BION ENVIRONMENTAL TECHNOLOGIES INC

(a)Exhibits

*This exhibit is being furnished rather than filed and shall not be deemed incorporated by reference into any filing, in accordance with Item 601 of Regulation S-K.

Table of Contents

To the Board of Directorsand

Stockholders of Bion Environmental Technologies, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Bion Environmental Technologies, Inc. (the Company) as of June 30, 2026 and 2025, and the related consolidated statements of operations, changes in stockholders’ equity (deficit), and cash flows for each of the years in the two-year period ended June 30, 2026, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2026 and 2025, and the results of its operations and its cash flows for each of the years in the two-year period ended June 30, 2026, in conformity with accounting principles generally accepted in the United States of America.

Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has yet to generate any revenue and has suffered recurring losses from operations. These factors raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also discussed in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Equity Transactions

As discussed in Note 5 and Note 6 to the financial statements, the Company has numerous equity-based agreements, including stock options and warrants issued for services, of which many were modified during the year. These agreements require management to estimate the value of options and warrants issued for services on the measurement date, constituting a significant management estimate subject to possible management bias. During the year ended June 30, 2026, the Company recorded interest related to the modification of warrants in the amount of $161,917, and compensation expense related to the modification of options and warrants of $7,260 and $117,397, respectively.

Our audit procedures required a significant amount of time performing procedures and evaluating audit evidence in connection with forming our overall opinion on the financial statements. Those procedures included gaining an overall understanding of the Company’s process for estimating fair value and the related calculations. We read the related equity-based agreements verifying the terms of each agreement to the Company’s calculations and ensuring the mathematical accuracy. We evaluated the assumptions used by management to develop their estimates and considered the relevant accounting guidance.

/s/ Haynie

Haynie

We have served as the Company’s auditor since 2023.

Salt Lake City, Utah

September 29, 2026

** **BION ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARIES

**CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED JUNE 30, 2026 AND 2025

1. BUSINESS AND ORGANIZATION:

Nature of Operations

Bion Environmental Technologies, Inc.'s ("Bion," "Company," "We," "Us," or "Our") was incorporated in 1987 in the State of Colorado.

Our patented and proprietary technology was developed to provide advanced waste treatment and resource recovery for large-scale livestock production facilities (also known as “Concentrated Animal Feeding Operations” or “CAFOs"). Our Gen3Tech can largely mitigate the environmental problems of CAFOs, while simultaneously improving operational/ resource efficiencies by recovering high-value co-products from the waste stream, including renewable energy, nutrients, and clean water. For the last several years, Bion was focused on the beef industry because we believe it faces the most challenges of all the livestock sectors and can benefit the most from the application of Bion’s technology and business strategy.

Until recently, we believed that the best opportunity for the Company to prove its technology, along with the sustainable beef concept, was with the Stovall Ranch, in Montana. In June 2024, Bion formed a strategic relationship with Turk Stovall and Stovall Ranching Companies. Bion and Stovall agreed to establish a JV, to be led by Mr. Stovall, with the goal of developing a 16,000-head sustainable beef project at Stovall’s Yellowstone Cattle Feeders (‘YCF’) location in Shepherd, Montana. We anticipated establishing the Stovall-Bion JV and creating related distribution agreements with key value chain partners during the 2024 calendar year, with the intent to begin construction in the first quarter of 2025. However, due to several factors, including 1) the extended development timeline to reach revenues at Stovall (which could be at least two years or more), 2) a need to prove our technology at full-scale as quickly as possible, and 3) enter the fertilizer markets with product in the 2026 growing season, we shifted our focus to smaller ‘bolt-on’ opportunities in both the animal waste and industrial sectors that we think can be developed more quickly.

Bion’s patents were expanded in 2024 to include industrial and municipal wastewater sources, in addition to animal waste streams that were previously covered. To that end, Bion directed part of its limited resources to understanding and evaluating opportunities to apply its Ammonia Recovery System (ARS) as a bolt-on or ‘standalone’ ammonia control solution in the industrial sector. In such cases, the ARS would be deployed as an ammonia control solution (vs integrated into a Bion Gen3Tech livestock platform) for facilities (both new and existing) that produce biogas from organic waste streams, such as food, food processing, and livestock packing/slaughter. These facilities are subject to EPA-mandated discharge limits that require ammonia control or face other limitations on ammonia/nitrogen in the effluent from biogas production. It should be noted that central processing facilities that treat the waste from more than one farm are required to have discharge permits, like industrial facilities. We will also seek to identify opportunities to provide ammonia control solutions in the livestock/animal waste at existing farms with anaerobic digesters already in place (which will also shorten the development timeline). While we have not abandoned developing new integrated livestock projects with our Gen3tech platform, we believe there is a robust opportunity to provide bolt-on ammonia control solutions to others’ biogas facilities, and we are now devoting almost all of our resources to developing this opportunity.

BION ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSYEARS ENDED JUNE 30, 2026 AND 2025

Going Concern

The Company’s consolidated financial statements have been prepared assuming the Company will continue as a going concern.

The Company is not currently generating any significant revenues. Further, the Company’s anticipated revenues, if any, from existing JVs and proposed projects will not be sufficient to offset operating and capital costs (for Projects) for a minimum of two to five years. Further, there are no assurances that the Company will ultimately be successful in its efforts to develop and construct its Projects and market its Systems; but, it is certain that the Company will require substantial funding from external sources. Given the unsettled state of the current credit and capital markets for companies such as Bion, there is no assurance the Company will be able to raise the funds it needs on reasonable terms. The aggregate effect of these factors raises substantial doubt about the Company’s ability to continue as a going concern.

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

During the year ended June 30, 2025 the Company had a loss of $2,380,000 including $844,000 non-cash compensation expenses related to the extension of warrants and options.

The constraints on available resources have had, and continue to have, negative effects on the pace and scope of the Company’s efforts to operate and develop its business. The Company has had to delay payment of trade obligations and has had to economize in many ways that have potentially negative consequences. If the Company is able to raise needed funds during the remainder of the current fiscal year (and subsequent periods), of which there is no assurance, management will not need to consider deeper cuts (including additional personnel cuts) and/or curtailment of ongoing activities including research and development activities. The Company will need to obtain additional capital to fund its operations and technology development, to satisfy existing creditors, and to develop Projects. The Company anticipates that it will seek to raise from $3,000,000 to $10,000,000 or more debt and/or equity through sale of its equity securities (common, preferred and/or hybrid) and/or debt (including convertible) securities, and/or through use of ‘rights’ and/or warrants (new and/or existing) and/or license payments and/or through other means during the next twelve months. Further, Bion may be required to fund $8 million (or more) in project finance for the initial ARS project, in a combination of debt financing and equity investment. However, as discussed above, there is no assurance, especially in light of the difficulties the Company has experienced in many recent years and the extremely unsettled capital markets that presently exist for small pre- revenue companies like us, that the Company will be able to obtain the funds that it needs to stay in business, complete its technology development or to successfully develop its business and Projects. Ultimately, in the event the Company cannot secure additional financial resources, or complete a strategic transaction in the longer term, the Company may need to curtail or suspend its operational plans or current initiatives, or potentially liquidate its business interests, and investors may lose all or part of their investment.

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.

BION ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSYEARS ENDED JUNE 30, 2026 AND 2025

Management’s Plan

The Company continues to explore sources of financing to satisfy its current operating requirements and future growth needs. The Company faced substantial demand for capital and operating expenditures during fiscal year 2026, which has continued during the 2027 fiscal year, and which we expect to increase for the periods thereafter as we move toward commercial implementation of our ARS (including costs associated with additions of personnel to carry out the business activities of the Company). As a result, the Company has faced, and continues to face, significant cash flow management challenges due to material working capital constraints. To partially mitigate these working capital constraints, the Company's core senior management and some key employees and consultants have been deferring most of their cash compensation and/or are accepting compensation in the form of securities of the Company and members of the Company's senior management have from time-to-time made loans to the Company in the past and may do so in future periods.

To help alleviate 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 original BLG note bore interest at a rate of 7.5% per annum and had a maturity date of April 15, 2025. As of the filing date, BLG is owed $483,483, including accrued interest. The Company has entered into four forbearance agreements; the first that raised the interest rate to 9%, the third that extended the maturity date to June 30, 2026, and the fourth that extended the maturity date to January 31, 2027. (see Note 5, Note payable – related party (BLG)).

