As Filed with the Securities and Exchange Commission on October 26, 2001
Registration Statement No. 333-_______
=============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT of 1933
BION ENVIRONMENTAL TECHNOLOGIES, INC.
(Exact Name of Registrant in its Charter)
Colorado 84-1176672
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
18 East 50th Street, 10th Floor
New York, New York 10022
(212) 758-6622
(Address and telephone number of principal
executive offices and principal place of business)
David J. Mitchell, Chairman of the Board
Bion Environmental Technologies, Inc.
18 East 50th Street, 10th Floor
New York, New York 10022
(212) 758-6622
(Name, address and telephone number of agent for service)
Copies to: Stanley F. Freedman, Esq.
Krys Boyle Freedman & Sawyer, P.C.
600 Seventeenth Street, Suite 2700 South
Denver, Colorado 80202-5427
(303) 893-2300
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box: [ ]
If any of the securities registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] _____________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a)of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.
CALCULATION OF REGISTRATION FEE
=============================================================================
Proposed Proposed
Maximum Maximum
Title of Each Class Offering Aggregate Amount of
of Securities to be Amount to be Price Per Offering Registration
Registered Registered Share Price Fee
_____________________________________________________________________________
Common Stock, 12,852,281 $0.81 $10,410,347.60 $2,602.58
no par value (1) (2) (2)
=============================================================================
(1) To be offered by Converting Holders.
(2) Estimated solely for the purpose of computing the amount of registration
fee based on the average of the closing bid and ask prices of our Common
Stock on the OTC Bulletin Board on October 24, 2001 which was $0.805 per
share.
PROSPECTUS SUBJECT TO COMPLETION DATED OCTOBER 26, 2001
____________________________________________________________________________
The information in this prospectus is not complete and may be changed. The
securities may not be sold until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an
offer to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
BION ENVIRONMENTAL TECHNOLOGIES, INC.
12,852,281 Shares of Common Stock
to be Offered by Converting Holders
The securities offered by this prospectus include 12,852,281 shares to be
offered for resale by the holders of certain warrants and debt instruments.
The shares to be offered for resale may be issued to the holders upon the
exercise of warrants or the conversion of the debt instruments they hold.
These persons may be deemed to be "underwriters" within the meaning of the
Securities Act.
We will receive proceeds from the exercise of warrants, but not from the
conversion of currently outstanding debt. See "Use of Proceeds."
Our Common Stock is traded on the OTC Bulletin Board under the symbol
"BION." On October 24, 2001, the reported closing price for our Common Stock
on the OTC Bulletin Board was $0.76.
____________________________
This investment involves a high degree of risk. You should purchase
shares only if you can afford a complete loss. SEE "RISK FACTORS" BEGINNING
ON PAGE 7.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or passed upon the
adequacy or accuracy of the prospectus. Any representation to the contrary is
a criminal offense.
We anticipate that sales may be effected from time to time, by or for the
accounts of the Converting Holders, in the over-the-counter market, in
negotiated transactions or otherwise. Sales, if any, will be made through
broker-dealers acting as agent for the converting holders or to broker-dealers
who may purchase the Common Stock as principals and thereafter sell the shares
from time to time in the over-the-counter market, in negotiated transactions
or otherwise. Sales, if any, will be made at market prices prevailing at the
times of the sales or at negotiated prices. See "Plan of Distribution"
beginning on page 19.
The date of this Prospectus is __________, 2001
1
AVAILABLE INFORMATION
We are subject to the information requirements of the Securities Exchange
Act of 1934, as amended, and in accordance therewith file reports and other
information with the Securities and Exchange Commission. Such reports and
other information filed by us can be inspected and copied at the public
reference facilities of the Commission at Room 1024, Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549. Requests for copies should be
directed to the Commission's Public Reference Section, Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-
0330 for more information on the public reference rooms. The Commission
maintains a Web site (http://www.sec.gov) that contains reports, proxy and
information statements and other information regarding registrants that file
electronically.
We have filed with the Commission a Registration Statement on Form S-2 of
which this Prospectus constitutes a part, under the Securities Act of 1933, as
amended. This Prospectus does not contain all of the information set forth in
the Registration Statement, certain parts of which are omitted in accordance
with the rules of the Commission. For further information pertaining to us,
reference is made to the Registration Statement. Statements contained in this
Prospectus or any document incorporated herein by reference concerning the
provisions of documents are necessarily summaries of such documents, and each
such statement is qualified in its entirety by reference to the copy of the
applicable document filed with the Commission. Copies of the Registration
Statement are on file at the offices of the Commission, and may be inspected
without charge at the offices of the Commission, the addresses of which are
set forth above, and copies may be obtained from the Commission at prescribed
rates. The Registration Statement has been filed electronically through the
Commission's Electronic Data Gathering, Analysis and Retrieval System and may
be obtained through the Commission's Web site (http://www.sec.gov).
2
TABLE OF CONTENTS
PAGE
PROSPECTUS SUMMARY ......................................... 4
RISK FACTORS ............................................... 7
COMPANY INFORMATION ........................................ 13
USE OF PROCEEDS ............................................ 13
DETERMINATION OF OFFERING PRICE ............................ 13
RECENT MATERIAL CHANGES IN OUR BUSINESS ................... 14
CONVERTING HOLDERS ......................................... 16
PLAN OF DISTRIBUTION ....................................... 18
DESCRIPTION OF COMMON STOCK ................................ 20
EXPERTS .................................................... 21
LEGAL MATTERS .............................................. 21
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION OF
OFFICERS AND DIRECTORS ......... .......................... 21
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE ............ 22
3
PROSPECTUS SUMMARY
The following is a summary of the pertinent information regarding this
offering. This summary is qualified in its entirety by the more detailed
information and financial statements and related notes incorporated by
reference in this Prospectus. The Prospectus should be read in its entirety,
as this summary does not contain all the facts necessary to make an
investment decision.
The Company
-----------
Bion Environmental Technologies, Inc. ("Bion," "we," "us" or "our") is an
environmental services company focused on the needs of confined animal feeding
operations (CAFO's). We are engaged in two main areas of activity: waste
stream remediation and organic soil and fertilizer production. Our waste
remediation service business provides CAFO's, primarily in the swine and dairy
industries, with treatment for animal waste outputs. In this regard, we treat
the entire waste stream in a manner which cleans and reduces the waste stream
thereby mitigating pollution of the air, water and soil, while creating value-
added organic soil and fertilizer products. Bion's soil and fertilizer
products are being used for a variety of applications including school
athletic fields, golf courses and home and garden applications.
