Executive Summary / Key Takeaways

• Bion Environmental Technologies (BNET) is a pre-revenue company with a patented Ammonia Recovery System (ARS) at the core of its Gen3Tech platform, aiming to transform organic waste from livestock and industrial sources into high-value, low-carbon, and organic fertilizers, renewable energy, and clean water.
• A recent strategic pivot from large, integrated livestock projects to smaller, "bolt-on" ARS solutions for existing biogas facilities is designed to accelerate commercialization, reduce capital requirements, and shorten the path to revenue generation.
• Despite significant financial distress, including recurring losses and critically low cash reserves, Bion has achieved key operational milestones such as optimizing its ARS at Fair Oaks, securing an OMRI Listing for its liquid nitrogen fertilizer, and obtaining initial non-binding offtake commitments.
• The company faces substantial liquidity challenges, highlighted by a defaulted bridge loan and ongoing litigation, necessitating significant external funding of $3 million to $10 million in the next 12 months, with an additional $15 million or more for initial projects.
• Bion's competitive advantage lies in its unique, patented technology that offers superior environmental and economic benefits, particularly its ability to produce a non-synthetic solid ammonium nitrogen fertilizer and achieve a 96% lower carbon footprint compared to urea, positioning it favorably in evolving sustainable agriculture and clean fuels markets.

A New Dawn for Waste: Bion's Vision for Sustainable Resource Recovery

Bion Environmental Technologies (OTCQB: BNET) stands at the nexus of agriculture, renewable energy, and environmental stewardship, championing a transformative approach to organic waste management. The company's long-term mission centers on making livestock production more sustainable, profitable, and transparent, addressing some of the most pressing environmental challenges of our time. Bion's core strategy revolves around its proprietary Gen3Tech platform, anchored by the patented Ammonia Recovery System (ARS), which is designed to convert problematic organic waste streams into valuable co-products: renewable energy, high-value organic and low-carbon fertilizers, and clean water.

The genesis of Bion's technology dates back to 1987, with early efforts in wastewater treatment for dairies and food processing plants. Initial first-generation systems, while deployed across seven states, proved financially unsustainable, prompting a re-evaluation. This led to the development of second-generation (2G) technology, which demonstrated significant reductions in nutrients and air emissions, even earning verified nutrient reduction credits. However, its reliance on anticipated regulatory or incentive programs that failed to materialize ultimately hindered its commercial success. This historical context underscores Bion's current strategic imperative: to develop solutions that create intrinsic economic value, independent of nascent environmental credit markets.

The environmental landscape Bion addresses is vast and increasingly urgent. Concentrated Animal Feeding Operations (CAFOs) are a primary source of excess nutrients, contributing to water quality degradation, harmful algae blooms, and groundwater contamination. Airborne ammonia emissions, a precursor to PM2.5 particulate matter, also pose significant public health risks. Globally, there is a growing emphasis on decarbonizing energy and food supply chains, coupled with increasing regulatory pressures, such as the nitrogen caps implemented in the European Union. These macro trends create a fertile ground for Bion's solutions, as industries seek verifiable and cost-effective pathways to sustainability.

The Ammonia Recovery System: A Technological Moat

At the heart of Bion's investment thesis is its highly differentiated and patented Ammonia Recovery System (ARS), the core technology underpinning its Gen3Tech platform. The ARS utilizes existing commercial evaporation and distillation equipment, customized for Bion's specific applications, to capture and upcycle over 90% of the volatile ammonia present in organic waste streams after anaerobic digestion (AD). Crucially, the system leverages the CO2 also found in these waste streams to stabilize the ammonia, forming ammonium carbonate/bicarbonate, which is then processed into commercial fertilizer products.

The tangible benefits of this technology are compelling and quantifiable. The optimized ARS at Bion's Fair Oaks, Indiana, demonstration facility has proven its stability, reliability, and scalability. It achieves ammonia reduction targets by evaporating one-third less water than initially anticipated, directly translating to significantly better economics and lower fertilizer production costs. Furthermore, a preliminary Life Cycle Analysis (LCA) using the internationally accepted GREET model demonstrates that Bion's ammonium bicarbonate fertilizer boasts a dramatically lower carbon footprint—96% less compared to the urea baseline. This substantial reduction in carbon intensity positions Bion's products as "Climate Smart" and highly relevant for industries focused on decarbonization, such as sustainable aviation fuel (SAF) production from corn ethanol.