In November 2024, the Company launched a series of secured promissory note offerings to previous investors/shareholders (and certain others) (“Shareholder Notes”) with similar terms to the BLG note. The capital raised in these offerings 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, although management is committed to minimizing that dilution compared to recent share prices.

Bion is now 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. The Company is evaluating a number of these as potential development and finance partners for project opportunities and on December 5, 2025, entered into an MOU with Kimmeridge Energy Management for a potential large RNG facility. The MOU includes a Right of First Refusal for Kimmeridge on 10 million shares of Bion stock at a premium to the current market. Effective June 6, 2026, the Company and Kimmeridge extended the MOU, including the Right of First Refusal, for six months under the same terms. 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 strong interest in the product. Bion believes that these developing 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.

BION ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSYEARS ENDED JUNE 30, 2026 AND 2025

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.

2. SIGNIFICANT ACCOUNTING POLICIES:

Principles of consolidation:

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Bion Integrated Projects Group, Inc., Bion Technologies, Inc., BionSoil, Inc., Bion Services, Bion PA2 LLC and Bion 3G-1 LLC (“3G1”); and its 58.9% owned subsidiary, Centerpoint Corporation (“Centerpoint”). All significant intercompany accounts and transactions have been eliminated in consolidation.

Operating Segment:

The Company operates as a single operating and reportable segment: advanced waste treatment and resource recovery solutions for organic waste streams. While in the future the Company may pursue other segments, such as integrated livestock projects, CAFO retrofits, and other opportunities to use its proprietary technology, it is currently focused entirely on bolt-on solutions for existing or planned biogas production facilities.

The Company's Chief Executive Officer is the chief operating decision maker ("CODM"). The CODM assesses performance and allocates resources based on consolidated net loss, as reported in the consolidated statements of operations. The CODM uses net loss, together with budget-to-actual comparisons and cash forecasts, to monitor spending, manage the Company's limited liquidity, and decide how to allocate resources to operations, research and development, and financing activities. The measure of segment assets is total consolidated assets, as reported in the consolidated balance sheets. The accounting policies of the segment are the same as those described in this Note.

The significant segment expenses and other segment items regularly provided to the CODM are as follows:

Non-cash stock-based compensation included in the expenses above was $124,709 and $843,537 for the years ended June 30, 2026 and 2025, respectively.

Cash and cash equivalents:

The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash and cash equivalents. As of June 30, 2026 and June 30, 2025 there areno cash equivalents.

Property and equipment:

Property and equipment are stated at cost and are depreciated, when placed into service, using the straight-line method over the estimated useful lives of the related assets, generally three to twenty years. The Company reviews its property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment loss would be recognized based on the amount by which the carrying value of the assets or asset group exceeds its estimated fair value and is recognized as a loss from operations.

BION ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSYEARS ENDED JUNE 30, 2026 AND 2025

Patents:

The Company has elected to expense all costs and filing fees related to obtaining patents (resulting in no related asset being recognized in the Company’s consolidated balance sheets) because the Company believes such costs and fees are immaterial (in the context of the Company’s total costs/expenses) and have no direct relationship to the value of the Company’s patents.

Stock-based compensation:

The Company follows the provisions of Accounting Standards Codification (“ASC”) 718, which generally requires that share-based compensation transactions be accounted and recognized in the statement of operations based upon their grant date fair values.

Derivative Financial Instruments:

Pursuant to ASC Topic 815 “Derivatives and Hedging” (“Topic 815”), the Company reviews all financial instruments for the existence of features which may require fair value accounting and a related mark-to-market adjustment at each reporting period end. Once determined, the Company assesses these instruments as derivative liabilities. The fair value of these instruments is adjusted to reflect the fair value at each reporting period end, with any increase or decrease in the fair value being recorded in results of operations as an adjustment to fair value of derivatives.

Options:

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

Warrants:

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

Concentrations of credit risk:

The Company's financial instruments that are exposed to concentrations of credit risk consist of cash. The Company's cash is in demand deposit accounts placed with federally insured financial institutions and selected brokerage accounts. Such deposit accounts at times may exceed federally insured limits. The Company has not experienced any losses on such accounts.

BION ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSYEARS ENDED JUNE 30, 2026 AND 2025

Noncontrolling interests:

In accordance with ASC 810, “Consolidation”, the Company separately classifies noncontrolling interests within the equity section of the consolidated balance sheets and separately reports the amounts attributable to controlling and noncontrolling interests in the consolidated statements of operations. In addition, the noncontrolling interest continues to be attributed its share of losses even if that attribution results in a deficit noncontrolling interest balance.

Fair Value Measurements:

The Company measures fair value in accordance with ASC 820,Fair Value Measurement. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, in the principal or most advantageous market. ASC 820 establishes a three-level fair value hierarchy that requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs. A fair value measurement is categorized in its entirety based on the lowest level of input that is significant to the measurement. The three levels are:

Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 – Inputs other than quoted prices included in Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities in active markets, or quoted prices for identical or similar assets or liabilities in markets that are not active.

Level 3 – Unobservable inputs that are supported by little or no market activity and that reflect management's own assumptions about the assumptions market participants would use.

The Company had no assets or liabilities measured at fair value on a recurring basis as of June 30, 2026 or 2025.

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.

Loss Contingencies and Legal Costs:

The Company is subject to various legal proceedings, claims, and regulatory matters arising in the ordinary course of business. In accordance with ASC 450,Contingencies, the Company records an accrual for a loss contingency when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. When a loss is probable and a range of loss can be estimated, the Company accrues its best estimate within that range. If no amount within the range is a better estimate than any other, the Company accrues the minimum amount in the range. The Company reviews these accruals each reporting period and adjusts them to reflect negotiations, settlements, rulings, advice of legal counsel, and other developments relating to each matter. When a loss is reasonably possible but not probable, or is probable but not reasonably estimable, the Company does not record an accrual. Instead, it discloses the nature of the contingency and, where material, an estimate of the possible loss or range of loss, or states that such an estimate cannot be made. Legal costs associated with loss contingencies are expensed as incurred and are included in general and administrative expenses in the consolidated statements of operations.

BION ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSYEARS ENDED JUNE 30, 2026 AND 2025

Revenue Recognition:

The Company currently does not generate revenue and if and when the Company begins to generate revenue the Company will comply with the provisions of ASC 606 “Revenue from Contracts with Customers”.

Income (Loss) per share:

Basic income (loss) per share amounts are calculated using the weighted average number of shares of common stock outstanding during the period. Diluted income (loss) per share assumes the conversion, exercise, or issuance of all potential common stock instruments, such as options or warrants, unless the effect is to reduce the income (loss) per share or increase the earnings per share. During the years ended June 30, 2026 and 2025, the basic and diluted income (loss) per share was the same, as the impact of potential dilutive common shares was anti-dilutive.

The following table represents the warrants and options (as if exercised) and convertible securities (as if converted) that have been excluded from the calculation of basic income (loss) per share:

The following is a reconciliation of the denominators of the basic and diluted income (loss) per share computations for the years ended June 30, 2026 and 2025.

Use of estimates:

In preparing the Company’s consolidated financial statements in conformity with accounting principles generally accepted in the United States of America, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Recent Accounting Pronouncements:

The Company continually assesses any new accounting pronouncements to determine their applicability. When it is determined that a new accounting pronouncement affects the Company’s financial reporting, the Company undertakes a study to determine the consequences of the change to its consolidated financial statements and assures that there are proper controls in place to ascertain that the Company’s consolidated financial statements properly reflect the change.

Recently Adopted Accounting Pronouncements:

ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. In November 2023, the FASB issued ASU 2023-07, which requires disclosure of significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”), the CODM’s title and position, and an explanation of how the CODM uses reported segment profit or loss measures, among other enhanced segment disclosures. The Company adopted ASU 2023-07 effective July 1, 2024 (fiscal year ended June 30, 2025) and applied it retrospectively to all periods presented. The adoption did not have a material impact on the Company’s consolidated financial statements, as it affects disclosure only.

BION ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSYEARS ENDED JUNE 30, 2026 AND 2025

ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. In December 2023, the FASB issued ASU 2023-09, which enhances the transparency and decision usefulness of income tax disclosures. Key provisions require disclosure of income or loss before income tax, income tax expense (or benefit) from continuing operations, and income taxes paid (net of refunds received), each disaggregated by domestic, foreign, federal (national), and state components, with further disaggregation of income taxes paid for significant individual jurisdictions. Public business entities are also required to provide a more detailed tabular reconciliation of the effective tax rate, including percentages, amounts, and qualitative descriptions by jurisdiction. The Company adopted ASU 2023-09 effective July 1, 2025, on a retrospective basis, as required for its fiscal year ended June 30, 2026. The adoption did not materially impact the Company’s consolidated financial statements but resulted in expanded income tax disclosures, as reflected in Note 9, Income Taxes.