Our principal offices are located at 18 East 50th Street, 10th Floor, New
York, New York 10022, and our phone number is (212) 758-6622.
The Offering
------------
Securities Offered: Included in the shares being offered hereby are
12,094,143 shares that may be issued upon the conver-
sion of convertible notes that are currently outstand-
ing. Also included in the shares being offered hereby
are a total of 758,138 shares that may be issued upon
the exercise of currently outstanding warrants issued
to holders of convertible debt. These shares are to be
offered by the holders of the warrants and convertible
notes. The number of shares which may be issued upon
conversion of the convertible notes is based on an
assumed conversion rate of $0.80 per share and
interest is calculated through April 29, 2002, the
automatic conversion date of each note. The
actual conversion rate may be greater and/or the
conversion date may be earlier, so fewer shares
may actually be issued. The holders of the warrants
and convertible notes are referred to in this document
as the "Converting Holders." It is currently unknown
how many of the Converting Holders will exercise
their warrants to purchase shares of our Common Stock.
The actual number of shares that would be issued upon
conversion of the notes is also unknown. We also do
not know whether any Converting Holders will decide to
sell any of these shares into the market.
4
Offering Price: The shares being offered by Converting Holders who
decide to resell their shares into the marketplace from
time to time, will be sold at the then current market
price.
Common Stock to be 26,156,096 shares. The number of shares outstanding
Outstanding after after the offering assumes that the Converting Holders
Offering exercise all of their warrants to purchase shares of
our Common Stock and that all of the notes are con-
verted into Common Stock at $.80 per share. Prior to
this offering, as of October 22, 2001, we had
13,303,815 shares issued and outstanding.
Dividend Policy We do not anticipate paying dividends on our Common
Stock in the foreseeable future.
Use of Proceeds The shares offered by this prospectus may be sold
by Converting Holders and we will not receive any
proceeds of the offering, except that we will receive
proceeds from any exercise of the warrants.
Risk Factors This offering involves a high degree of risk, elements
of which include:
- We Have a Very Limited Operating History
- We Have Incurred Substantial Losses and May Never
Achieve Profitability
- We Need Additional Working Capital; The Report of
our Accountants Contains a "Going Concern"
Qualification
- Our Future Operations Will Depend on the Efforts
of our Management Team and our Business
Will Suffer if We Lose the Services of Any
Key Employees
- We Have Numerous Agreements with Related Parties
Which May Create Conflicts of Interest that
Could Hurt our Business
- Our Management Beneficially Owns over 50% of our
Stock and Can Control the Election of All of our
Directors
- The Development of our Technology Has Been Limited
to a Few Markets; We May Not Attract Enough
Customers to be Successful
- We Face Intense Competition Which Could Adversely
Affect our Financial Performance
- Our Products Could Become Obsolete; We May Not be
Able to Keep Up with Changes in Technology
- Our Patent and Trade Secret Protection Efforts May
Not be Adequate to Protect our Technology
- Our Business is Affected by Government Regulations
Which Change
- We Face Risks of Litigation Resulting from Improper
Operation of our Systems
- We are Not Sure How We Will Use the Proceeds of Any
Warrant Exercises
5
- The Exercise Price of our Warrants is Not Based on
Any Objective Criteria of Value
- Resales of Outstanding Restricted Shares Could Hurt
the Market Price of our Stock
- We do Not Expect to Pay Dividends
- Our Business Could Make Us Liable for Damages for
Which we do Not Have Adequate Insurance
- The Market for our Shares is Very Limited and May
Not be Maintained
- The Market for our Common Stock is Adversely
Affected by the "Penny Stock" Rules
- NASD Sales Practice Requirements Adversely Affect
the Market for Our Common Stock
- Our Results of Operations May be Affected by Non-
cash Charges
- Conversion of Outstanding Convertible Debt to Stock
and Exercise of Warrants Will Reduce the
Ownership Percentage of Existing Shareholders
6
RISK FACTORS
Prospective investors should consider carefully, in addition to the other
information in this Prospectus, the following:
The securities being offered hereby are speculative in nature and involve
a high degree of risk. Following is a summary discussion of the risk factors
applicable to an investment in the securities. Prospective investors should
thoroughly consider all of the risk factors discussed below and should
understand that there is substantial risk they will lose all or part of their
investment. No person should consider investing who cannot afford to lose his
entire investment or who is in any way dependent upon the funds that he is
investing.
1. WE HAVE A VERY LIMITED OPERATING HISTORY.
All of our business activities are conducted through our subsidiaries.
Potential investors should be aware of the difficulties faced by a new
enterprise, especially in view of the intense competition from existing and
more established companies in the wastewater, waste management, environmental
control and soils products businesses. During the past fiscal year we
essentially curtailed our commercial operations to focus on research and
development activities associated with the development of our second
generation system. Consequently, we have very little history of commercial
operations and we have never achieved any significant revenues.
2. WE HAVE INCURRED SUBSTANTIAL LOSSES AND MAY NEVER ACHIEVE
PROFITABILITY.
From inception to date, neither we nor our subsidiaries have ever
sustained any profitable operations. During the year ended June 30, 2001 we
had a net loss of $15,553,223 and through June 30, 2001 we have total losses
from our inception of $39,380,101. We are in the process of completing
research and development of our second generation of Bion Nutrient Management
Systems and expect to commence sales of these systems during our current
fiscal year. Although we expect to eventually generate sufficient revenues
from sales of these systems and the related BionSoil(R) to pay our future
operating expenses, there can be no assurance that profitable operations will
ever be achieved or sustained. We are still dependent upon infusions of
capital from investors and proceeds from loans to enable us to continue in
business. We believe that since we have curtailed sales efforts of our first
generation systems and are not yet finished with the development of our second
generation system, we will not generate sufficient operating cash flow to meet
our needs in the near term without additional external financing. There is no
assurance that our efforts to obtain such financing will be successful. Any
failure on our part to do so will have a material adverse impact on us and may
cause us to cease operations. In the event we are unable to achieve sustained
profitable operations in the future, it is likely that any investment in our
Common Stock will ultimately be lost.
3. WE NEED ADDITIONAL WORKING CAPITAL; THE REPORT OF OUR ACCOUNTANTS
CONTAINS A "GOING CONCERN" QUALIFICATION.