Bion has successfully produced samples of its 10-0-0 liquid nitrogen fertilizer, which received an Organic Materials Review Institute (OMRI) Listing in August 2024. This certification assures organic growers that the fertilizer can be used in organic production, a market segment that commands substantially higher prices than synthetic alternatives. The company is also developing a solid/granular ammonium bicarbonate product with 18-22% or higher nitrogen content, designed for precision application using existing agricultural equipment. The ongoing research and development efforts, including the planned fourth-generation (4G) ARS, aim to further reduce both capital and operating expenditures, enhancing the system's economic viability and expanding its market applicability. These technological advancements form a critical competitive moat, enabling Bion to offer solutions that are both environmentally superior and economically attractive.

Strategic Pivot: A Shorter Path to Revenue

Bion's strategic trajectory has recently undergone a significant pivot, shifting its primary focus from developing large, integrated sustainable beef projects to pursuing smaller, "bolt-on" ammonia control solutions. This strategic reorientation, driven by the expanded claims of its January 2024 patent to include industrial and municipal wastewater, is a pragmatic response to capital constraints and the desire for a quicker path to revenue generation. Management believes that standalone ARS deployments, particularly as retrofits for existing biogas facilities, offer a much shorter project development timeline and require substantially less capital compared to building new, large-scale integrated livestock operations.

The company is now actively targeting existing large-scale livestock facilities with anaerobic digesters already in place, as well as industrial wastewater facilities that produce biogas from organic waste streams like food processing and slaughterhouse waste. In the industrial sector, Bion anticipates a "double dip" revenue opportunity: receiving a tolling fee for ammonia nitrogen removal while simultaneously selling the recovered ammonia as a high-value fertilizer. This model presents a compelling economic proposition. The European Union, with its established nitrogen caps, also represents a ripe market for Bion's proven technology and value-added fertilizers.

Early successes from this strategic pivot are already materializing. In May 2025, Bion secured its first non-binding offtake commitments for 250,000 gallons of its liquid AB10 nitrogen fertilizer from Perfect Blend and Yield RNG, two prominent West Coast organic fertilizer distributors. A third confidential agreement further validates market interest. These initial commitments underscore the commercial viability of Bion's fertilizer products and the potential for rapid market penetration through strategic partnerships.

Competitive Dynamics in a Growing Market

Bion operates within a diverse and increasingly competitive landscape that spans livestock and industrial waste treatment, renewable energy production, and fertilizer manufacturing. Traditional waste management methods, such as lagoons and manure spreading, are facing mounting regulatory pressure, creating a demand for advanced solutions. While numerous technology firms offer partial solutions, Bion's Gen3Tech platform and ARS offer a comprehensive approach to resource recovery and environmental mitigation.

Direct competitors in the broader environmental services sector include global giants like Veolia Environnement (VEOEY) and water technology specialists such as Xylem Inc. (XYL). Veolia, with its extensive global operations, reported revenue of €52.38 billion and net income of €1.30 billion in the last 12 months, showcasing significant scale and profitability. Xylem, a leader in water infrastructure, posted revenues of $8.6 billion in 2024, with adjusted earnings per share of $4.27, and forecasts 2025 revenue between $8.6 billion and $8.7 billion. These companies benefit from established market positions, diversified revenue streams, and robust financial health. MYR Group Inc. (MYRG), an electrical infrastructure contractor, also operates in related energy and environmental projects, reporting $3.45 billion in revenue and $76.38 million in profits over the last 12 months, with a strong backlog.

Bion's niche focus and specialized technology provide a distinct competitive edge. Unlike many competitors whose ammonia removal processes may release nitrogen gas to the atmosphere, Bion's ARS produces a salable, high-value fertilizer. Furthermore, Bion's unique ability to produce a solid ammonium nitrogen fertilizer, a capability not matched by other manure nutrient technology firms, offers a significant differentiator. The company's "bolt-on" strategy aims to transform competitors—specifically operators of existing anaerobic digesters—into customers, leveraging its unique value proposition in ammonia control. While Bion's scale and financial resources are considerably smaller than these established players, its patented technology and superior environmental performance position it to capture market share in specialized segments where its solutions offer unparalleled benefits.