Accounting Pronouncements Issued But Not Yet Adopted:

ASU 2024-04, Debt—Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments. In November 2024, the FASB issued ASU 2024-04, which clarifies the criteria for determining whether a settlement of convertible debt instruments should be accounted for as an induced conversion rather than an extinguishment. The ASU is effective for the Company’s fiscal year beginning July 1, 2026 (fiscal year ending June 30, 2027), with early adoption permitted for entities that have adopted ASU 2020-06. The Company is currently evaluating the impact of this standard on its consolidated financial statements.

ASU 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. In July 2025, the FASB issued ASU 2025-05, which introduces a practical expedient allowing entities to assume that current conditions persist through the forecast period when estimating credit losses on current trade receivables and contract assets, along with an accounting policy election available to non-public entities. The ASU is effective for the Company’s fiscal year beginning July 1, 2026, applied prospectively, with early adoption permitted. The Company is currently evaluating the impact of this standard on its allowance for credit losses. The Company has no receivables or allowances and the standard is not expected to have any effect.

ASU 2024-03, as clarified by ASU 2025-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. This ASU requires disaggregated disclosure of specified categories of expenses (including purchases of inventory, employee compensation, and depreciation and amortization) within relevant income statement expense captions. For public business entities, it is effective for annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027 — for the Company, this will first apply to the fiscal year beginning July 1, 2027. Early adoption is permitted. The Company is currently evaluating the impact of this standard, which is expected to result in expanded disclosure only.

Management does not believe that any other recently issued, but not yet effective, accounting pronouncements, if adopted, would have a material effect on the accompanying consolidated financial statements.

BION ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSYEARS ENDED JUNE 30, 2026 AND 2025

3. PROPERTY AND EQUIPMENT:

Property and equipment consist of the following:

Depreciation expense was nil and $695 for the years ended June 30, 2026 and 2025, respectively.

4. DEFERRED COMPENSATION:

The Company owes deferred compensation to various employees, former employees and consultants totaling $1,368,268 and $1,173,237 as of June 30, 2026 and June 30, 2025, respectively.

Family members of the late Dominic Bassani, Bion’s former CEO and Mark A. Smith, previously a Director and President are owed a balance of nil and nil as of June 30, 2026 and $12,306 and $83,964 as of June 30, 2025, respectively.

Effective September 15, 2025, family members of the late Dominic Bassani and Smith, and Edward Schafer, previously a Director, each individually agreed to a settlement (“Settlement Agreements”) that will simplify Bion’s capital structure and substantially reduce the number of Fully Diluted Shares. In consideration of the cancellation of various obligations and security instruments held by Smith and Bassani, including without limitation deferred compensation, Smith and the Bassani heirs will receive shares of common stock, as described below in Note 6, Stockholders’ Equity. Included in the Bassani family Settlement Agreement was a provision to cancel their remaining 5% obligation under their previous Giveback Agreement.

The Company owes deferred compensation to Craig Scott of $465,742 and $330,046 at June 30, 2026 and June 30, 2025, respectively, interest accrues at 3% per annum and can be converted into shares of the Company’s common stock at the election of the employee during the first five calendar days of any month. The conversion price shall be the average closing price of the Company’s common stock for the last 10 trading days of the immediately preceding month. As of September 30, 2025, the Company and Scott agreed to offset the subscription receivable with the Deferred Compensation balance; $19,400 receivable and $6,117 in accumulated interest were reduced from the deferred compensation balance.

Bill O’Neill, former CEO, is owed a balance of $367,500 and $367,500 at June 30, 2026 and June 30, 2025, respectively, pursuant to his 2021 employment agreement. There is no interest accrual or conversion rights related to the deferred balance. O’Neill terminated his service to the Company prior to the full term of his agreement.

The Company also owes various consultants and employees, pursuant to various agreements, for deferred compensation of $462,526 and $306,920 as of June 30, 2026 and June 30, 2025, respectively, with similar conversion terms as those described above for Scott, with the exception that the interest accrues at 0% to 3% per annum. The Company also owes a former employee $72,500, which is not convertible and is non-interest bearing. As of September 30, 2025, the Company and an employee agreed to offset the subscription receivable with the Deferred Compensation balance; $27,000 receivable and $8,513 in accumulated interest were reduced from the deferred compensation balance.

The Company recorded interest expense of $19,086 ($11,212 with related parties) and $15,764 ($10,131 with related parties) for the years ended June 30, 2026 and 2025, respectively.

BION ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSYEARS ENDED JUNE 30, 2026 AND 2025

5. NOTES PAYABLE:

Adjusted 2020 Convertible Obligations and Adjusted September 2015 Convertible Notes

Effective February 1, 2023, three (3) directors/officers of the Company agreed to adjust the provisions of long term convertible obligations (including most of the 2020 Convertible Obligations and September 2015 Convertible Notes --- see below) owed to them by the Company in a manner which reduced the indebtedness of the Company by 80% (approximately $3.47 million, in aggregate** **while equitably maintaining existing conversion rights). The debt modification was treated as an equity transaction because the modifications were with affiliates that are related parties.

Mark A. Smith (the Company’s former President)(“Smith”), Dominic Bassani (the Company’s former Chief Operating Officer) (“Bassani”) (NOTE: Dominic Bassani passed away on November 11, 2023) and Ed Schafer (former Director)(“Schafer”), adjusted/reduced the principal owed to them by $1,109,649, $1,939,670 and $424,873, respectively. Subsequent to the adjustment, the adjusted portion of the 2020 Convertible Obligations were renamed Adjusted 2020 Convertible Obligations and the adjusted portion of the September 2015 Convertible Notes were renamed Adjusted September 2015 Convertible Notes. The Adjusted 2020 Convertible Obligations of Smith, Bassani and Schafer are convertible into Units (consisting of 1 share and from one half (1/2) to one (1) warrant) at prices of $.0946, $.0953, and $.0953, respectively, and the Adjusted September 2015 Convertible Notes may be converted at the sole election of the noteholders into restricted common shares of the Company at a conversion price of $0.115 per share. The adjusted conversion prices slightly reduce the securities to be issued on conversion of each instrument from the amount receivable under the unadjusted instruments. The Adjusted 2020 Convertible Obligations and Adjusted September 2015 Convertible Notes do not accrue any interest until their maturity date. After the adjustment, the Company owed Smith, Bassani (and trust) and Schafer $262,154, $434,016 and $96,364, respectively, of Adjusted 2020 Convertible Obligations and Bassani and Schafer, respectively, $24,230 and $4,012 of Adjusted September 2015 Convertible Notes. The Company has extended the maturity dates to September 15, 2025.

As of June 30, 2026, the Adjusted 2020 Convertible Obligation balances, including accrued interest, owed Bassani (and his donees), Smith and Edward Schafer were nil. As of June 30 2025, the Adjusted 2020 Convertible Obligation balances, including accrued interest, owed Bassani (and his donees), Smith and Edward Schafer were $459,277, nil and $101,973, respectively.

As of June 30, 2026 the Adjusted September 2015 Convertible Notes balances, including accrued interest, owed Bassani Family Trusts and Schafer were nil. As of June 30, 2025 the Adjusted September 2015 Convertible Notes balances, including accrued interest, owed Bassani Family Trusts and Schafer were $7,907 and nil, respectively.

On September 15, 2025, settlements were reached with Mr. Smith, Mr. Schafer, and the Bassani family, to surrender additional securities. Included in these agreements were provisions to cancel these convertible note obligations, effective on that date.