We have incurred losses from our inception totaling $39,380,101 at June
30, 2001, and we have thus far failed to generate adequate working capital
from operations. As of June 30, 2001, we had a working capital deficit of
7
$7,028,315. Our auditors have included an explanatory paragraph in the
auditors' opinion, noting that there is substantial doubt as to our ability to
continue as a going concern. Our audited financial statements for the fiscal
year ended June 30, 2001 have been prepared assuming that we will continue as
a going concern. Our continued losses without additional equity capital raise
substantial doubt about our ability to continue in business during the next
twelve months.
4. OUR FUTURE OPERATIONS WILL DEPEND ON THE EFFORTS OF OUR MANAGEMENT
TEAM AND OUR BUSINESS WILL SUFFER IF WE LOSE THE SERVICES OF ANY KEY
EMPLOYEES.
We are completely dependent upon the efforts and abilities of our team of
officers and directors to manage our business. We do not currently carry any
"key man" life insurance coverage on any of our employees. Although none of
our officers or directors has experience in the management of any profitable
entity that has engaged in our area of business, the loss of the services of
any of these persons could have a material adverse impact on our business,
results of operations and financial condition.
5. WE HAVE NUMEROUS AGREEMENTS WITH RELATED PARTIES WHICH MAY CREATE
CONFLICTS OF INTEREST THAT COULD HURT OUR BUSINESS.
We have entered into a Management Agreement with D2 Co., LLC ("D2")
which has resulted in David J. Mitchell becoming our President and in our
retention of Summerwind Restructuring, Inc. as a consultant. We have also
issued warrants to D2 that will allow it to purchase 20% of our "fully-
diluted" outstanding shares under certain circumstances. In addition, we have
entered into an employment agreement with Jere Northrop and a consulting
agreement with LoTayLingKyur, Inc. for the services of Mark A. Smith. We have
entered into numerous other agreements with related parties. We believe that
all of these agreements were negotiated on terms at least as favorable to us
as those which could have been obtained from unaffiliated persons; however,
our business, results of operations and financial condition could be
materially adversely affected by conflicts of interest.
6. OUR MANAGEMENT BENEFICIALLY OWNS OVER 50% OF OUR STOCK AND CAN
CONTROL THE ELECTION OF ALL OF OUR DIRECTORS.
Present management beneficially controls in excess of 50% of our
outstanding Common Stock and can elect all of our directors, appoint our
officers and control our affairs and operations. Such control by management
could materially adversely affect our business, results of operations and
financial condition. D2, Mark A. Smith, Jere Northrop, Jon Northrop,
LoTayLingKyur, Inc., and Dublin Holding, Ltd. are parties to a shareholders'
agreement which, among other things, allows D2 to designate three board
members and, with our consent, nominate a fourth. Our Articles of
Incorporation do not provide for cumulative voting. Mark Smith and certain
entities related to him which own shares of our Common Stock (the "Smith
Shares") have entered into a voting agreement that gives David Mitchell, our
Chairman, President and CEO, the power to vote all of the Smith Shares as to
most matters, but Mr. Smith will still have the right to vote the Smith Shares
with respect to a sale of substantially all of our assets or a merger. The
voting agreement is purely contractual and is not a formal voting trust.
8
7. THE DEVELOPMENT OF OUR TECHNOLOGY HAS BEEN LIMITED TO A FEW MARKETS;
WE MAY NOT ATTRACT ENOUGH CUSTOMERS TO BE SUCCESSFUL.
Our wastewater treatment systems to date have been developed and marketed
to certain agricultural and food processing applications and have not yet been
expanded into other markets. We have not yet completed the development of all
of the wastewater treatment system applications that will be necessary to
address targeted market applications and geographic areas and we anticipate a
continuing need for the development of additional applications. During the
fiscal year ended June 30, 2001, we invested substantially in developing our
second generation system. This upgraded system is designed to operate using
significantly lower water volume and less energy. Although management
believes that our existing technology is sufficient to support development of
additional commercial applications, no assurance can be given that new
applications can be developed or that existing and/or new applications will
achieve commercially viable sales levels. We have not conducted formal market
studies with respect to our technology and services.
We anticipate that the achievement of any significant degree of market
acceptance for our wastewater treatment systems and products will require
substantial marketing efforts and the expenditure of significant amounts of
funds to inform potential customers of the distinctive characteristics and
benefits of such products. We cannot give any assurances that our targeted
customers will accept our proposed products. We also cannot give any
assurance that we will ever realize substantial revenues from the sale of our
products.
8. WE FACE INTENSE COMPETITION WHICH COULD ADVERSELY AFFECT OUR
FINANCIAL PERFORMANCE.
Although we believe that our systems offer many significant advantages
over other competing technologies/systems, competition in the biological
wastewater treatment industry is intense. We are in direct competition with
local, regional and national engineering and environmental consulting firms
and soils products companies. Some of our competitors may be capable of
developing soils products or waste and wastewater treatment systems similar to
ours or based on other competitive technologies. Many of our competitors are
well-established and have greater financial and other resources than we do.
9. OUR PRODUCTS COULD BECOME OBSOLETE; WE MAY NOT BE ABLE TO KEEP UP
WITH CHANGES IN TECHNOLOGY.
Our business is susceptible to changing technology. Although we intend
to continue to develop and improve our treatment systems, there is no
assurance that funds for such expenditures will be available or that our
competitors will not develop similar or superior capabilities.
10. OUR PATENT AND TRADE SECRET PROTECTION EFFORTS MAY NOT BE ADEQUATE
TO PROTECT OUR TECHNOLOGY.
We have limited patent protection on our soils products and also on
certain aspects of our wastewater treatment systems technology. We also
possess certain proprietary processes. We intend to obtain additional patents
or other appropriate protection for our technology. Additionally, we use
nondisclosure contract provisions and license arrangements which prohibit the
disclosure of our proprietary processes. However, there can be no assurance
9
that we can effectively protect against unauthorized duplication or the
introduction of substantially similar products. Our ability to compete with
other companies is materially dependent upon the proprietary nature of our
patents and technologies. We cannot give assurances that we will be able to
obtain any additional key patents or other protection for our technology. In
addition, if any of our key patents or proprietary rights were invalidated,
there could be an adverse effect on our business, results of operations and
financial condition.