Financial Realities and the Path to Sustainability

Bion Environmental Technologies is currently a pre-revenue company, reflecting its developmental stage and significant investment in technology. For the fiscal years ended June 30, 2025, and 2024, the company reported nil revenues. This pre-revenue status has led to substantial net losses, totaling $2.38 million in fiscal year 2025 and $11.69 million in fiscal year 2024. A major factor in the 2024 loss was a $9.46 million non-cash charge related to the write-down of the Initial Project at Fair Oaks, Indiana, to zero on the balance sheet. This reclassification occurred because the facility is primarily a research and development site on a short-term lease, impacting shareholders' equity, which stood at $7.10 million as of June 30, 2025.

The company faces acute liquidity challenges. Cash on hand decreased from approximately $52,000 to a critically low $4,400 between June 30, 2024, and June 30, 2025. Current liabilities surged by approximately $1.40 million to $7.10 million over the same period, driven by new debt and deferred compensation. Bion has experienced extreme difficulty securing funding, leading to a default on a $1.50 million convertible bridge loan and lawsuits from its two largest creditors seeking $1.49 million in unpaid invoices related to the Fair Oaks facility. The company is also in default on lease payments for the Fair Oaks site.

To address these immediate financial pressures, Bion has implemented extreme cost-saving measures, maintaining only mission-critical operations. A loan group, BION BLG, LLC, formed by affiliates including interim COO Greg Schoener and Director Bob Weerts, has provided short-term funding through a secured promissory note of up to $500,000, with $407,734 advanced as of the filing date. This note, secured by Bion's intellectual property, bears interest at 9% per annum and has been extended to January 15, 2026. Additionally, a secured promissory note offering to shareholders raised $611,000. Management acknowledges that the company's ability to continue as a going concern is in substantial doubt, and it anticipates needing to raise $3 million to $10 million or more in debt and/or equity in the next twelve months, with an additional $15 million or more required for initial project financing.

Risks and the Path Forward

Investing in Bion Environmental Technologies carries significant risks, primarily stemming from its pre-revenue status and substantial financial constraints. The company's ability to secure the necessary capital, estimated at $3 million to $10 million in the near term and over $15 million for initial projects, remains a critical hurdle. The potential for dilution from future equity raises is considerable. Furthermore, the successful development and market adoption of organic and low-carbon fertilizer products and clean fuels are not assured, and competitive pressures from larger, more established players could intensify. Cybersecurity risks, evidenced by past breaches, also pose a threat to the company's limited operational systems.

Despite these challenges, Bion's new leadership team is committed to the company's continuation and future success. The strategic pivot to less capital-intensive "bolt-on" opportunities is a calculated move to accelerate revenue generation and build investor confidence. Bion is actively pursuing strategic partnerships with engineering firms, renewable energy developers, and organic fertilizer distributors, which could provide crucial funding through direct investment, licensing fees, or upfront financial benefits. Recent settlement agreements with key affiliates, effective September 15, 2025, are expected to simplify Bion's capital structure by reducing fully diluted shares by 14.37 million while increasing outstanding shares by approximately 8.10 million, streamlining future financing efforts.

Conclusion

Bion Environmental Technologies presents a compelling, albeit high-risk, investment proposition rooted in its innovative and patented Ammonia Recovery System. The company's technology offers a powerful solution to the escalating environmental crisis posed by organic waste, transforming pollutants into valuable resources like low-carbon and organic fertilizers and renewable energy. While Bion's history is marked by developmental challenges and financial setbacks, the recent strategic pivot towards "bolt-on" solutions for existing biogas facilities represents a more pragmatic and potentially faster route to commercialization and revenue.

The critical path forward for Bion hinges on its ability to successfully execute its revised strategy, secure substantial external financing, and forge strategic partnerships that can leverage its technological leadership. The proven performance of its ARS, including its quantifiable environmental and economic benefits, coupled with initial market validation through OMRI listing and offtake commitments, provides a foundation for future growth. For investors with a high tolerance for risk and a long-term vision for sustainable environmental solutions, Bion represents a unique opportunity to participate in the transformation of waste into value, provided the company can overcome its immediate liquidity hurdles and effectively scale its differentiated technology.