BION ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSYEARS ENDED JUNE 30, 2026 AND 2025

2020 Convertible Obligations

The 2020 Convertible Obligations (which combined/replaced prior convertible instruments dating to 2017 (or earlier), which accrue interest at either 4% per annum or 4% compounded quarterly and effective January 1, 2020 were due and payable on July 1, 2024. The 2020 Convertible Obligations (including accrued interest, plus all future deferred compensation added subsequently), are convertible, at the sole election of the holder, into Units consisting of one share of the Company’s common stock and one half to one warrant to purchase a share of the Company’s common stock, at a price of $0.50 per Unit until July 1, 2024 The original conversion price of $0.50 per Unit approximated the fair value of the Units at the date of the agreements; therefore, no beneficial conversion feature exists. Management evaluated the terms and conditions of the embedded conversion features based on the guidance of ASC 815-15 “Embedded Derivatives” to determine if there was an embedded derivative requiring bifurcation. An embedded derivative instrument (such as a conversion option embedded in the deferred compensation) must be bifurcated from its host instruments and accounted for separately as a derivative instrument only if the “risks and rewards” of the embedded derivative instrument are not “clearly and closely related” to the risks and rewards of the host instrument in which it is embedded. Management concluded that the embedded conversion feature of the deferred compensation was not required to be bifurcated because the conversion feature is clearly and closely related to the host instrument, and because of the Company’s limited trading volume that indicates the feature is not readily convertible to cash in accordance with ASC 815-10, “Derivatives and Hedging”. Effective February 1, 2023, a large portion of the 2020 Convertible Obligations were adjusted. The maturity date of the notes has been extended to September 15, 2025.

Effective January 9, 2025, the Board of Directors amended the terms of the 2020 Adjusted Convertible Note owned by Ed Schafer, who retired from the Company’s Board of Directors on December 31, 2024. The maturity date of the 2020 Adjusted Convertible Note has been extended to September 15, 2025.

On September 15, 2025, a settlement was reached with Mr. Schafer to cancel the 2020 Adjusted Convertible Note, effective on that date.

As of June 30, 2026, the remaining unadjusted portion of the 2020 Convertible Obligation balances, including accrued interest, owed Bassani Family Trusts and Smith were nil. As of June 30, 2025, the remaining unadjusted portion of the 2020 Convertible Obligation balances, including accrued interest, owed Bassani Family Trusts (and his donees) and Smith, were $386,676 and $125,919, respectively.

The Company recorded interest expense of $3,690 and $17,521 for the years ended June 30, 2026 and 2025, respectively.

Effective February 1, 2023, three (3) directors/officers of the Company agreed to adjust the provisions of long-term convertible obligations (including most of the 2020 Convertible Obligations and September 2015 Convertible Notes) owed to them by the Company in a manner which reduced the indebtedness of the Company by 80% (approximately $3.47 million, in aggregate) while equitably maintaining existing conversion rights. Because the modifications were with affiliates that are related parties, the debt modification was treated as an equity transaction. The Company recorded a deemed dividend for the reductions.

Smith, Bassani and Schafer, adjusted/reduced the principal owed to them by $1,109,649, $1,939,670 and $424,873, respectively. Subsequent to the adjustment, the adjusted portion of the 2020 Convertible Obligations were renamed Adjusted 2020 Convertible Obligations (see above and Note 8.).

BION ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSYEARS ENDED JUNE 30, 2026 AND 2025

September 2015 Convertible Notes

During the year ended June 30, 2016, the Company entered into September 2015 Convertible Notes with Bassani, Schafer and a Shareholder which replaced previously issued promissory notes. The September 2015 Convertible Notes bear interest at 4% per annum, have maturity dates of July 1, 2024, and may be converted at the sole election of the noteholders into restricted common shares of the Company at a conversion price of $0.60 per share. As the conversion price of $0.60 approximated the fair value of the common shares at the date of the September 2015 Convertible Notes, no beneficial conversion feature exists. The maturity date of the notes has been extended to September 15, 2025 forall note holders. On September 15, 2025 the maturity date for two of the 2015 Convertible Notes was extended to September 15, 2027.

Effective January 16, 2025, Mr. Schafer voluntarily surrendered 36,918 shares of common stock that would have been issued as the result of the conversion of his $4,246 Adjusted 2015 Convertible Note. The note was convertible at $0.115 per share.

As of June 30, 2026, the remaining unadjusted portion of the 2015 Convertible Notes balances including accrued interest owed Bassani, Schafer and Shareholder are nil, nil and $506,223, respectively. The balances of the September 2015 Convertible Notes as of June 30, 2025, including accrued interest owed Bassani, Schafer and Shareholder, were $169,383, nil and $491,107, respectively

The Company recorded interest expense of $16,200 and $20,317 for the years ended June 30, 2026 and 2025, respectively.

On September 15, 2025, settlements were reached with Mr. Smith, Mr. Schafer, and the Bassani family to surrender additional securities. Included in these agreements were provisions to cancel these convertible note obligations, effective on that date.

Convertible Bridge Loan/Default

On September 28, 2023, the Company entered into an agreement for a $1,500,000 bridge loan and executed documents including a convertible promissory note (“Note”) and a binding subscription agreement (“Subscription”) (collectively the Note and the Subscription are the “Bridge Loan Agreements”) with SEB LLC, a non-affiliated party (“Lender”). SEB and the note represented a strategic investment that would ‘anchor’ a larger capital raise. In addition to SEB, it was to include an offering to Bion shareholders, alongside new retail and institutional investors introduced by Titan Partners, the NY investment banking firm Bion engaged to underwrite the offering. The Bridge Loan Agreements required the Lender to loan the Company $1,500,000 in six monthly tranches of $250,000 commencing October 2023. All sums advanced under the Bridge Loan Agreements (and accrued interest thereon) would be due and payable (with interest accrued at 9% per annum) on October 1, 2024 if not previously converted into securities of the Company. The Note is convertible at $1.00 per unit, at the sole election of the Lender, into units consisting of one share of the Company’s common stock and a warrant to purchase one half share. The initial $250,000 tranche was received by the Company on October 5, 2023. However, no further funds were received by the Company from the Lender.

The balances of the Convertible Bridge Loan, including accrued interest, are $491,256 and $454,957 as of June 30, 2026 and June 30, 2025, respectively.

On May 10, 2024 the Company received $150,000 from affiliates of the Bridge Loan Lender on terms not yet finalized and included in an agreement. These funds were received in the context of negotiations/discussions regarding a potential larger investment by affiliates and/or associates of the Lender but no further funds were received and the larger transaction was never completed. The funds were used primarily to re-initiate operations at the Initial Project. The Company is currently involved in discussions with representatives of SEB in an effort to achieve a mutually satisfactory resolution.

The Company recorded interest expense of $36,298 and $36,298 for the years ended June 30, 2026 and 2025, respectively.

BION ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSYEARS ENDED JUNE 30, 2026 AND 2025

May 2024 Convertible Notes

During the year ended June 30, 2024, the Company entered into May 2024 Convertible Notes with five individuals. The May 2024 Convertible Notes bear interest at 6% per annum, had maturity dates of December 31, 2025, and may be converted at the sole election of the noteholders into one restricted common shares and one warrant of the Company at a conversion price of $1.00 per unit. The maturity date of the notes has been extended to December 31, 2026. As the conversion price of $1.00 approximated the fair value of the common shares at the date of the May 2024 Convertible Notes, no beneficial conversion feature exists.

The balances of the May 2024 Convertible Notes including accrued interest owed is $140,567 and $133,067 as of June 30, 2026 and June 30, 2025, respectively.

The Company recorded interest expense of $7,500 and $7,500 for the year ended June 30, 2026 and 2025, respectively.

Note payable - related party (BLG)

To help alleviate the company’s short-term cash needs following the management challenges in 2024, three affiliates of the Company (Greg Schoener, Interim COO & Director; Turk Stovall, previous Director; Bob Weerts, now-deceased Director) and two shareholders (one of whom is the brother of Greg Schoener) began advancing money to Bion to cover critical payables. Schoener, Weerts, and the two non-affiliate members were also large Bion shareholders, prior to the formation of BLG.

On October 22, 2024, Bion's Board of Directors ratified an agreement with the Bion BLG, LLC, loan group, effective October 15, 2024, to purchase a Convertible Promissory Note in the principal amount of up to $500,000. The Company received advances during the year ended June 30, 2025 in the amount of $399,763 and interest was applied based on the date the funds were received. The Company received an additional amount of $15,972 during the year ended June 30, 2026. The note bore interest at 7.5% per annum and had a maturity date of April 15, 2025.

At that time, three Bion Directors (Schoener, Stovall – former/resigned, and Weerts – former/deceased) were members of the loan group and together comprised 60% ownership of the loan group (each member owns 20%). The Note is secured by the Company's Intellectual Property (IP)/patents. The Note will convert into securities in the Company at the price of a later capital raise (or other source of funding) in excess of $3.0 million, which had to be completed within six (6) months.