11. OUR BUSINESS IS AFFECTED BY GOVERNMENT REGULATIONS WHICH CHANGE.
We are a provider of systems and services that result in the reduction of
pollution and, therefore, we are not under direct enforcement or regulatory
pressure. We are involved, however, in waste and wastewater treatment and are
impacted by environmental regulations in at least three different ways: (1)
our marketing and sales success depends, to a substantial degree, on the
pollution clean-up requirements of various governmental agencies, from the
Environmental Protection Agency at the federal level to state and local
agencies; (2)our system design and performance criteria must be responsive to
the changes in federal, state and local environmental agencies' effluent
standards and other requirements; and (3) our system installations and
operations require governmental permits or approvals in many jurisdictions.
We are also a manufacturer and provider of BionSoil(R) products such as
potting soils, soil amendments and fertilizers. Some state and federal
regulatory agencies have standards these products must meet to be sold as soil
amendment or fertilizer products in various markets. The production and sales
of our BionSoil(R) products currently meet relevant federal and state
requirements. These regulations can change which creates a level of
unpredictability. We are continually reviewing current regulations and
potential changes that may affect our business and are making necessary
compliance efforts in all jurisdictions in which we do business. We believe
that Bion is currently in compliance with all applicable federal, state and
local regulations.
We are in the business of helping our customers solve problems associated
with their discharge of wastewater into the environment, and most of our
systems and services are subject to federal, state and local government
regulation, and many are subject to extensive testing procedures. The effects
of rulings of regulatory bodies could delay our marketing efforts for a long
time and ultimately could prevent the completion of projects. The regulations
pertaining to the environment which may impact our systems are continually
changing. While we believe that such regulatory changes are favorable to our
business since such regulations may require the use of our systems, there can
be no assurance that, in the future, such regulations will not cause us
additional economic expense or be a materially adverse effect on our business,
results of operations and financial condition.
12. WE FACE RISKS OF LITIGATION RESULTING FROM IMPROPER OPERATION OF OUR
SYSTEMS.
In order for our waste and waste water treatment systems to function
properly, the systems must be operated in accordance with our specifications.
In the event that our systems are not operated properly and environmental
violations or other problems occur as a result, it is possible that we could
be named as a defendant in litigation brought by governmental agencies and/or
10
individuals. Such litigation could seek, among other things, damages,
equitable remedies, punitive damages and penalties. In fact, we were named as
a defendant, along with the owners of one of our first generation systems, in
just such an action filed by the Attorney General of the State of Illinois
alleging environmental violations associated with the operation of a hog farm.
While we were able to settle that litigation for approximately $9,000, there
can be no assurance that similar litigation will not occur in the future.
Litigation of this nature could damage our reputation.
13. WE ARE NOT SURE HOW WE WILL USE THE PROCEEDS OF ANY WARRANT
EXERCISES.
To the extent that we receive any proceeds from the exercise of currently
outstanding warrants, these proceeds have been allocated by us to working
capital for general corporate purposes. Specific uses of these funds will
depend upon the business judgment of our management.
14. THE EXERCISE PRICE OF OUR WARRANTS IS NOT BASED ON ANY
OBJECTIVE CRITERIA OF VALUE.
The exercise price of our warrants was determined by us based on
management's perceptions of future market conditions at the time the warrants
were sold. The exercise prices of all the warrants do not have any direct
relationship to our current assets, earnings, book value or any other
objective criteria of value. Such price should not be regarded as an
indication of any future value of the shares that underlie the warrants. Bion
has the unilateral right to reduce the exercise price of warrants and may or
may not elect to do so with one or more classes of warrants.
15. RESALES OF OUTSTANDING RESTRICTED SHARES COULD HURT THE MARKET PRICE
OF OUR STOCK.
Of our shares of Common Stock currently outstanding a significant number
are "restricted securities" which may in the future be sold upon compliance
with Rule 144 adopted under the Securities Act of 1933, as amended. Generally,
Rule 144 provides that a person holding "restricted securities" for a period
of at least one year may sell every three months, in brokerage transactions,
an amount equal to the greater of one percent of our outstanding shares of
Common Stock or the average weekly reported volume of trading for the
securities. There is no limitation on the amount of "restricted securities"
which may be sold by a person who has been the beneficial owner of such
restricted securities for more than two years, and has not been an "affiliate"
for at least 90 days prior to the date of such sales. Investors should be
aware that such sales under Rule 144 may, in the future, cause the price of
our Common Stock to drop.
16. WE DO NOT EXPECT TO PAY DIVIDENDS.
Investors are cautioned that we have never paid any cash dividends on any
class of stock in the past. Due to our present financial status and our
contemplated financial requirements, we do not anticipate paying any cash
dividends upon any class of stock in the immediately foreseeable future.
11
17. OUR BUSINESS COULD MAKE US LIABLE FOR DAMAGES FOR WHICH WE DO NOT
HAVE ADEQUATE INSURANCE.
We are in the business of helping our customers solve problems associated
with their discharge of waste and wastewater into the environment. As we do
not ourselves discharge any substantial waste of any kind during the normal
course of our business, we do not consider the risk of potential liability
associated with damage to the environment to be substantial, and do not have
insurance coverage with respect to such risks. Presently we carry only
nominal amounts of insurance coverage to cover relatively standard business
risks. Management believes such coverage to be adequate for our current
operations. It is possible, however, that circumstances might potentially
exist that could cause us to be held liable for damage to the environment,
such as the negligent design of a system resulting in the aggravation of an
existing wastewater problem. We could also be subject to liabilities
resulting from other business risks in excess of our current policy amounts.
Any such liability, if imposed, could be substantial and would, in all
likelihood, be an adverse effect on our business, results of operations and
financial condition.
18. THE MARKET FOR OUR SHARES IS VERY LIMITED AND MAY NOT BE MAINTAINED.
Investors should be aware that our Common Stock trades on the OTC
Bulletin Board, that there is currently only an extremely limited and "thin"
trading market in our Common Stock, and there is no assurance that it will
continue or that any active trading will occur.
19. THE MARKET FOR OUR COMMON STOCK IS ADVERSELY AFFECTED BY THE "PENNY
STOCK" RULES.
