capital costs for a minimum of two to five years. While there are no assurances that the Company will be successful in its efforts to develop and construct its Projects and market its Systems, it is certain that the Company will require substantial funding from external sources. As stated in multiple places in this report, over the last fiscal year the Company has had only very limited success in raising needed funds which lack of success has had material negative effects on the Company and its business. Given the unsettled state of the current credit and capital markets for companies such as Bion, there is no assurance the Company will be able to raise the funds it needs on reasonable terms.

Investing Activities

During the year ended June 30, 2026, the Company invested nil in the purchase of property and equipment or other investing activities.

Financing Activities

During the year ended June 30, 2026, the Company received net cash proceeds of $16,000 from a note payable, $789,000 in convertible loans less commissions of $19,000, and net $20,000 from a demand note.

During the year ended June 30, 2025, the Company received net cash proceeds of $400,000 from a note payable and $426,000 in convertible loans less commissions of $5,300.

As of June 30, 2026, the Company has debt obligations consisting of: a) deferred compensation of $1,368,000, b) convertible notes payable of $1,935,000, c) current note payable including accrued interest of $476,000, d) convertible bridge note payable of $491,000 and e) demand note payable of $22,000. As of June 30, 2025, the Company has debt obligations consisting of: a) deferred compensation of $1,173,000, b) convertible notes payable - affiliates of $2,310,000, c) current note payable including accrued interest of $423,000 and d) convertible bridge note payable of $455,000.

Plan of Operations and Outlook

As of June 30, 2026, the Company had cash of approximately $3,700.

The Company continues to explore sources of additional financing to satisfy its current operating requirements as it is not currently generating any significant revenues. The Company faced substantial difficulty raising capital during the 2025 and 2026 fiscal years (and the first quarter of 2027 through the date of this report) as it emerged from its management challenges and change in direction. The Company raised very limited debt (convertible notes) funds during such periods to meet some of its immediate needs, and therefore, the Company needs to raise substantial additional funds in the upcoming periods. The Company has faced substantial demand for capital and operating expenditures for the fiscal year 2026 that we anticipate will continue (or increase) during the 2027 fiscal year and periods thereafter as it moves toward commercial implementation of its 3G Tech and development of JVs (including costs associated with additions of personnel to carry out the business activities of the Company) and, therefore, is likely to continue to face, significant cash flow management issues due to limited capital resources and working capital constraints. 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 much or 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.

The Company continues to explore sources of additional financing (including potential agreements with strategic partners - both financial, renewable energy- and ag-industry) to satisfy its current and future operating and capital expenditure requirements as it is not currently generating any significant revenues. Bion's leadership team's new approach, focusing on the bolt-on opportunity and developing a single proof-of-concept project vs multiple projects developed simultaneously, will substantially reduce the company's need to raise capital. Further, leadership believes this approach represents a more achievable goal that will reinspire confidence in our own shareholders, as well as assure potential new strategic and institutional investors, and make it easier to raise funds.

Going Concern and Management's Plans:

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 fiscal year ended June 30, 2026, the Company had a loss of $1,958,000 including $125,000 non-cash compensation expenses related to extension of warrants and options.

For more detail regarding Going Concern, including Management's Plans, see Note 1 of Notes to Financial Statements below.

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

The Company continues to explore sources of 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 2026 that we anticipate will increase during the 2027 fiscal year and periods thereafter as we move toward commercial implementation of our ARS and 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 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 the company's short-term cash needs following the management challenges in 2024, three affiliates of the Company and two shareholders began advancing money to Bion to cover critical payables. They subsequently formed a loan group, BION BLG, LLC ("BLG"), and provided short-term funding for Bion in a secured promissory note of up to $500,000. The note is secured by the Company's Intellectual Property ("IP" "Collateral"). BLG will share the Collateral on a pro rata basis with investors in a secured promissory note with similar terms that has been offered to previous Bion investors. The BLG note and security agreements contain other terms set forth therein and are included as exhibits to this filing. The Company has entered into four forbearance agreements with BLG, the last that extended the maturity date to January 31, 2027 (see Note 5 Note payable - related party (BLG)).

In November 2024, the Company launched a secured promissory note offering to previous investors/shareholders (and certain others) ("Shareholder Notes") with similar terms to the BLG note. This and subsequent shareholder offerings have allowed Bion to accomplish the steps needed to commercialize our technology, move forward with potential strategic partners, and position ourselves for the larger offering/ funding that will be required for that commercialization. As of the filing date, Bion has raised $1,399,800 in the Shareholder Note offerings and believes the Company is now positioned to attract investment from outside and/or institutional sources. (see Note 5, Convertible Notes (Shareholder Notes)).

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.

Bion is in discussions with several potential strategic partners in engineering, renewable energy (biogas/RNG) and clean fuels, organic fertilizer distribution, and others involved in reducing the environmental footprint of biogas, agriculture, and livestock production. Bion is now evaluating a number of these as potential development and finance partners for project opportunities and recently signed an MOU with Kimmeridge Energy Management for a potential large RNG facility, that includes a Right of First Refusal on 10 million shares of Bion stock at a premium to the current market. Further, with the recent OMRI Listing for its commercial fertilizer, the Company has initiated discussions with several large U.S. fertilizer manufacturers and distributors that have demonstrated interest in the product. Bion believes that these and potentially other industry relationships could also entail a direct investment in Bion, licensing fee, or some other 'up front' financial benefit to Bion, although there is no assurance that they will.

CONTRACTUAL OBLIGATIONS

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 lease ended December 31, 2024 and there is an agreement to extend month to month at the same rate.

The Company has not made consistent lease payments since October 16, 2023. The Company made five payments totaling $31,250 in the fiscal year 2026. The Company owes $150,000 in lease payments at June 30, 2026. A settlement with the lessor has been reached (see Note 11, Subsequent Events in the footnotes to the financial statements of this filing)

OFF-BALANCE SHEET ARRANGEMENTS

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