Effective May 29, 2025, the Company entered into a Forbearance Agreement with Bion BLG, LLC, extending the maturity date of the BLG Note to July 15, 2025 (See Bion’s Form 8-K, dated May 30, 2025).

On July 24, 2025, the Company entered into a Forbearance Agreement with Bion BLG, LLC, (effective July 15, 2025) extending the maturity date of the BLG Note to January 15, 2026 (attached as exhibit). The agreement was ratified by Bion’s Board on July 24, 2025. Under the terms of the Forbearance Agreement, the amounts outstanding under the Note will continue to bear interest at a rate of 9% per annum. Bion agreed to a new formula to determine BLG’s obligation for up to $100,000 in legal costs related to litigation over delinquent payment for construction costs incurred at Bion’s demonstration facility near Fair Oaks, IN (see Bion’s Forms 8-K, dated April 17, May 30 and July 24, 2025). Bion BLG, LLC, also extended their agreement to share their collateral with investors in the three prior Shareholder Note offerings, with investors participating in a new offering, dated July 25, 2025.

On January 8, 2026, BLG informed Bion it was extending the maturity date of its Convertible Promissory Note’s Second Forbearance Agreement, with an effective date of July 15, 2025 (see 8-K filed July 24, 2025), under the same terms and conditions (including the collateral sharing agreement), until June 30, 2026. In the fourth forbearance signed July 14, 2026, BLG extended the maturity date to January 31, 2027. BLG also extended their agreement to share their collateral with investors in the three prior Shareholder Note offerings, with investors participating in a new offering, dated January 8, 2026.

The balances of the BLG note payable including accrued interest owed is $475,849 and $423,053 as of June 30, 2026 and June 30, 2025, respectively.

The Company recorded interest expense of $36,825 and $23,290 for the years ended June 30, 2026 and 2025, respectively.

BION ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSYEARS ENDED JUNE 30, 2026 AND 2025

Convertible notes (shareholder notes)

The Company has issued multiple series of convertible notes to various individuals from November 1, 2024 through June 30, 2026. The convertible notes bear interest at a rate of 7.5% per annum. The original maturity date for the first four offerings in the series was December 31, 2025 and the last offering was June 30, 2026. All of which have subsequently been extended to December 31, 2026.

The Notes will automatically convert into units of the Company ("Units") upon the closing of a later capital raise in which the Company raises aggregate capital of at least $3 million. The conversion will occur at the price of that future capital raise. The Notes are secured by the Company's Intellectual Property (IP)/patents, which security is shared with the BLG.

The aggregate balances of all convertible notes, including accrued interest, are $1,287,739 and $435,093 as of June 30, 2026 and June 30, 2025, respectively.

The Company recorded interest expense of $63,845 and $9,093 for the years ended June 30, 2026 and 2025, respectively.

Convertible notes payable – related party

Included in the July 2025 convertible notes is a $25,000 note issued on July 7, 2025 to Stephen Posner, a director of the Company. The note bears interest at 7.5% per annum, matures on December 31, 2026, as extended, and converts on the same terms as the other notes in the offering. No principal or interest has been paid on the note.

As of June 30, 2026, the balance of the note, including accrued interest, was $26,839. Interest expense on the note was $1,839 for the year ended June 30, 2026.

Demand note payable – related party

On August 11, 2025, the Company issued an unsecured demand note payable to Salvatore Zizza, a member of the Company's Board of Directors, in exchange for cash proceeds of $24,743. The note bears interest at 10% per annum, has no stated maturity date, and is payable upon demand of the holder. During the year ended June 30, 2026, the Company repaid $5,000 of principal. No interest has been paid on the note.

As of June 30, 2026, the outstanding principal balance was $19,743 and accrued interest was $2,196, for a total of $21,940, which is included in demand note payable – related party, a current liability, in the consolidated balance sheet. Interest expense on the note was $2,196 for the year ended June 30, 2026.

The scheduled maturities of the Company's debt, including accrued interest, as of June 30, 2026, by fiscal year ending June 30, are as follows:

6. STOCKHOLDERS’ EQUITY:

Write down of carry value of Initial Project

Effective June 30, 2024, at the same time the Initial Project was deemed placed in service, the Board of Directors determined that the capitalized carrying value of the Initial Project on the Company balance sheet as of that date be reduced to $0 in order to conform to the applicable accounting practices, because the Initial Project was recently reclassified as largely a research & development facility and is located on land subject to a short term lease (as described above in Item 7, Management’s Discussion and Analysis). As a result, a large ‘one time/non-recurring’ ‘non-cash’ charge of $9,460,425 has been taken by the Company at that date which charge reduced the Company shareholders’ equity to ($5,808,501) and resulted in a loss of $11,691,115 for the 2024 fiscal year.

“Give-back” Agreements to Additional Paid in Capital

Effective April 1, 2024 the Company entered into two material definitive agreements (“Giveback Agreements”) regarding voluntary surrender for cancellation of securities of the Company (and related matters) by: a) members of the family of Dominic Bassani, recently deceased former Chief Executive Officer and (with his family) the Company’s largest shareholder (collectively “Bassani Family”)(see Exhibit 10.1)(“Bassani Family Agreement”), and b) Mark A. Smith, recently retired President of the Company and a director (see Exhibit 10.2)(“MAS Agreement”). The Bassani Family and Smith entered into these agreements with the intention of mitigating dilution to shareholders as new, successor management is added to the Company’s management team. The “giveback” agreements were treated as equity transactions because the forfeitures were with affiliates that are related parties.

The Bassani Family agreed to surrender not less than approximately 20% of its Company holdings (as of December 2023), which surrender would increase to approximately 30% based on certain financing performances. The Bassani Family elected to surrender deferred compensation of $652,252 (for 770,792 shares), $17,734 of partial surrender of the 2015 adjusted replacement note (for 154,208 shares) and 4,025,000 options as of June 30, 2024. The Bassani Family Agreement also sets forth requirements regarding conversion of convertible notes held by members of the Bassani Family after the security surrender.

On January 18, 2025, under the Bassani Family Agreement described above, Bion cancelled 1,237,500 warrants owned by the Bassani Family. Under the terms of the Agreement, the Bassani Family was required to surrender an additional 5% of their holdings after Bion successfully raised $500,000 in funding, following the date of the agreement. The warrants had a net exercise cost of $0.1875.

MAS agreed to surrender approximately 30% of his Company holdings (as of December 2023). Immediately upon the effectiveness of the MAS Agreement, he cancelled all Company options held by him (2,425,000, in aggregate) and waived $56,250 of accrued deferred compensation (convertible into 75,000 shares of the Company’s common stock). The MAS Agreement also sets forth requirements regarding conversion of convertible notes held by MAS after the security surrender and references the retirement of MAS on or before May 15, 2024.

BION ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSYEARS ENDED JUNE 30, 2026 AND 2025

Subsequently, and effective June 27, 2024, the Board of Directors of the Company agreed to amend the terms of the agreements dated April 1, 2024. The amendments solely extend any dates of certain required conversions and/or exercises (and related promissory note maturity dates and warrant expiration dates), if any, that were earlier than January 15, 2025, to said date.

On January 9, 2025, the Company agreed to amend the terms of the agreements dated April 1, 2024 regarding voluntary surrender for cancellation of securities of the Company (and related matters) by: a) members of the family of Dominic Bassani, recently deceased former Chief Executive Officer and (with his family) the Company’s largest shareholder (collectively “Bassani Family”)(see Form 8-K dated April 3, 2024, Exhibit 10.1)(“Bassani Family Agreement”), and b) Mark A. Smith, former President of the Company and a director (“MAS”)(see Form 8-K dated April 3, 2024, Exhibit 10.2)(“MAS Agreement”). The Bassani Family and MAS entered into these agreements with the intention of mitigating dilution to shareholders as new, successor management is added to the Company’s management team. The amendments solely extend any dates of certain required conversions and/or exercises (and related promissory note maturity dates and warrant expiration dates), if any, that were dated January 15, 2025, to April 15, 2025. No changes were made regarding any ‘give backs’ of securities of the Company.

Effective September 15, 2025, family members of the late Dominic Bassani, Bion’s former CEO, Mark A. Smith, previously a Director and President, and Edward Schafer, previously a Director, have each individually agreed to a settlement (“Settlement Agreements”) that will simplify Bion’s capital structure and substantially reduce the number of Fully Diluted Shares. In consideration of the cancellation of various obligations, as noted below, and security instruments held by the Holders, including without limitation deferred compensation, convertible notes, warrants, and options, that could have increased the Company's outstanding shares by up to 22,498,405 shares, if all were fully converted or exercised. The Holders (as a whole) will receive, in aggregate, 8,101,746 shares of common stock. The transactions will produce a net reduction in fully diluted shares of approximately 14,396,659 shares. Included in the Bassani family agreement was a provision to cancel their remaining 5% obligation under the Giveback Agreement.