Our Common Stock is currently defined as a "penny stock" under the
Exchange Act and rules of the Securities and Exchange Commission. The
Exchange Act and such penny stock rules generally impose additional sales
practices and disclosure requirements on broker-dealers who sell our
securities to persons other than "accredited investors" or in transactions not
recommended by the broker-dealer. For transactions covered by the penny stock
rules, the broker-dealer must make a written suitability determination for
each purchaser and receive the purchaser's written agreement prior to the
sale. In addition, the broker-dealer must make certain required disclosures
in penny stock transactions, including the actual sale or purchase price and
actual bid and offer quotations, and the compensation to be received by the
broker-dealer and certain associated persons, provide monthly account
statements showing the market value of each penny stock held in a customer's
account, and deliver certain standardized risk disclosures required by the
Securities and Exchange Commission. Consequently, the penny stock rules
affect the ability of broker-dealers to make a market in or trade our shares
and may also affect the ability of purchasers of shares to resell those shares
in the public market.
20. NASD SALES PRACTICE REQUIREMENTS ADVERSELY AFFECT THE MARKET FOR
OUR COMMON STOCK.
In addition to the "Penny Stock" rules described above, the NASD has
adopted rules that require that, in recommending an investment to a customer,
that a broker-dealer have reasonable grounds for believing that the investment
is suitable for that customer. Prior to recommending speculative low priced
12
securities to their non-institutional customers, broker-dealers must make
reasonable efforts to obtain information about the customers' financial
status, tax status, investment objectives and other information. Under
interpretations of these rules, the NASD believes that there is a high
probability that speculative low priced securities will not be suitable for at
least some customers. The NASD requirements make it more difficult for
broker-dealers to recommend that their customers buy our Common Stock, and
this has an adverse effect on the market for our shares.
21. OUR RESULTS OF OPERATIONS MAY BE AFFECTED BY NON-CASH CHARGES.
During the year ended June 30, 2001 we recorded significant non-cash
charges. In some cases we expect to incur such charges in the future,
including those charges related to beneficial features of equity instruments
exchanged and amortization of debt discount as interest expense. These
charges are related to transactions in which stock options and warrants are
used, and are likely to be incurred on a one-time or sporadic basis. Results
of operations could be materially adversely affected by these non-cash
charges.
22. CONVERSION OF OUTSTANDING CONVERTIBLE DEBT TO STOCK AND EXERCISE OF
WARRANTS WILL REDUCE THE OWNERSHIP PERCENTAGE OF EXISTING SHAREHOLDERS.
The conversion of outstanding convertible debt to stock and exercise of
warrants will result in a significant reduction in the respective percentage
interests of Bion and voting power held by the shareholders, other than those
participating in the conversion exercise. We expect to issue additional
shares of our Common Stock, warrants and options in connection with further
financings.
COMPANY INFORMATION
This Prospectus is accompanied by a copy of our most recent Annual Report
on Form 10-KSB for our fiscal year ended June 30, 2001, which report is
incorporated by reference into this Prospectus in its entirety.
USE OF PROCEEDS
We will not receive any proceeds from the sale of the Common Stock being
registered hereunder for sale by the Converting Holders. However, some of the
Converting Holders' shares being registered are to be issued pursuant to the
terms of currently outstanding warrants. If any of these warrants are
exercised, we would receive certain proceeds. Any proceeds received pursuant
to the exercise of these warrants would be used for general working capital
purposes.
DETERMINATION OF OFFERING PRICE
The shares being offered by Converting Holders will be sold at the market
price as of the date of sale. The exercise price of the Warrants was
arbitrarily determined by us and set at $1.50 per share. Our Common Stock is
traded on the OTC Bulletin Board under the symbol "BION". On October 18,
13
2001, the reported closing price for our Common Stock on the OTC Bulletin
Board was $0.81.
RECENT MATERIAL CHANGES IN OUR BUSINESS
There have been no material changes in our business since June 30, 2001,
except as set forth below:
Changes in our Management.
The following changes in our management were either adopted or ratified
by us on September 6, 2001:
- We accepted the resignation of Ron Cullis as a member of our
Board of Directors. The options held by Mr. Cullis will
continue to be exercisable in accordance with their terms. His
resignation was not the result of any disagreement with us on any
matter relating to our operations, policies or practices.
- We accepted the resignation of Jon Northrop as an officer and
director of our company and as an officer and director of each of
our subsidiaries. Mr. Northrop will continue to serve us as a
consultant and will also serve as a member of our Advisory Board.
His resignation was not the result of any disagreement with us on
any matter relating to our operations, policies or practices.
- Mark Smith resigned as Chairman of our Board and was replaced in
that capacity by David Mitchell, our President. Mr. Smith will
continue to serve as a director and as a member of our Executive
Committee.
- Mr. Mitchell will serve as the President of both of our
subsidiaries.
- The resignation of Bart Chilton as our Senior Vice President in
August 2001 to continue his career with the United States
government was ratified.
Severance Agreements.
We entered into severance agreements with Jon Northrop and the only other
employee that remained in our Denver, Colorado office. As a result, we no
longer have any employees in Denver and substantially all of our business
operations are conducted out of our office in New York City, although we will
continue to have a small office in Denver which will be used by Mr. Northrop
in his capacity as our consultant.
Restructuring of Notes to Related Parties and Cancellation of Options and
Warrants.
We have amended the terms of certain notes that we owe to certain related
parties and have cancelled certain outstanding options and warrants held by
them. The accrued amounts due under notes that we amended are as follows:
14
Amount of Accrued Debt
Holder (Accrued to November 1, 2001)
------ -----------------------------
Jon Northrop $ 337,466
Jere Northrop $ 297,531
Harley Northrop $ 397,865
Northrop Family Trust $ 136,150
Edward A. Hennig $ 159,173
M. Duane Stutzman $ 181,106
William J. Crossetta $ 279,000
S. Craig Scott $ 49,804
Dublin Holding Ltd. $3,682,944
Mark Smith Rollover IRA $ 393,556
Kelly Smith Rollover IRA $ 339,870
TOTAL $6,254,465
As the result of these amendments we now have approximately $14.2 million
of debt (without non-cash discounts reflected in our balance sheet) in
instruments (including accrued interest to November 1, 2001) that will convert
into our Common Stock at the same time and at the same price, subject to
conversion price caps which differ for the various debt instruments from $1.80
to $2.50 per share. The provisions of the agreements vary for each debt
holder, with cancellations of certain options and warrants. All of the
subject debt is convertible to shares of our Common Stock or before April 29,
2002, subject to certain conditions precedent.
Mark Smith Agreements.
- Mark Smith and certain entities related to him which own shares
of our Common Stock (the "Smith Shares") entered into a voting
agreement that gives David Mitchell, our President and CEO, the
power to vote all of the Smith Shares as to most matters, but Mr.
Smith will still have the right to vote the Smith Shares with
respect to a sale of substantially all of our assets or a merger.
The voting agreement is purely contractual and is not a formal
voting trust.
- In addition, Mr. Smith and certain entities that he controls
entered into a separate agreement with us which imposes certain
restrictions on the sale and transfer of the Smith Shares and
amends the respective terms of five convertible promissory notes
payable to Dublin Holding, Ltd, the Mark A. Smith Rollover IRA
and the Kelly Smith Rollover IRA to provide that all five of
these notes will be automatically and fully converted (with all
principal and accrued interest calculated as if they had been
held to maturity) into shares of our Common Stock upon the
conversion of our outstanding Convertible Bridge Notes and 2001
Convertible Notes at a conversion rate equal to the lesser of (i)
$1.80 per share or (ii) the conversion price of our outstanding
Convertible Bridge Notes and 2001 Convertible Notes.
15
D2CO, LLC Agreements.
We entered into an agreement with D2CO, LLC, Southview, Inc. and Atlantic
Partners, LLC, all of which are affiliates of David Mitchell, our President
and CEO (collectively, "D2") in which, among other things, we agreed to:
- provide that certain compensation to D2 be paid in a deferred
manner as set forth in an exhibit to the agreement;
- be a party to the voting agreement that gives David Mitchell the
power to vote all of the Smith Shares as to most matters;
- release Jon Northrop from the restrictions related to the sale of
shares of our Common Stock owned by him that are contained in the
Shareholders Agreement dated December 23, 1999, as amended; and
- amend the SV1 and SV2 Warrants held by D2 so that upon earlier of
(i) completion of financing or series of financings large enough
to "trigger" the conversion of Bion's outstanding Bridge Notes
and 2001 Convertible Notes (collectively "CV Notes") into Bion
Common Stock; or (ii) conversion of the CV Notes into Bion Common
Stock on April 29, 2002, the outstanding Class SV1 and SV2
Warrants owned by D2 will be adjusted ("Adjusted Warrants") so
that D2 owns Adjusted Warrants to purchase a number of shares of
Bion Common Stock equal to 20% of the "fully-diluted" outstanding
shares, calculated by including (i) the Adjusted Warrants, (ii)
the securities issued in the conversion of the CV Notes and other
notes, (iii) the securities issued in connection with the subject
financing, and (iv) other outstanding options, warrants and/or
convertible promissory notes which are exercisable or
convertible, as applicable, at a price equal to or lower than the
exercise price of the Adjusted Warrants, which Adjusted Warrants
will have the same expiration date as the current SV1 and SV2
Warrants and will have an exercise price equal to the lower of
$1.00 per share or the conversion price of the CV Notes;
provided, however, that for purposes of calculating the number of
Adjusted Warrants, no securities outstanding related to any
portion of a financing aggregating greater than $10,000,000 will
be included in the calculation. As partial consideration for our
agreeing to the adjustment to the warrants, Southview agreed to
extend the term of the outstanding promissory note (with an
accrued balance of $521,039.81 as of July 31, 2001)so that such
promissory note could be repaid from the proceeds of a new
financing.
CONVERTING HOLDERS
Included in the securities being offered hereby are 12,852,281 shares
being offered for resale by the Converting Holders. Up to 12,094,143 of those
shares are issuable upon conversion of notes held by investors. Up to 758,138
shares are issuable upon exercise of warrants held by investors. The shares
are being offered for the account of the Converting Holders as set forth in
the table below.
16
The following table sets forth information concerning the selling
Converting Holders, including:
* the estimated maximum number of shares issuable upon conversion of
notes;
* the number of shares issuable upon exercise of warrants; and
* the number of shares offered by each Converting Holder.
Bion has no knowledge of the intentions of any Converting Holder to actually
sell any of the securities listed under the column "Shares Offered." There
are no material relationships between any of the selling security holders and
Bion other than those disclosed below:
Shares Shares
Issuable on Issuable Percent of
Conversion on Exercise Common Stock
of Notes of Warrants Shares held after
Security Holder (1) (2) Offered the Offering
--------------- ----------- ----------- ---------- ------------
2001 Convertible Bridge Notes and Warrants:
Ronald Altbach 13,637 2,925 16,562 *
Berkley Insurance Co. 1,362,329 300,000 1,662,329 *
Bistate Oil 340,865 73,875 414,740 *
Bruno Schuschny 13,620 2,925 16,545 *
Donald Codignotto 33,604 7,425 41,029 *
Stanley Cohen 54,537 11,850 66,387 *
Barry Fingerhut 345,634 75,000 420,634 *
Steve Gottlieb 100,688 22,200 122,888 *
Andrew Gould (A) 10,735 2,363 13,098 *
International Jumpers,
Ltd. 68,038 14,775 82,813 *
Richard Kirshenbaum 34,187 7,500 41,687 *
Jonathan Leiterdorf 272,287 59,100 331,387 *
Jan Mitchell 269,048 59,100 328,148 *
Anthony Orphanos 276,233 60,000 336,233 *
Salvatore Zizza (B) 134,727 29,550 164,277 *
Joseph Wright (C) 134,727 29,550 164,277 *
--------- ------- ---------
Total 3,464,896 758,138 4,223,034
Convertible Debt:
Jon Northrop 441,170 0 441,170 4.5%
Jere Northrop (D) 389,165 0 389,165 5.9%
Harley Northrop 520,440 0 520,440 *
Northrop Family Trust 178,082 0 178,082 *
Edward A. Hennig 208,367 0 208,367 *
M. Duane Stutzman 236,883 0 236,883 *
William J. Crossetta 365,625 0 365,625 *
S. Craig Scott 65,143 0 65,143 *
Dublin Holding Ltd. (E) 4,603,681 0 4,603,681 8.8%
17
Mark Smith Rollover
IRA (F) 491,947 0 491,947 *(3)
Kelly Smith Rollover
IRA (G) 424,838 0 424,838 *(3)
--------- ------- ---------
Total 7,925,341 0 7,925,341
D2 Convertible Notes:
D2 Co, LLC (H) 356,250 0 356,250 *(4)
Trust Under Deferred
Compensation Plan for
D2 Co, LLC 347,656 0 347,656 *
--------- ------- ---------
Total 703,906 703,906
-------------------------
* represents less than 1%.
(1) Based on an assumed conversion price of $.80 per share and accrued
interest on the notes through April 20, 2002.