On September 18, 2025 the Bassani family agreed to 7,200,000 shares and surrendered 7,506,369 warrants, 2020 Adjusted Trust Note balance of $459,277, 2020 Collateral Note balance of $389,318, Replacement Note balance $170,466, adjusted replacement note balance of $7,908, deferred compensation balance of $12,409, accrued life insurance payable balance of $140,000, offset with the subscription receivable balance of $555,333, representing up to 18,466,011 shares if fully converted or exercised.

On September 17, 2025, MAS agreed to 400,000 shares and surrendered 2020 Collateral Note balance of $126,958, deferred compensation balance of $84,664, expense reimbursement balance of $41,246, offset with the subscription receivable balance of $38,531, representing up to 1,188,428 shares if fully converted or exercised.

On September 18, 2025, Schafer agreed to 501,746 shares and surrendered 23,934 warrants, 1,215,000 options and the 2020 Adjusted Convertible Note balance of $101,974, representing up to 2,843,966 shares if fully converted or exercised.

On January 22, 2026, the Board of Directors ratified granting a 90-day extension to the issuance of 7,701,746 settlement shares to two affiliates of the Company (Danielle Lominy and Christopher Parlow, family members of the late Dominic Bassani, Bion’s former CEO), and two non-affiliates of the Company (Dominic Bassani’s spouse and Edward Schafer, previously a Director) (referred to hereinafter collectively as ‘Holders’), effective January 15, 2026. The Holders have agreed to the extension.

On April 15, 2026, at the request of Danielle Lominy, Christopher Parlow, Edward Schafer, and Dominic Bassani’s spouse, Bion agreed to extend the issuance of their settlement shares to December 31, 2026, subject to a capital raise or other source of funding which would trigger the immediate issuance of the shares.

BION ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSYEARS ENDED JUNE 30, 2026 AND 2025

Series B Preferred stock:

The Company has 50,000 shares of Series B redeemable convertible preferred stock, par value $0.01 per share, authorized. All previously outstanding shares of the Company's Series B redeemable convertible preferred stock were redeemed during the fiscal year ended June 30, 2022. No shares of Series B Preferred stock were issued or outstanding, andno dividends were declared, during the fiscal years ended June 30, 2026 and 2025. The Company hadno liability related to the Series B Preferred stock as of June 30, 2026 or 2025.

Common stock:

Holders of common stock are entitled to one vote per share on all matters to be voted on by common stockholders. In the event of liquidation, dissolution or winding up of the Company, the holders of common stock are entitled to share in all assets remaining after liabilities have been paid in full or set aside and the rights of any outstanding preferred stock have been satisfied. Common stock has no preemptive, redemption or conversion rights. The rights of holders of common stock are subject to, and may be adversely affected by, the rights of the holders of any outstanding series of preferred stock or any series of preferred stock the Company may designate in the future.

Centerpoint holds 704,309 shares of the Company’s common stock. These shares of the Company’s common stock held by Centerpoint are for the benefit of its shareholders without any beneficial interest.

During the year ended June 30, 2026,330,144 shares of common stock were issued as cashless warrant exercises.

During the year ended June 30, 2026,400,000 shares of common stock were issued to Mark Smith for the Settlement Agreement.

During the year ended June 30, 2025,159,228 shares of restricted common stock were issued for consulting services valued at $34,500.

Warrants:

As of June 30, 2026, the Company had approximately 6 million warrants outstanding, with exercise prices from $0.60 to $1.60 and expiring on various dates through December 31, 2026.

The weighted-average exercise price for the outstanding warrants is $0.91, and the weighted-average remaining contractual life as of June 30, 2026 is.44 years.

On March 31, 2026 the Company modified 1,915,090 warrants by extending the exercise date from March 31, 2026 to December 31, 2026. The valuation method used by the Company determines the valuation based on prior private placements. 9 month extensions were valued at $0.0375. The Company had interest expense of $71,816.

On December 31, 2025 the Company modified 2,020,090 warrants by extending the exercise date from December 31, 2025 to March 31, 2026. The valuation method used by the Company determines the valuation based on prior private placements. Three month extensions were valued at $0.013. The Company had interest expense of $25,251.

On October 28, 2025 the Company modified 35,000 warrants by extending the exercise date from November 30, 2025 to September 30, 2026. The valuation method used by the Company determines the valuation based on prior private placements. Ten month extensions were valued at $0.042. The Company had interest expense of $1,458.

BION ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSYEARS ENDED JUNE 30, 2026 AND 2025

On October 28, 2025 the Company modified 50,000 warrants by extending the exercise date from October 31, 2025 to September 30, 2026. The valuation method used by the Company determines the valuation based on prior private placements. Eleven month extensions were valued at $0.046. The Company had interest expense of $2,292.

On July 15, 2025 the Company modified 3,000,000 warrants by extending the exercise date from July 15, 2025 to September 15, 2025. The valuation method used by the Company determines the valuation based on prior private placements. Two month extensions were valued at $0.023. The Company had non-cash employee compensation of $68,750.

On July 15, 2025 the Company modified 5,909,869 warrants by extending the exercise date from July 15, 2025 to August 15, 2025. On August 15, 2025 the Company modified the same warrants by extending the exercise date from August 15, 2025 to September 15, 2025. The valuation method used by the Company determines the valuation based on prior private placements. One month extensions were valued at $0.004. The Company had non-cash employee compensation of $48,697.

On September 30, 2025 the Company modified 1,222,005 warrants by extending the exercise date from September 30, 2025 to September 30, 2026. The valuation method used by the Company determines the valuation based on prior private placements. Twelve month extensions were valued at $0.05. The Company had interest expense of $61,100.

On September 15, 2025, settlements were reached with MAS, the Bassani family and Schafer, to surrender additional securities. Included in the Bassani family agreement was a provision to cancel their remaining 5% obligation under the Giveback Agreement. For details on the settlement agreement, see Giveback and Settlement Agreements above.

Stock options:

On April 7, 2022 the Company’s shareholders approved the Bion Environmental Technologies, Inc. 2021 Equity Incentive Award Plan (the “Equity Plan”). The Equity Plan provides for the issuance of options (and/or other securities) to purchase up to 30,000,000 shares of the Company’s common stock. The Equity Plan was adopted and ratified by Board of Directors on April 8, 2022. Terms of exercise and expiration of options/securities granted under the Equity Plan may be established at the discretion of the Board of Directors, but no option may be exercisable for more than ten years. No grants have been made pursuant to the Equity Plan as of the date of this report.

The Company’s 2006 Consolidated Incentive Plan, as amended during the year ended June 30, 2021 (the “2006 Plan”), provides for the issuance of options (and/or other securities) to purchase up to 36,000,000 shares of the Company’s common stock. Terms of exercise and expiration of options/securities granted under the 2006 Plan may be established at the discretion of the Board of Directors, but no option may be exercisable for more than ten years. The 2006 Plan will be maintained to service grants already made thereunder (together with new grants, if any, to employees and consultants who already had received grants pursuant to its terms).

The Company recorded compensation expense related to employee stock options of $7,260 and $332,128 for the year ended June 30, 2026 and 2025, respectively. The Company granted nil and nil options for the year ended June 30, 2026 and 2025, respectively.

On July 15, 2024 the Company modified 3,806,600 options by extending the exercise date.3,736,600 options held by employees and directors were extended two years from December 31, 2024 to December 31, 2026.70,000 options with a non-employee were extended one year from December 31, 2024 to December 31, 2025. The Company used the Black- Scholes valuation method and expensed $332,128 to non-cash compensation.

On September 15, 2025, a settlement was reached with Mr. Schafer to cancel the 2020 Adjusted Convertible Note and surrender 1,215,000 options, effective on that date. For details on the settlement agreement, see Giveback and Settlement Agreements above.

On December 31, 2025 the Company modified 430,000 options held by employees, directors and non-employees by extending the exercise date three months from December 31, 2025 to March 31, 2026. The Company used the Black- Scholes valuation method and expensed nil to non-cash compensation.