(2) The warrants may be exercised to purchase shares of Common Stock at
$1.50 per share through December 31, 2005.
(3) Does not include other shares beneficially owned by Mark Smith and
Kelly Smith.
(4) Does not include other shares beneficially owned by David Mitchell.
------------------
(A) Andrew Gould is a Director of Bion.
(B) Salvatore J. Zizza is a Director of Bion.
(C) Joseph Wright is a Director of Bion.
(D) Jere Northrop is Chief Technical Officer and a Director of Bion.
(E) Dublin Holding, Ltd. is a principal shareholder of Bion.
(F) Mark Smith is Secretary and a Director of Bion.
(G) Kelly Smith is the wife of Mark Smith, Secretary and a Director
of Bion.
(H) D2 Co, LLC is owned by David Mitchell, President and a Director
of Bion.
PLAN OF DISTRIBUTION
CONVERTING HOLDERS
Included in the shares offered hereby are a total of 758,138 shares that
may be issued upon the exercise of 2001 Bridge Warrants that we currently have
outstanding. A description of these warrants is contained in Exhibit 10.3 to
our Report on Form 8-K dated April 26, 2001, which is incorporated herein by
reference. An additional 12,094,143 shares offered hereby may be issued upon
the conversion of convertible notes and debt that are also currently
outstanding.
18
The number of shares which may be issued upon conversion of the
convertible notes is based on an assumed conversion rate of $0.80 per share
and interest is calculated through maturity of each note. The actual
conversion rate may be greater, and so fewer shares may actually be issued. It
is currently unknown how many of the Converting Holders will exercise their
warrants to purchase shares of our Common Stock. The actual number of shares
that would be issued upon conversion of the notes is also unknown. We also do
not know whether any Converting Holders will decide to sell any of these
shares into the market.
The Common Stock registered hereunder may be sold from time to time by
the Converting Holders. Such sales may be made in the over-the-counter market
or otherwise at prices and at terms then prevailing or at prices related to
the then current market price, or in negotiated transactions. In connection
with such sales the Converting Holders may be deemed to be "underwriters"
within the meaning of the Securities Act. At the time of their purchase of
the securities, none of the Converting Holders had any agreements or
understandings, directly or indirectly, with any person to distribute the
securities.
The Common Stock may be sold by one or more of the following methods:
(i) a block trade in which the broker or dealer so engaged will attempt to
sell the Common Stock as agent for the Converting Holders; and (ii) ordinary
brokerage transactions and transactions in which the broker solicits
purchasers. In effecting sales, brokers or dealers engaged by the Converting
Holders may arrange for other brokers or dealers to participate. Brokers or
dealers will receive commissions from the Converting Holders in amounts to be
negotiated by the holders immediately prior to the sale. Such brokers or
dealers and any other participating brokers or dealers may be deemed to be
"underwriters" within the meaning of the Securities Act in connection with
such sales.
The Converting Holders may agree to indemnify any agent, dealer or
broker-dealer that participates in transactions involving sales of the Common
Stock against certain liabilities, including liabilities arising under the
Securities Act of 1933, as amended.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers or persons controlling us
pursuant to the foregoing provisions, we have been informed that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in such Act and is therefore unenforceable.
EXERCISE OF BRIDGE WARRANTS
The shares which may be purchased upon the exercise of the outstanding
Warrants are being offered to the holders of those warrants by the Company on
a "best efforts" basis. No commissions or fees will be paid to anyone for the
solicitation of the exercise of the Warrants.
The Warrants are exercisable to purchase one share at a price of $1.50
per share until December 31, 2005. The Warrants are not transferrable.
Persons who wish to exercise their Warrants must deliver an executed
Warrant with the form of Election to Purchase, properly executed, accompanied
with payment in check or money order payable to "Bion Environmental
19
Technologies, Inc." for the number of shares subscribed to the Company. All
payments must be received by the Company prior to the termination of the
exercise period, and Warrants not exercised prior to the termination of the
exercise period will expire.
DESCRIPTION OF COMMON STOCK
We are authorized to issue 100,000,000 shares of our no par value Common
Stock, of which 13,303,815 shares were issued and outstanding as of October
22, 2001. Holders of Common Stock are entitled to cast one vote for each
share held of record on all matters presented to shareholders. Shareholders
do not have cumulative rights; hence, the holders of more than 50% of the
outstanding Common Stock can elect all directors.
We have reserved approximately 20,000,000 shares of our Common Stock for
issuance under outstanding options, warrants, rights and convertible
securities.
Holders of Common Stock are entitled to receive such dividends as may be
declared by the Board of Directors out of funds legally available therefor. In
the event of liquidation, holders of Common Stock will share pro rata in any
distribution of our assets after payment of all liabilities. We do not
anticipate that any dividends on Common Stock will be declared or paid in the
foreseeable future. Holders of Common Stock do not have any rights of
redemption or conversion or preemptive rights to subscribe to additional
shares if issued by us. All of the outstanding shares of our Common Stock are
fully paid and nonassessable.
Penny Stock and NASD Sales Practices Rules
Our Common Stock is currently defined as a "penny stock" under the
Exchange Act and rules of the Securities and Exchange Commission. The
Exchange Act and such penny stock rules generally impose additional sales
practices and disclosure requirements on broker-dealers who sell our
securities to persons other than "accredited investors" or in transactions not
recommended by the broker-dealer. For transactions covered by the penny stock
rules, the broker-dealer must make a written suitability determination for
each purchaser and receive the purchaser's written agreement prior to the
sale. In addition, the broker-dealer must make certain required disclosures
in penny stock transactions, including the actual sale or purchase price and
actual bid and offer quotations, and the compensation to be received by the
broker-dealer and certain associated persons, provide monthly account
statements showing the market value of each penny stock held in a customer's
account, and deliver certain standardized risk disclosures required by the
Securities and Exchange Commission. Consequently, the penny stock rules
affect the ability of broker-dealers to make a market in or trade our shares
and may also affect the ability of purchasers of shares to resell those shares
in the public market.
In addition to the "penny stock" rules described above, the NASD has
adopted rules that require that in recommending an investment to a customer, a
broker-dealer have reasonable grounds for believing that the investment is
suitable for that customer. Prior to recommending speculative low priced
securities to their non-institutional customers, broker-dealers must make
reasonable efforts to obtain information about the customers' financial
20
status, tax status, investment objectives and other information. Under
interpretations of these rules, the NASD believes that there is a high
probability that speculative low priced securities will not be suitable for
at least some customers. The NASD requirements make it more difficult for
broker-dealers to recommend that their customers buy our Common Stock, and
this has an adverse effect on the market for our shares.
EXPERTS
The June 30, 2001 financial statements incorporated by reference in this
Prospectus have been audited by BDO Seidman, LLP, independent certified public
accountants, to the extent and for the periods set forth in their report
(which contains an explanatory paragraph regarding the Company's ability to
continue as a going concern) incorporated herein by reference, and are
incorporated herein in reliance upon such report given upon the authority of
said firm as experts in auditing and accounting.
LEGAL MATTERS
The validity of the issuance of the Common Stock offered hereby will be
passed upon for us by Krys Boyle Freedman & Sawyer, P.C., Denver, Colorado.
Officers, directors and employees of this law firm own an aggregate of
approximately 120,000 shares of our Common Stock.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN
THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY
SECURITIES OTHER THAN THE COMMON STOCK OFFERED BY THIS PROSPECTUS. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER
TO BUY ANY COMMON STOCK IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR
SOLICITATION IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY
SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN OUR AFFAIRS SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED BY REFERENCE HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT
TO ITS DATE.
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR
SECURITIES ACT LIABILITIES
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the small business issuer pursuant to the forgoing provisions, or otherwise,
the small business issuer has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable.
21
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents that we have filed with the Commission shall be
deemed to be incorporated in this Prospectus and to be a part hereof from the
date of the filing of such documents:
1. Annual Report on Form 10-KSB for the fiscal year ended June 30,
2001.
2. Amendment on Form 10-KSB/A to the Annual Report on Form 10-KSB
for the fiscal year ended June 30, 2001.
3. Current Report on Form 8-K dated September 6, 2001.
Any statement contained in a document incorporated by reference herein
shall be deemed to be modified or superseded for all purposes to the extent
that a statement contained in this Prospectus or in any other subsequently
filed document which is also incorporated herein by reference modifies or
replaces such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of
this Prospectus.
We will provide without charge to each person to whom this Prospectus is
delivered, on written or oral request of such person, a copy of any or all
documents incorporated by reference in this Prospectus. Requests for such
copies should be directed to Bion Environmental Technologies, Inc., 18 East
50th Street, 10th Floor, New York, New York 10022, or (212) 758-6622.
22
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
______________________________________
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table itemizes our estimated expenses in connection with
the issuance and distribution of the securities being registered hereby.
SEC Registration Fee.................... $ 2,587
Transfer Agent Fees..................... 1,000
Legal Fees and Expenses................. 6,000
Accounting Fees and Expenses............ 3,000
Miscellaneous........................... 2,413
--------
Total .............................. $ 15,000
========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Colorado Business Corporation Act generally provides that a
corporation may indemnify its directors, officers, employees and agents
against liabilities and reasonable expenses (including attorneys' fees)
incurred in connection with any threatened, pending or completed action, suit
or proceeding, whether civil, criminal, administrative or investigative, and
whether formal or informal (a "Proceeding"), by reason of being or having been
a director, officer, employee, fiduciary or agent of the Corporation, if such
person acted in good faith and reasonably believed that his conduct in his
official capacity with the Corporation was in the best interests of the
Corporation (or, with respect to employee benefit plans, was in the best
interests of the participants in or beneficiaries of the plan), and in all
other cases his conduct was at least not opposed to the Corporation's best
interests. In the case of a criminal proceeding, the director, officer,
employee or agent must have had no reasonable cause to believe his conduct was
unlawful. The Corporation may not indemnify a director, officer, employee or
agent in connection with a proceeding by or in the right of the Corporation if
such person is adjudged liable to the Corporation, or in a proceeding in which
such person is adjudged liable for receipt of an improper personal benefit.
Unless limited by the Corporation's Articles of Incorporation, the Corporation
shall be required to indemnify a director or officer of the Corporation who is
wholly successful, on the merits or otherwise, in defense of any proceeding to
which he was a party, against reasonable expenses incurred by him in
connection with the proceeding. The foregoing indemnification is not exclusive
of any other rights to which those indemnified may be entitled under
applicable law, the Corporation's Articles of Incorporation, Bylaws,
agreement, vote of shareholders or disinterested directors, or otherwise.
The Corporation's Articles of Incorporation and Bylaws generally provide
for indemnification of directors, officers, employees and agents to the
fullest extent allowed by law.
II-1
ITEM 16. EXHIBITS
Exhibit
Number Description of Exhibit
------- ----------------------
5.1 Opinion of Krys Boyle Freedman & Sawyer, P.C. regarding legality.*
23.1 Consent of BDO Seidman, LLP.*
23.2 Consent of Krys Boyle Freedman & Sawyer, P.C. Contained in Exhibit
5.1.*
______________
* Filed herewith electronically.
ITEM 17. UNDERTAKINGS
The undersigned Company hereby undertakes:
(1) to file, during any period in which offers or sales are being made,
a post-effective amendment to the registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement; and
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement.
(2) That for purposes of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering.
II-2
(4) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the Registrant's annual report pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934 that is incorporated by
reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at the time shall be deemed to be the initial bona
fide offering.
(5) That, insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Company pursuant to the foregoing provisions, or
otherwise, the Company has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Company of expenses incurred or paid by a director, officer or controlling
person of the Company in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Company will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-2 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York, State of New York, on
October 26, 2001.
BION ENVIRONMENTAL TECHNOLOGIES, INC.
By: /s/ David J. Mitchell
----------------------------------
David J. Mitchell, Chief Executive
Officer, President and Chairman
(Principal Executive Officer)
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the date(s) indicated.
Signatures Title Date
/s/ David J. Mitchell
------------------------- Chief Executive Officer, October 26, 2001
David J. Mitchell President and Chairman
/s/ David Fuller
------------------------- Principal Accounting October 26, 2001
David Fuller Officer
/s/ Mark A. Smith
------------------------- Secretary and Director October 26, 2001
Mark A. Smith
/s/ Jere Northrop
------------------------- Chief Technical Officer October 26, 2001
Jere Northrop and Director
------------------------- Director October __, 2001
Salvatore J. Zizza
------------------------- Director October __, 2001
Andrew G. Gould
/s/ Joseph R. Wright, Jr.
------------------------- Director October 26, 2001
Joseph R. Wright, Jr.