BION ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSYEARS ENDED JUNE 30, 2026 AND 2025

On March 31, 2026 the Company modified 430,000 options held by employees, directors and non-employees by extending the exercise date nine months from March 31, 2026 to December 31, 2026. The Company used the Black- Scholes valuation method and expensed $7,260 to non-cash compensation.

A summary of option activity under the 2006 Plan for years ended June 30, 2026 and 2025 is as follows:

The total fair value of stock options that vested during the years ended June 30, 2026 and 2025 was nil and nil, respectively. As of June 30, 2026, the Company had no unrecognized compensation cost related to stock options.

7. SUBSCRIPTION RECEIVABLE - AFFILIATES:

As of June 30, 2025, the Company has three interest bearing, secured promissory notes with an aggregate principal amount of $428,250 ($551,766, including interest) from Bassani which were received as consideration for purchases of warrants to purchase 5,565,000 shares, in aggregate, of the Company’s restricted common stock, which warrants have an exercise price of $0.75 (with a 75% exercise price adjustment provision) and have expiry dates ranging from December 31, 2024 (extended to July 15, 2025) to December 31, 2025 (subject to extension rights) secured by portions of Bassani Family Trust’s 2020 Convertible Obligation and Bassani Family Trust’s September 2015 Convertible Notes. The secured promissory notes are payable July 15, 2025 (extended to September 15, 2025).

As of June 30, 2025, the Company has an interest bearing, secured promissory note for $30,000 ($38,282 including interest) from Smith as consideration to purchase warrants to purchase 300,000 shares of the Company’s restricted common stock, which warrants are exercisable at $0.60 (with a 75% exercise price adjustment provision) and had expiry dates of December 31, 2024 (extended to September 15, 2025). The promissory note bears interest at 4% per annum and is secured by $30,000 original principal ($38,282 including interest) of Smith’s 2020 Convertible Obligations. The secured promissory note is payable July 15, 2025 (extended to September 15, 2025).

As of June 30, 2025, the Company has an interest bearing, secured promissory note for $19,400 ($25,323 including interest) from Scott as consideration to purchase warrants to purchase 485,000 shares of the Company’s restricted common stock, which warrants are exercisable at $0.75 (with a 90% exercise price adjustment provision) and have expiry dates of December 31, 2024 (extended to December 31, 2026). The promissory note bears interest at 4% per annum and is secured by the warrants (which 400,000 were gifted subject to the security interest).

As of June 30, 2025, the Company has one interest bearing, secured promissory note with an aggregate principal amount of $27,000 ($35,244 including interest) from one employee as consideration to acquire warrants to purchase 570,000 shares of the Company’s restricted common stock, which warrants are exercisable at $0.75 (with a 90% exercise price adjustment provision) and have expiry dates of December 31, 2024 (now extended to December 31, 2026). The promissory note bears interest at 4% per annum and is secured by a perfected security interest in the warrants, and are payable on December 31, 2026.

As of September 15, 2025 the subscription receivable balance of $593,864 (including $135,614 of interest) was included in the Giveback Agreement, see Note 6 Stockholders Equity for details of the giveback and settlement agreements.

As of September 30, 2025, the Company and Scott agreed to offset the subscription receivable with the Deferred Compensation balance; $19,400 receivable and $6,117 in accumulated interest were reduced from the deferred compensation balance.

As of September 30, 2025, the Company and an employee agreed to offset the subscription receivable with the Deferred Compensation balance; $27,000 receivable and $8,513 in accumulated interest were reduced from the deferred compensation balance.

As of June 30, 2026, the Company has no outstanding subscription receivables.

These secured promissory notes are recorded as “Subscription receivable—affiliates” on the Company’s balance sheet pending payment.

BION ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSYEARS ENDED JUNE 30, 2026 AND 2025

8. COMMITMENTS AND CONTINGENCIES:

A: Employment/Consulting (and related)agreements:

Stephen Craig Scott (“Scott”) was appointed interim CEO effective June 1, 2024. Scott had previously been working with the Company as an employee/consultant since 1993 in various positions including Director of Communications, SVP- Capital Markets and Head of Business Development. On October 25, 2023, Scott entered into an agreement with the Company which included provisions for a monthly salary of $14,000 almost all of which Scott deferred to help the Company conserve cash. For the years ended June 30, 2026 and 2025, deferred compensation was $150,000 and $163,000 and Scott was paid $18,000 and $5,000 respectively.

Effective April 1, 2024 the Company entered into two material definitive agreements regarding voluntary surrender for cancellation of securities of the Company (and related matters) by: a) members of the family of Dominic Bassani, recently deceased former Chief Executive Officer and (with his family) the Company’s largest shareholder (collectively “Bassani Family”)(“Bassani Family Agreement”), and b) Mark A. Smith, recently retired President of the Company and a director (“MAS”) (“MAS Agreement”), as described in multiple places herein.

Until his retirement on July 31, 2024, MAS held the positions of Director, President, Interim Chief Financial Officer and General Counsel of Company (and its subsidiaries) under various agreements (and extensions) and terms since March 2003. Over the years, MAS accumulated various obligations and security instruments, including without limitation deferred compensation, convertible notes, warrants, and options, as noted above in 6. STOCKHOLDERS EQUITY, Giveback and Settlement Agreements. On September 18, 2025, MAS surrendered all obligations and security instruments and accepted 400,000 common shares in settlement. For the years ended June 30, 2026 and 2025, MAS was paid nil and $5,000, respectively, of cash compensation.

Dominic Bassani, who was serving as the Company’s Chief Operating Officer (‘COO’) at the time, passed away on November 11, 2023. He had served as the Company’s Chief Executive Officer (‘CEO’) since 2011 (any reference to Brightcap or Bassani for all purposes are referring to the same individual). Over the years, Bassani accumulated various obligations and security instruments, including without limitation deferred compensation, convertible notes, warrants, and options, as noted above in 6. STOCKHOLDERS EQUITY, Giveback and Settlement Agreements. On September 18, 2025, the Bassani family surrendered all obligations and security instruments and accepted 7,200,000 common shares in settlement. For the years ended June 30, 2026 and 2025, Bassani/Brightcap was paid nil and nil, respectively, of cash compensation.

BION ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSYEARS ENDED JUNE 30, 2026 AND 2025

B: Initial Project:

On January 28, 2022, Bion entered into a Purchase Order Agreement with Buflovak and Hebeler Process Solutions (collectively ‘Buflovak’) in the amount of $2,665,500 for the core of the ‘Bion System’ portion of the Initial Project at Fair Oaks, IN. In addition to the Purchase Order, through June 30, 2024 the Company has incurred additional costs of $6,794,925 on the Initial Project for capitalized interest and costs, non-cash compensation, equipment and consulting fees. In total, the Company has incurred costs of $8,406,434 on the Initial Project, not including capitalized labor and interest.

Management previously believed that the Initial Project had reached the point where it could be appropriately deemed ‘placed in service’ at January 1, 2024. However, discussions with the key technical and engineering personnel involved at the Initial Project during the recently concluded quarter convinced management that such a characterization was premature as some key modules had not yet been completed and/or fully tested. The Company’s Board of Directors re-evaluated the classification/status of the Initial Project as part of the Company’s annual review process and determined that the Initial Project had been ‘placed in service’ at the June 30, 2024, fiscal year end.

Further, after extensive discussion, it was determined that the ‘carrying value’ of the Initial Project on the Company balance sheet as of that date be reduced to $0 in order to conform to accepted accounting practices, because the Initial Project was recently reclassified as largely a research & development facility and is located on land subject to a short-term lease (as described above in Item 7, Management’s Discussion and Analysis). As a result, a large ‘one time/non-recurring’ ‘non-cash’ charge of $9,460,425 was taken by the Company on June 30, 2024, which charge reduced the Company shareholders’ equity to ($5,808,501) and resulted in a loss of $11,691,115 for the 2024 fiscal year.

GAAP accounting rules notwithstanding, the Fair Oaks facility has been and continues to be the most important asset of the Company. In addition to providing data needed to optimize a full-scale commercial system, Bion has conducted dozens of demonstrations with developers and operators, engineering firms, potential fertilizer and finance partners, and others. Further, Fair Oaks is operating at capacity to produce samples of Bion’s Ammonium Bicarbonate fertilizers for testing by various stakeholders.

On April 16, 2025, the Company was served a summons by Hamstra Builders, Inc. (“Hamstra”) related to a Notice of Intent to file a Mechanic’s Lien, that was filed April 16, 2024, and has been disclosed in our public filings since that date. Hamstra is seeking to recover $1,494,513 in unpaid invoices related to the construction of Bion’s Ammonia Recovery System at Fair Oaks, Indiana. This sum includes $653,915 owed to Dilling Group, Inc., a subcontractor of Hamstra. Dilling filed suit to recover that amount on March 31, 2025, which was disclosed in Bion’s 8-K, dated April 7, 2025.

On July 14, 2026, Bion executed a Settlement Agreement with Hamstra Builders, Inc. The settlement, along with a separate agreement between Hamstra and Dilling Group, a subcontractor, results in the dismissal by both parties of all mechanics liens and litigation related to the construction of the Ammonia Recovery System at Fair Oaks. See Note 11, Subsequent Events for more details on the settlement with Hamstra, Dilling, and NPHLLC.

BION ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSYEARS ENDED JUNE 30, 2026 AND 2025

C: Lease:

The Company entered into an agreement on September 23, 2021, to lease approximately four acres of land near Fair Oaks, Indiana, for the development site of its Initial Project. The 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 as part of Accounts Payable at June 30, 2026. See Note 11, Subsequent Events for details on the settlement reached with the lessor.** **

D: Litigation (and related matters):

On April 16, 2025, the Company was served a summons by Hamstra Builders, Inc. (“Hamstra”) along with three other defendants: Bion Technologies, Inc. (“Biontech”), Bion 3G-1, LLC (“3G-1”), both entities of Bion Environmental Technologies, Inc., and North Prairie Holdings, LLC (‘NPHLLC”) the property lessor. The Hamstra suit is related to the Notice of Intent to file a Mechanic’s Lien, that was filed April 16, 2024, and has been disclosed in our public filings since that date. Bion has retained counsel in Indiana to represent the company in these actions. Hamstra is seeking to recover $1,494,513 in unpaid invoices related to the construction of Bion’s Ammonia Recovery System at Fair Oaks, Indiana. This sum includes $653,915 owed to Dilling Group, Inc., a subcontractor of Hamstra. Dilling filed suit to recover that amount on March 31, 2025, which was disclosed in Bion’s 8-K, dated April 7, 2025. These amounts are included in Accounts payable and accrued expenses.

On July 14, 2026, Bion executed a Settlement Agreement with Hamstra Builders, Inc. The settlement, along with a separate agreement between Hamstra and Dilling Group, a subcontractor, results in the dismissal by both parties of all mechanics liens and litigation related to the construction of the Ammonia Recovery System at Fair Oaks. See Note 11, Subsequent Events for details on the settlement with Hamstra, Dilling, and NPHLLC.

The Company currently is not involved in any other material litigation or similar events.

9. INCOME TAXES:

The Company adopted ASU 2023-09,Income Taxes (Topic 740): Improvements to Income Tax Disclosures, for the year ended June 30, 2026, and has applied it retrospectively to all periods presented.

All of the Company’s loss before income taxes was generated in the United States. The Company has no foreign operations and no foreign income or losses. The Company recorded no current or deferred federal, state or foreign income tax expense or benefit for the years ended June 30, 2026 and 2025.

The following is a reconciliation between the expected federal income tax expense (benefit), computed by applying the federal statutory rate of 21% to loss before income taxes, and the actual income tax expense (benefit) for the years ended June 30, 2026 and 2025:

BION ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSYEARS ENDED JUNE 30, 2026 AND 2025

The Company paid no income taxes, net of refunds, to federal, state or foreign jurisdictions during the years ended June 30, 2026 and 2025.

As of June 30, 2026, the Company had federal net operating loss carryforwards (“NOLs”) of approximately $39,140,000. Of this amount, approximately $16,975,000 was generated in tax years beginning before January 1, 2018 and expires on various dates from 2030 through 2038. The remaining approximately $22,165,000 was generated in tax years beginning after December 31, 2017, does not expire, and may be used to offset up to 80% of taxable income in any year. The utilization of the NOLs may be limited under Section 382 of the Internal Revenue Code.

The Company’s deferred tax assets as of June 30, 2026 and 2025 are estimated as follows:

The Company has provided a valuation allowance of 100% of its net deferred tax assets due to the uncertainty of generating future profits that would allow for the realization of such deferred tax assets.

Reclassification of Prior-Year Amounts

Certain amounts in the prior-year income tax disclosures have been reclassified to conform to the current-year presentation. Certain deferred tax asset components as of June 30, 2025 were reclassified, resulting in an increase of $2,751,000 in both gross deferred tax assets and the related valuation allowance, from $16,021,000 to $18,772,000, with no effect on net deferred tax assets of $0 as of that date.

These reclassifications had no effect on previously reported income tax expense (benefit), net deferred tax assets, net loss, total assets, total liabilities, stockholders’ equity, or loss per share.

10.401(k) PLAN:

The Company maintained the Bion Technologies, Inc. 401(k) Profit Sharing Plan and Trust (the "401(k) Plan"), a defined contribution retirement plan for the benefit of its employees. The 401(k) Plan was a salary deferral only plan, and the Company did not match employee contributions. The 401(k) Plan was open to all employees over 21 years of age, with no service requirement.

The Company discontinued the 401(k) Plan effective July 7, 2025. The Company recognized no costs related to the 401(k) Plan during the fiscal years ended June 30, 2026 and 2025.

The Company discontinued the 401(k) plan as of July 7, 2025.

11. SUBSEQUENT EVENTS:

On July 14, 2026, Bion executed a Settlement Agreement with Hamstra Builders, Inc., the General Contractor for the Fair Oaks demonstration facility that was completed in July 2023. The settlement, along with a separate agreement between Hamstra and Dilling Group, a subcontractor, results in the dismissal by both parties of all mechanics liens and litigation related to the construction of the Ammonia Recovery System at Fair Oaks. The first lien was filed on April 16, 2024 and litigation commenced in April 2025; details have been disclosed in various SEC 8-K’s, 10-Q’s, and 10-K’s, since that time.

Bion will issue Hamstra a convertible promissory note in the amount of $1,774,512. Terms include a maturity date of December 31, 2026; interest at 10%; a cash payment of $653,915 at the time of a future Bion financing; and conversion of the balance into Bion common stock at the price of that financing (to be determined). As of June 30, 2026 there is a balance in Accounts Payable of $1,489,684 and the Company recorded $284,828 in interest expense. The Note and Settlement Agreement are attached as exhibits.

All holders of Bion’s Secured Convertible Promissory Notes, along with all holders of Bion’s May 2024 Convertible Promissory Notes, both Notes with a maturity date of June 30, 2026, have agreed to extend their maturity date, under the same terms until December 31, 2026.

The Bion Loan Group has agreed to extend its Secured Convertible Promissory Note, with a maturity date of June 30, 2026, under the same terms until January 31, 2027. Subsequent to yearend BLG has advanced an additional $7,634.

During July 2026, the Company entered into Convertible Notes with seven individuals for $185,000 in gross proceeds, less $750 in commissions. The Convertible Notes bear interest at 7.5% per annum, have maturity dates of December 31, 2026. The Convertible Notes will convert into Units in the Company at the terms of a later capital raise, in which the Company crosses the threshold of $3 million aggregate capital raised, including proceeds from the Shareholder Note offerings.

On August 12, 2026, the Board of Directors adopted a Director Compensation Policy for the Company's non-employee directors. Under the Policy, each non-employee director is entitled to an annual retainer of $50,000 for each of the fiscal years ended June 30, 2026 and ending June 30, 2027, and $25,000 for each fiscal year thereafter. The retainers for fiscal years 2026 and 2027 will be paid in shares of the Company's common stock at a price per share equal to the price in the Company's anticipated financing that triggers conversion of its outstanding convertible notes. Beginning with fiscal year 2028, retainers will be paid in shares based on the average closing price of the Company's common stock for the ten trading days ending June 30 of the preceding fiscal year. The Company currently has four non-employee directors. Because the Policy was adopted after June 30, 2026, no compensation expense or liability related to the Policy was recorded in the accompanying consolidated financial statements.

On August 25, 2026, Bion executed a Settlement and Mutual Release Agreement with North Prairie Holdings, LLC, the landlord of the real property in Newton County, Indiana on which Bion's Ammonia Recovery System demonstration facility at Fair Oaks is located, together with a related convertible promissory note issued by the Company in the initial principal amount of $162,500. The Settlement Agreement and Note are attached as exhibits to the 8-K dated August 27, 2026.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunder duly authorized.

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated: