As Filed with the Securities and Exchange Commission on April 13, 2001
Registration Statement No. 333-58654
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-2/A
AMENDMENT NO. 2
TO REGISTRATION STATEMENT ON FORM S-3 ON FORM S-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT of 1933
BION ENVIRONMENTAL TECHNOLOGIES, INC.
(Exact Name of Registrant in its Charter)
Colorado 84-1176672
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
18 East 50th Street, 10th Floor
New York, New York 10022
(212) 758-6622
(Address and telephone number of principal
executive offices and principal place of business)
Jon Northrop, Executive Vice President
Bion Environmental Technologies, Inc.
7921 Southpark Plaza, Suite 200
Littleton, Colorado 80120
(303) 738-0845
(Name, address and telephone number of agent for service)
Copies to: Stanley F. Freedman, Esq.
Krys Boyle Freedman & Sawyer, P.C.
600 Seventeenth Street, Suite 2700 South
Denver, Colorado 80202-5427
(303) 893-2300
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box: -- --
If any of the securities registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. -- X --
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. -- --
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. -- -- __________________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. -- -
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a)of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.
CALCULATION OF REGISTRATION FEE
==============================================================================
Proposed Proposed
Maximum Maximum
Title of Each Class Offering Aggregate Amount of
of Securities to be Amount to be Price Per Offering Registration
Registered Registered Share Price Fee
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Common Stock, 5,921,356 $0.95 $5,625,288 $1,406
no par value (1) (2) (2)
Common Stock, 481,552 $8.00 $3,852,416 $1,017
no par value (3) (4) (4)
Total $2,423 (5)
==============================================================================
(1) To be offered by Converting Holders.
(2) Estimated solely for the purpose of computing the amount of registration
fee based on the average of the closing bid and ask prices of our Common
Stock on the OTC Bulletin Board on April 10, 2001 which was $0.95 per
share.
(3) To be offered to holders of Class X Warrants.
(4) Based on exercise price of the Class X Warrants.
(5) Pursuant to Rule 457(p) the filing fee is being paid by applying a
portion of the $3,037 paid in connection with the filing of the
Registrant's Form S-3 Registration Statement initially filed as a Form
S-3 Registration Statement on November 3, 2000, which was withdrawn,
re-filed on Form S-3 and is now being converted to a Form S-2
Registration Statement.
PROSPECTUS SUBJECT TO COMPLETION DATED APRIL 13, 2001
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The information in this prospectus is not complete and may be changed. The
securities may not be sold until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an
offer to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
BION ENVIRONMENTAL TECHNOLOGIES, INC.
5,921,356 Shares of Common Stock
to be Offered by Converting Holders
481,552 Shares of Common Stock
Which may be Purchased by Holders of
Class X Warrants
The securities offered by this prospectus include 5,921,356 shares to be
offered for resale by the holders of certain warrants and debt instruments.
The shares to be offered for resale may be issued to the holders upon the
exercise of warrants or the conversion of the debt instruments they hold.
These persons may be deemed to be "underwriters" within the meaning of the
Securities Act.
Also included in the securities being offered by this prospectus are
481,552 shares that may be issued upon the exercise of Class X Warrants to the
holders of these warrants. The Class X Warrants are exercisable at $8.00 per
share through December 31, 2001. See "Plan of Distribution" beginning on page
16.
We will receive proceeds from the exercise of warrants, but not from the
conversion of currently outstanding debt. See "Use of Proceeds."
Our Common Stock is traded on the OTC Bulletin Board under the symbol
"BION." On April 11, 2001, the reported closing price for our Common Stock on
the OTC Bulletin Board was $.91.
____________________________
This investment involves a high degree of risk. You should purchase
shares only if you can afford a complete loss. SEE "RISK FACTORS" BEGINNING
ON PAGE 6.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of the prospectus. Any representation to the contrary is
a criminal offense.
We anticipate that sales may be effected from time to time, by or for the
accounts of the Converting Holders, in the over-the-counter market, in
negotiated transactions or otherwise. Sales, if any, will be made through
broker-dealers acting as agent for the converting polders or to broker-dealers
who may purchase the Common Stock as principals and thereafter sell the shares
from time to time in the over-the-counter market, in negotiated transactions
or otherwise. Sales, if any, will be made at market prices prevailing at the
times of the sales or at negotiated prices. See "Plan of Distribution"
beginning on page 16.
The date of this Prospectus is __________, 2001
AVAILABLE INFORMATION
We are subject to the information requirements of the Securities Exchange
Act of 1934, as amended and in accordance therewith file reports and other
information with the Securities and Exchange Commission. Such reports and
other information filed by us can be inspected and copied at the public
reference facilities of the Commission at Room 1024, Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549, and at the Regional Offices of the
Commission located at 7 World Trade Center, New York, New York 10048 and 500
West Madison, 14th Floor, Chicago, Illinois 60661. Copies can be obtained by
mail at prescribed rates. Requests for copies should be directed to the
Commission's Public Reference Section, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549. The public may obtain information on the
operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.
The Commission maintains a Web site (http://www.sec.gov) that contains
reports, proxy and information statements and other information regarding
registrants that file electronically.
We have filed with the Commission a Registration Statement on Form S-3 of
which this Prospectus constitutes a part, under the Securities Act of 1933, as
amended. This Prospectus does not contain all of the information set forth in
the Registration Statement, certain parts of which are omitted in accordance
with the rules of the Commission. For further information pertaining to us,
reference is made to the Registration Statement. Statements contained in this
Prospectus or any document incorporated herein by reference concerning the
provisions of documents are necessarily summaries of such documents, and each
such statement is qualified in its entirety by reference to the copy of the
applicable document filed with the Commission. Copies of the Registration
Statement are on file at the offices of the Commission, and may be inspected
without charge at the offices of the Commission, the addresses of which are
set forth above, and copies may be obtained from the Commission at prescribed
rates. The Registration Statement has been filed electronically through the
Commission's Electronic Data Gathering, Analysis and Retrieval System and may
be obtained through the Commission's Web site (http://www.sec.gov).
2
TABLE OF CONTENTS
PAGE
PROSPECTUS SUMMARY ......................................... 4
RISK FACTORS ............................................... 6
COMPANY INFORMATION ........................................ 12
USE OF PROCEEDS ............................................ 12
DETERMINATION OF OFFERING PRICE ............................ 12
RECENT MATERIAL CHANGES IN OUR BUSINESS ................... 12
CONVERTING HOLDERS . ....................................... 13
PLAN OF DISTRIBUTION ....................................... 17
DESCRIPTION OF COMMON STOCK ................................ 19
EXPERTS .................................................... 20
LEGAL MATTERS .............................................. 20
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION OF
OFFICERS AND DIRECTORS ......... .......................... 21
DOCUMENTS INCORPORATED BY REFERENCE ........................ 22
3
PROSPECTUS SUMMARY
The following is a summary of the pertinent information regarding this
offering. This summary is qualified in its entirety by the more detailed
information and financial statements and related notes incorporated by
reference in this Prospectus. The Prospectus should be read in its entirety,
as this summary does not contain all the facts necessary to make an investment
decision.
The Offering
------------
Securities Offered: Included in the shares being offered hereby are a total
of 1,549,856 shares that may be issued upon the exercise
of ten different classes of warrants that we currently
have outstanding. Also included are 4,371,500 shares
that may be issued upon the conversion of convertible
notes that are also currently outstanding. These shares
are to be offered by the holders of the warrants and
convertible notes. The number of shares which may be
issued upon conversion of the convertible notes is based
on an assumed conversion rate of $1.00 per share and
interest is calculated through the automatic conversion
date of each note at a rate of 10% per annum. The
actual conversion rate may be greater, and so fewer
shares may actually be issued. The holders of the
warrants and convertible notes are referred to in this
document as the "Converting Holders." It is currently
unknown how many of the Converting Holders will exercise
their warrants to purchase shares of our Common Stock.
The actual number of shares that would be issued upon
conversion of the notes is also unknown. We also do
not know whether any Converting Holders will decide to
sell any of these shares into the market.
Also included in the securities being offered hereby are
481,552 shares that may be issued upon the exercise of
outstanding Class X Warrants to the holders of those
warrants. The Class X Warrants are exercisable at $8.00
per share through December 31, 2001.
Offering Price: The shares being offered by Converting Holders who
decide to resell their shares into the marketplace from
time to time, will be made at the then current market
price. The Class X Warrants are exercisable at $8.00
per share.
Common Stock to be 19,469,593 shares. The number of shares outstanding
Outstanding after after the offering assumes that the Converting Holders
Offering exercise all of their warrants to purchase shares of our
Common Stock and all of the notes are converted into
Common Stock. It does not take into account additional
shares that may be received by Converting Holders as a
result additional interest accrued after April 30,2001
(approximately), none of which shares are included in
this Registration Statement. Prior to this offering,
as of March 31, 2001, we had 13,066,685 shares issued
and outstanding.
Dividend Policy We do not anticipate paying dividends on our common
stock in the foreseeable future.
4
Use of Proceeds The shares offered by this prospectus may be sold
by Converting Holders and we will not receive any
proceeds of the offering, except that we will receive
proceeds from the exercise of the warrants.
Risk Factors This offering involves a high degree of risk, elements
of which include:
- We Have a Very Limited Operating History
- We Have Incurred Substantial Losses and May Never
Achieve Profitability
- We Need Additional Working Capital; The Report of
Our Accountants Contains a "Going Concern"
Qualification
- Our Future Operations Will Depend on the Efforts
of our New Management Team and Our Business
Will Suffer if We Lose the Services of Any
Key Employees
- We Have Numerous Agreements with Related Parties
Which May Create Conflicts of Interest That
Could Hurt Our Business
- Our Management Controls Over 50% of Our Stock and
Can Elect All of Our Directors
- The Development of Our Technology Has Been Limited
to a Few Markets; We May Not Attract Enough
Customers to be Successful
- We Face Intense Competition Which Could Adversely
Affect Our Financial Performance
- Our Products Could Become Obsolete; We May Not be
Able to Keep Up with Changes in Technology
- Our Patent and Trade Secret Protection Efforts May
Not be Adequate to Protect Our Technology
- Our Business is Affected by Government Regulations
Which Change
- We Face Risks of Litigation Resulting from Improper
Operation of Our Systems
- We are Not Sure How We Will Use the Proceeds of Any
Warrant Exercises
- The Exercise Price of Our Class X Warrants is Not
Based on Any Objective Criteria of Value
- Resales of Outstanding Restricted Shares Could Hurt
the Market Price of Our Stock
- We do not Expect to Pay Dividends
- Our Business Could Make Us Liable for Damages Which
We do not Have Adequate Insurance
- The Market for Our Shares is Very Limited and May not
be Maintained
- The Market for Our Common Stock is Adversely
Affected by the "Penny Stock" Rules
- NASD Sales Practice Requirements Adversely Affect
the Market for Our Common Stock
- Our Results of Operations May be Affected by Non-
cash Charges
- Conversion of Outstanding Convertible Debt to Stock
and Exercise of Warrants Will Reduce the
Ownership Percentage of Existing Shareholders
5
RISK FACTORS
Prospective investors should consider carefully, in addition to the other
information in this Prospectus, the following:
The securities being offered hereby are speculative in nature and involve
a high degree of risk. Following is a summary discussion of the risk factors
applicable to an investment in the securities. Prospective investors should
thoroughly consider all of the risk factors discussed below and should
understand that there is substantial risk they will lose all or part of their
investment. No person should consider investing who cannot afford to lose his
entire investment or who is in any way dependent upon the funds that he is
investing.
1. WE HAVE A VERY LIMITED OPERATING HISTORY.
All of our business activities are conducted through our subsidiaries.
Potential investors should be aware of the difficulties faced by a new
enterprise, especially in view of the intense competition from existing and
more established companies in the wastewater, waste management, environmental
control and soils products businesses. Since our commercial operations have
only recently begun our history is limited and without significant revenues.
2. WE HAVE INCURRED SUBSTANTIAL LOSSES AND MAY NEVER ACHIEVE
PROFITABILITY.
From inception to date, neither we nor our subsidiaries have ever
sustained any profitable operations. Although the subsidiaries have now
commenced sales of wastewater treatment systems, Bion Nutrient Management
Systems and BionSoil(R) and expect to generate sufficient revenues from these
operations to pay operating expenses in the future, there can be no assurance
that profitable operations will ever be achieved or sustained in the future.
In the past, we have been dependent upon infusions of capital from investors
and proceeds from loans to enable us to continue in business. We believe that
in the near term we will not generate sufficient operating cash flow to meet
our needs without additional external financing. There is no assurance that
our efforts to obtain such financing will be successful. Any failure on our
part to do so will have a material adverse impact on us and may cause us to
cease operations. In the event we are unable to achieve sustained profitable
operations in the future, it is likely that any investment in our common stock
will ultimately be lost.
3. WE NEED ADDITIONAL WORKING CAPITAL; THE REPORT OF OUR ACCOUNTANTS
CONTAINS A "GOING CONCERN" QUALIFICATION.
We have incurred losses from our inception totaling $23,826,878 at June
30, 2000, and we have thus far failed to generate adequate working capital
from operations. Our auditors have included an explanatory paragraph in the
auditors opinion, noting that there is substantial doubt as to the Company's
ability to continue as a going concern. Our audited financial statements for
the fiscal year ended June 30, 2000 have been prepared assuming that we will
continue as a going concern. Our continued losses without additional equity
capital raise substantial doubt about our ability to continue in business
during the next twelve months.
6
4. OUR FUTURE OPERATIONS WILL DEPEND ON THE EFFORTS OF OUR NEW
MANAGEMENT TEAM AND OUR BUSINESS WILL SUFFER IF WE LOSE THE SERVICES OF ANY
KEY EMPLOYEES.
On December 23, 1999 we entered into a Management Agreement with D2 Co.,
LLC which has substantially modified our management team. We are completely
dependent upon the efforts and abilities of this team of officers and
directors who have not worked as a team prior to the Management Agreement. We
do not currently carry any "key man" life insurance coverage on any of our
employees. Loss of the services of these key employees would have a material
adverse on our business, results of operations and financial condition.
5. WE HAVE NUMEROUS AGREEMENTS WITH RELATED PARTIES WHICH MAY CREATE
CONFLICTS OF INTEREST THAT COULD HURT OUR BUSINESS.
On December 23, 1999 we entered into a Management Agreement with D2 Co.,
LLC which resulted in the employment of David J. Mitchell and the retention of
Summerwind Restructuring, Inc. On December 1, 1997 we entered into employment
agreements with Messrs. Jon Northrop, Jere Northrop and M. Duane Stutzman. In
addition, on May 21, 1999, we entered into a consulting agreement with
LoTayLingKyur, Inc. for the services of Mark A. Smith. We have entered into
numerous other agreements with related parties. (See our Form 10-KSB fiscal
year end June 30, 2000, Item 12.) We believe that all of these agreements
were negotiated on terms at least as favorable to us as those which could have
been obtained from unaffiliated persons. Our business, results of operations
and financial condition could be materially adversely affected by conflicts of
interest.
6. OUR MANAGEMENT CONTROLS OVER 50% OF OUR STOCK AND CAN ELECT ALL OF
OUR DIRECTORS.
Present management controls in excess of 50% of our outstanding Common
Stock and can elect all of our directors, appoint our officers and control our
affairs and operations. Such control by management could materially adversely
affect our business, results of operations and financial condition. On
December 23, 1999, D2, Mark A. Smith, Jere Northrop, Jon Northrop,
LoTayLingKyur, Inc., and Dublin Holding, Ltd. entered into a Shareholders'
Agreement which, among other things, allows D2 to designate three board
members and, with our consent, nominate a fourth. Our Articles of
Incorporation do not provide for cumulative voting.
7. THE DEVELOPMENT OF OUR TECHNOLOGY HAS BEEN LIMITED TO A FEW MARKETS;
WE MAY NOT ATTRACT ENOUGH CUSTOMERS TO BE SUCCESSFUL.
Our wastewater treatment systems to date have been developed and marketed
to certain agricultural and food processing applications and have not yet been
expanded into other markets. We have not yet completed the development of all
of the wastewater treatment system applications that will be necessary to
address targeted market applications and geographic areas and we anticipate a
continuing need for the development of additional applications. During fiscal
year ended June 30, 2000, we invested substantially in developing the "next
generation" system. This upgraded system is designed to operate using
significantly lower water volume and less energy, therefore requiring smaller
bioreators. Although management believes that our existing technology is
sufficient to support development of additional commercial applications, no
assurance can be given that new applications can be developed or that existing
and/or new applications will achieve commercially viable sales levels. We
have not conducted formal market studies with respect to our technology and
services.
7
We anticipate that the achievement of any significant degree of market
acceptance for our wastewater treatment systems and products will require
substantial marketing efforts and the expenditure of significant amounts of
funds to inform potential customers of the distinctive characteristics and
benefits of such products. We cannot give any assurances that our targeted
customers will accept our proposed products. We also can not give any
assurance that we will ever realize substantial revenues from the sale of our
products.
8. WE FACE INTENSE COMPETITION WHICH COULD ADVERSELY AFFECT OUR
FINANCIAL PERFORMANCE.
Although we believe that our systems offer many significant advantages
over other competing technologies/systems, competition in the biological
wastewater treatment industry is intense. We are in direct competition with
local, regional and national engineering and environmental consulting firms
and soils products companies. Some of our competitors may be capable of
developing soils products or waste and wastewater treatment systems similar to
ours or based on other competitive technologies. Many of our competitors are
well-established and have greater financial and other resources than we do.
9. OUR PRODUCTS COULD BECOME OBSOLETE; WE MAY NOT BE ABLE TO KEEP UP
WITH CHANGES IN TECHNOLOGY.
Our business is susceptible to changing technology. Although we intend
to continue to develop and improve our treatment systems, there is no
assurance that funds for such expenditures will be available or that our
competitors will not develop similar or superior capabilities.
10. OUR PATENT AND TRADE SECRET PROTECTION EFFORTS MAY NOT BE ADEQUATE
TO PROTECT OUR TECHNOLOGY.
We have limited patent protection on our soils products and also on
certain aspects of our wastewater treatment systems technology. We also
possess certain proprietary processes. We intend to obtain additional patents
or other appropriate protection for our technology. Additionally, we use
nondisclosure contract provisions and license arrangements which prohibit the
disclosure of our proprietary processes. However, there can be no assurance
that we can effectively protect against unauthorized duplication or the
introduction of substantially similar products. Our ability to compete with
other companies is materially dependent upon the proprietary nature of our
patents and technologies. We cannot give assurances that we will be able to
obtain any additional key patents or other protection for our technology. In
addition, if any of our key patents or proprietary rights were invalidated,
there could be an adverse effect on our business, results of operations and
financial condition.
11. OUR BUSINESS IS AFFECTED BY GOVERNMENT REGULATIONS WHICH CHANGE.
We are a provider of systems and services that result in the reduction of
pollution and, therefore, we are not under direct enforcement or regulatory
pressure. We are involved, however, in waste and wastewater treatment and are
impacted by environmental regulations in at least three different ways: (1)
our marketing and sales success depends, to a substantial degree, on the
pollution clean-up requirements of various governmental agencies, from the
Environmental Protection Agency at the federal level to state and local
agencies; (2)our system design and performance criteria must be responsive to
the changes in federal, state and local environmental agencies' effluent
8
standards and other requirements; and (3) our system installations and
operations require governmental permits or approvals in many jurisdictions.
We are also a manufacturer and provider of BionSoil (R) products such as
potting soils, soil amendments and fertilizers. Some state and federal
regulatory agencies have standards these products must meet to be sold as soil
amendment or fertilizer products in various markets. The production and sales
of our BionSoil (R) products currently meet relevant federal and state
requirements. These regulations can change which creates a level of
unpredictability. We are continually reviewing current regulations and
potential changes that may affect our business and are making necessary
compliance efforts in all jurisdictions in which we do business. We believe
that Bion is currently in compliance with all applicable federal, state and
local regulations.
We are in the business of helping our customers solve problems associated
with their discharge of wastewater into the environment, and most of our
systems and services are subject to federal, state and local government
regulation, and many are subject to extensive testing procedures. The effects
of rulings of regulatory bodies could delay our marketing efforts for a long
time and ultimately could prevent the completion of projects. The regulations
pertaining to the environment which may impact on the our systems are
continually changing. While we believe that such regulatory changes are
favorable to our business since such regulations may require the use of our
systems, there can be no assurance that, in the future, such regulations will
not cause us additional economic expense or be a materially adverse effect on
our business, results of operations and financial condition.
12. WE FACE RISKS OF LITIGATION RESULTING FROM IMPROPER OPERATION OF OUR
SYSTEMS.
In order for our waste and waste water treatment systems to function
properly, the systems must be operated in accordance with our specifications.
In the event that the our systems are not operated properly and environmental
violations or other problems occur as a result, it is possible that we could
be named as a defendant in litigation brought by governmental agencies and/or
individuals. Such litigation could seek, among other things, damages,
equitable remedies, punitive damages and penalties. In one such action filed
by the Attorney General of the State of Illinois on December 12, 1999, one of
our subsidiaries was named as a defendant, along with the owners of the
subject farm and system.
The Illinois case involves a hog farm utilizing one of our systems. We
do not operate this system; rather, the system was operated by the farmer and
has not been operated properly despite our repeated warnings. We believe that
this litigation is not material to our business and that we will not
ultimately be held liable for damages in this action because of the factual
circumstances involving the alleged environmental violations. We currently
believe that we will enter into an agreement to settle this litigation for
approximately $9,000.00. There can be no assurance that similar litigation
will not occur in the future. Even if we win the Illinois litigation,
however, our reputation might be severely damaged by this and other similar
litigation and the resulting publicity.
13. WE ARE NOT SURE HOW WE WILL USE THE PROCEEDS OF ANY WARRANT
EXERCISES.
To the extent that we receive any proceeds from the exercise of currently
outstanding warrants, these proceeds have been allocated by us to working
9
capital for general corporate purposes. Specific uses of these funds will
depend upon the business judgment of our management.
14. THE EXERCISE PRICE OF OUR CLASS X WARRANTS IS NOT BASED ON ANY
OBJECTIVE CRITERIA OF VALUE.
The exercise price of the Class X Warrants was arbitrarily determined by
us. The exercise prices of all the warrants do not have any direct
relationship to our current assets, earnings, book value or any other
objective criteria of value. Such price should not be regarded as an
indication of any future value of the shares that underlie the warrants. Bion
has the unilateral right to reduce the exercise price of warrants and may or
may not elect to do so with one or more classes of warrants.
15. RESALES OF OUTSTANDING RESTRICTED SHARES COULD HURT THE MARKET PRICE
OF OUR STOCK.
Of our shares of Common Stock currently outstanding a significant number
are "restricted securities" which may in the future be sold upon compliance
with Rule 144 adopted under the Securities Act of 1933, as amended.
Generally, Rule 144 provides that a person holding "restricted securities" for
a period of at least one year may sell every three months, in brokerage
transactions, an amount equal to the greater of one percent of our outstanding
shares of Common Stock or the average weekly reported volume of trading for
the securities. There is no limitation on the amount of "restricted
securities" which may be sold by a person who has been the beneficial owner of
such restricted securities for more than two years, and has not been an
"affiliate" for at least 90 days prior to the date of such sales. Further,
investors should note that D2 Co., LLC has 6,500,000 warrants. Our current
outstanding restricted securities were issued between our inception and
October 5, 2000, and such restricted securities have and will become available
for resale pursuant to Rule 144 on dates from our inception through October 5,
2002. Investors should be aware that such sales under Rule 144 may, in the
future, cause the price of our Common Stock to drop.
16. WE DO NOT EXPECT TO PAY DIVIDENDS.
Investors are cautioned that we have never paid any cash dividends on any
class of stock in the past. Due to our present financial status and our
contemplated financial requirements, we do not anticipate paying any cash
dividends upon any class of stock in the immediately foreseeable future.
17. OUR BUSINESS COULD MAKE US LIABLE FOR DAMAGES FOR WHICH WE DO NOT
HAVE ADEQUATE INSURANCE.
We are in the business of helping our customers solve problems associated
with their discharge of waste and wastewater into the environment. As we do
not ourselves discharge any substantial waste of any kind during the normal
course of our business, we do not consider the risk of potential liability
associated with damage to the environment to be substantial, and do not have
insurance coverage with respect to such risks. Presently we carry only
nominal amounts of insurance coverage to cover relatively standard business
risks. Management believes such coverage to be adequate for our current
operations. It is possible, however, that circumstances might potentially
exist that could cause us to be held liable for damage to the environment,
such as the negligent design of a system resulting in the aggravation of an
existing wastewater problem. We could also be subject to liabilities
resulting from other business risks in excess of our current policy amounts.
Any such liability, if imposed, could be substantial and would, in all
10
likelihood, be an adverse effect on our business, results of operations and
financial condition.
18. THE MARKET FOR OUR SHARES IS VERY LIMITED AND MAY NOT BE MAINTAINED.
Investors should be aware that our Common Stock trades on the OTC
Bulletin Board, that there is currently only an extremely limited and "thin"
trading market in our Common Stock, and there is no assurance that it will
continue or that any active trading will occur.
19. THE MARKET FOR OUR COMMON STOCK IS ADVERSELY AFFECTED BY THE "PENNY
STOCK" RULES.
Our common stock is currently defined as a "penny stock" under the
Exchange Act and rules of the Securities and Exchange Commission. The
Exchange Act and such penny stock rules generally impose additional sales
practices and disclosure requirements on broker-dealers who sell our
securities to persons other than "accredited investors" or in transactions not
recommended by the broker-dealer. For transactions covered by the penny stock
rules, the broker-dealer must make a written suitability determination for
each purchaser and receive the purchaser's written agreement prior to the
sale. In addition, the broker-dealer must make certain required disclosures
in penny stock transactions, including the actual sale or purchase price and
actual bid and offer quotations, and the compensation to be received by the
broker-dealer and certain associated persons, provide monthly account
statements showing the market value of each penny stock held in a customer's
account, and deliver certain standardized risk disclosures required by the
Securities and Exchange Commission. Consequently, the penny stock rules
affect the ability of broker-dealers to make a market in or trade our shares
and may also affect the ability of purchasers of shares to resell those shares
in the public market.
20. NASD SALES PRACTICE REQUIREMENTS ADVERSELY AFFECT THE MARKET FOR
OUR COMMON STOCK.
In addition to the "Penny Stock" rules described above, the NASD has
adopted rules that require that in recommending an investment to a customer
that a broker-dealer have reasonable grounds for believing that the investment
is suitable for that customer. Prior to recommending speculative low priced
securities to their non-institutional customers, broker-dealers must make
reasonable efforts to obtain information about the customers financial status,
tax status, investment objectives and other information. Under
interpretations of these rules, the NASD believes that there is a high
probability that speculative low priced securities will not be suitable for at
least some customers. The NASD requirements make it more difficult for
broker-dealers to recommend that their customers buy our common stock, and
this has an adverse effect on the market for our shares.
21. OUR RESULTS OF OPERATIONS MAY BE AFFECTED BY NON-CASH CHARGES.
During the year ended June 30, 2000 we recorded significant non-cash
charges. In some cases we expect to incur such charges in the future,
including those charges related to beneficial features of equity instruments
exchanged and amortization of debt discount as interest expense. These
charges are related to transactions in which stock options and warrants are
used, and are likely to be incurred on a one-time or sporadic basis. Results
of operations could be materially adversely affected by these non-cash
charges.
11
22. CONVERSION OF OUTSTANDING CONVERTIBLE DEBT TO STOCK AND EXERCISE OF
WARRANTS WILL REDUCE THE OWNERSHIP PERCENTAGE OF EXISTING SHAREHOLDERS.
The conversion of outstanding convertible debt to stock and exercise of
warrants will result in a significant reduction in the respective percentage
interests of Bion and voting power held by the shareholders, other than those
participating in the conversion exercise. We expect to issue additional
shares of our common stock, warrants and options in connection with further
financings.
COMPANY INFORMATION
This Prospectus is accompanied by a copy of our most recent Annual
Report on Form 10-KSB (as amended) for our fiscal year ended June 30, 2000 and
by a copy of our most recent Quarterly Report on Form 10-QSB for the quarter
ended December 31, 2000, both of which reports are incorporated into this
Prospectus in their entirety.
USE OF PROCEEDS
Assuming that all 481,552 Class X Warrants are exercised by the holders
of such warrants, we will receive net proceeds of approximately $3,800,000,
which would be used by us for general working capital purposes. If we reduce
the exercise price of the Class X Warrants, the proceeds we could receive
would be proportionately reduced.
We will not receive any proceeds from the sale of the Common Stock being
registered hereunder for sale by the Converting Holders. However, some of the
Converting Holders' shares being registered are to be issued pursuant to the
terms of currently outstanding warrants. If any of these warrants are
exercised, we would receive certain proceeds. Any proceeds received pursuant
to the exercise of these warrants would be used for general working capital
purposes.
DETERMINATION OF OFFERING PRICE
The shares being offered by Converting Holders will be sold at the market
price as of the date of sale. The exercise price of the Class X Warrants was
arbitrarily determined by us and set at $8.00 per share. Our Common Stock is
traded on the OTC Bulletin Board under the symbol "BION". On April 11, 2001,
the reported closing price for our Common Stock on the OTC Bulletin Board was
$.91.
RECENT MATERIAL CHANGES IN OUR BUSINESS
There have been no material changes in our business since our fiscal year
ended June 30, 2000, except as set forth on our quarterly reports for quarters
ended September 30, 2000 and December 31, 2000, and our amended quarterly
reports for quarters ended September 30, 1999, December 31, 1999 and March 31,
2000, and our current reports on Form 8-K dated August 3, 9 and 10, 2000,
December 1, 2000 and February 6, 2001, and as set forth below:
On December 12, 2000, we announced that we had successfully completed the
monitoring and control phase of our second generation Bion Nutrient Management
System. The second generation system installed at Dream Maker Dairy is
operating at a level of efficiency five times that of its predecessor systems
and is producing Bion Soil(R) in less than 20% of the time previously
required.
12
Bion is now proceeding with Phase Two of the initiative -- development of
a prototype fully contained system that will be housed in tanks -- the third
generation of the BionNMS. This will allow us to subject the system to a
"mass balance" analysis, a scientific protocol that will specify the ultimate
end of all materials in the waste stream. This will allow us to
scientifically prove our position that a properly operated BionNMS does not
emit nitrogen oxide or ammonia to the atmosphere. With the ability to track
the nutrient component of the waste stream through all phases of the process,
including those elements released to the atmosphere, Bion will also be able to
quantify those components for any potential nutrient and/or air credit
benefits.
We are presently evaluating a dairy site in upstate New York where the
third-generation system prototype will be tested. The design of the prototype
has commenced, and the initial installation is anticipated to be in the first
quarter of 2001.
Upon the successful completion of the prototype full contained dairy
system in upstate New York, Bion plans to install and further test such a
system on a swine farm. Bion believes that its second generation NMS
technology will be equally effective in a swine farm application.
CONVERTING HOLDERS
Included in the securities being offered hereby are 5,921,356 shares
being offered for resale by the Converting Holders. Up to 4,371,500 of those
shares are issuable upon conversion of notes held by investors. Up to
1,549,856 shares are issuable upon exercise of warrants held by investors.
The shares are being offered for the account of the Converting Holders as set
forth in the table below.
The following table sets forth information concerning the selling
Converting Holders, including:
* the estimated maximum number of shares issuable upon conversion of
notes;
* the number of shares issuable upon exercise of warrants;
* the number of shares offered by each Converting Holder.
Bion has no knowledge of the intentions of any Converting Holder to actually
sell any of the securities listed under the column "Shares Offered." There
are no material relationships between any of the selling security holders and
Bion other than those disclosed below:
Shares Shares
Issuable Issuable Percent of
on the on the Common Stock
Conversion Exercise Shares held after
Security Holder of Notes of Warrants Offered the Offering
--------------- ----------- ----------- ---------- ------------
AA.01 Warrants(1)
Davis, Joseph P., III 0 15,000 15,000 *
13
Shares Shares
Issuable Issuable Percent of
on the on the Common Stock
Conversion Exercise Shares held after
Security Holder of Notes of Warrants Offered the Offering
--------------- ----------- ----------- ---------- ------------
G5.1 Warrants(2)
Miller, Kevin S. 0 1,115 1,115 *
G5.2 Warrants(3)
Miller, Kevin S. 0 919 919 *
G6 Warrants(4)
Archutowski, Karen 0 814 814 *
Global Financial Group,
Inc. 0 2,334 2,334 *
H1 Warrants(5)
Joys, David 0 7,408 7,408 *
Sauer, Robert 0 3,704 3,704 *
H2 Warrants(6)
Joys, David 0 10,742 10,742 *
Sauer, Robert 0 5,370 5,370 *
H16 Warrants(7)
Family Trust U/A 3rd
U/W Catherine Northrop(A) 0 38,000 38,000 *
J1 Warrants(8) and Convertible Note(9) holders
Arab Commerce Bank, LTD 110,000 30,000 140,000 *
Balmore, S.A. 220,000 60,000 280,000 *
Schaan, Austost Austalt 220,000 60,000 280,000 *
J1-A Warrants(10)
Morgan, Taylor &
Associates, Inc. 0 112,500 112,500 *
R. G. Securities, LLC 0 20,250 20,250 *
Salomon Grey Financial, 0
Inc. 2,250 2,250 *
Westport Resources
Investment Services, Inc. 0 9,000 9,000 *
Slavney, David 0 20,250 20,250 *
Posner, Steven 0 11,700 11,700 *
14
Shares Shares
Issuable Issuable Percent of
on the on the Common Stock
Conversion Exercise Shares held after
Security Holder of Notes of Warrants Offered the Offering
--------------- ----------- ----------- ---------- ------------
J1-A Warrants (10) and Convertible Note-A (11) holders
Ablamsky, Linda 110,000 30,000 140,000 *
Basilice, Joseph P. 38,500 10,500 49,000 *
Battaglia, John L. 27,500 7,500 33,000 *
Berman, Richard J. 27,500 7,500 33,000 *
Bjorge, Victor and
Clark, Karen 27,500 7,500 33,000 *
Blitz, Harvey 55,000 15,000 70,000 *
Brosnan, Patrick J. 27,500 7,500 33,000 *
Burzotta, James 27,500 7,500 33,000 *
Casadonte, Donald A. 27,500 7,500 33,000 *
Casadonte, Renee S. 27,500 7,500 33,000 *
Casadonte, Virginia P. 110,000 30,000 140,000 *
D2 Co., LLC (B) 362,000 30,000 392,000 *
Donnalley, Geralyn E. 27,500 7,500 33,000 *
Dosch, Michael Keith 27,500 7,500 33,000 *
Fleming, Kerry M. 1,100,000 300,000 1,400,000 *
Foglia, Joseph A. 27,500 7,500 33,000 *
Frisa, Jean A. 275,000 75,000 350,000 *
Fusco, Joseph 27,500 7,500 33,000 *
Fusco, Robert 27,500 7,500 33,000 *
Growth Ventures, Inc.
Pension Plan & Trust 82,500 22,500 105,000 *
Investor Resource
Services, Inc. 55,000 15,000 70,000 *
JR Squared, LLC 165,000 45,000 210,000 *
Kirby, Charles F. 27,500 7,500 33,000 *
Kirsch, Jodi 357,500 97,500 455,000 *
Lane, John D. 55,000 15,000 70,000 *
Lohmann, Robert B. 11,000 3,000 14,000 *
Nixon, J. Michael 55,000 15,000 70,000 *
Orphanos, Anthony G 110,000 30,000 140,000 *
Ponte, Vincent J. 55,000 15,000 70,000 *
Reiter, Michael M. and
Loreane M. 27,500 7,500 33,000 *
Santomauro, Angelo 27,500 7,500 33,000 *
Scibelli, James 137,500 37,500 175,000 *
Smith, Harry M. 27,500 7,500 33,000 *
Smith, James 27,500 7,500 33,000 *
Spartz, James G. 27,500 7,500 33,000 *
TCMP(3) Capital, LLC 110,000 30,000 140,000 *
Weiss, Kenneth 27,500 7,500 33,000 *
Zizza, Salvatore J.(C) 55,000 15,000 70,000 *(C)
15
Shares Shares
Issuable Issuable Percent of
on the on the Common Stock
Conversion Exercise Shares held after
Security Holder of Notes of Warrants Offered the Offering
--------------- ----------- ----------- ---------- ------------
J2 Warrants (12)
Rodgers, David 0 15,000 15,000 *
Slavney, David 0 50,000 50,000 *
Zizza, Salvatore J.(C) 0 100,000 100,000 *(C)
__________________________________________________________
* represents less than 1%.
(1) AA.01 warrants may be exercised to purchase shares of common stock at
$5.40 per share through December 31, 2001.
(2) G5.1 warrants may be exercised to purchase shares of common stock at
$2.70 per share through January 21, 2001.
(3) G5.2 warrants may be exercised to purchase shares of common stock at
$2.70 per share through September 12, 2001.
(4) G6 warrants may be exercised to purchase shares of common stock at
$5.40 per share through April 20, 2002.
(5) H1 warrants may be exercised to purchase shares of common stock at
$4.50 per share through August 20, 2001.
(6) H2 warrants may be exercised to purchase shares of common stock at
$2.70 per share through August 20, 2001.
(7) H16 warrants may be exercised to purchase shares of common stock at
$2.25 per share through December 31, 2001.
(8) J1 warrants may be exercised to purchase shares of common stock at
$2.00 per share through December 31, 2004.
(9) Convertible Notes shall be automatically converted into shares of our
common stock at June 30, 2001, if not previously paid or converted.
(10) J1-A warrants may be exercised to purchase shares of common stock at
$1.50 per share through December 31, 2004.
(11) Convertible Notes-A shall be converted into shares of our common stock
pursuant to the terms of the note or automatically converted on April 30,
2002, if not previously paid or converted.
(12) J2 warrants may be exercised to purchase shares of common stock at
$2.375 per share through December 31, 2004.
_________________________________________________
(A) Mr. Jon Northrop, our Executive Vice President, Chief Financial Officer,
Treasurer, and Secretary, is a Trustee for the Family Trust U/A 3rd
U/W Catherine Northrop.
16
(B) We entered into a Management Agreement with D2 Company, LLC ("D2") on
December 23, 1999, which was amended August 10, and December 1, 2000.
Mr. David Mitchell, our Chief Executive Officer, President and Director
is the sole owner of D2. The number of shares "Issuable on the Conversion
of Notes" is current as of December 31, 2000. Additional shares held and
issued to D2 will be subsequently registered. Percent of shares held
after the offering does not include 6.5 million shares underlying
currently exercisable warrants held by Southview, Inc., a corporation
wholly owned by David J. Mitchell.
(C) Mr. Salvatore J. Zizza is a Director on our Board and serves as our
Governmental Affairs Liaison. The total amount of shares being
registered for Mr. Zizza is 146,429. Mr. Zizza's total "Percent of
Common Stock held after the Offering" is less than 1%.
PLAN OF DISTRIBUTION
CONVERTING HOLDERS
Included in the shares offered hereby are a total of 1,549,856 shares
that may be issued upon the exercise of ten different classes of warrants that
we currently have outstanding. A description of these warrants is contained
in Exhibit 99.4 to our Report on Form 8-K dated August 10, 2000, which is
incorporated herein by reference. An additional 4,371,500 shares offered
hereby may be issued upon the conversion of convertible notes that are also
currently outstanding.
On February 6, 2001, we proposed certain amended terms to holders of our
Convertible Bridge Notes and Warrants. The offer to amend the terms was
terminated on February 24, 2001. Most of the holders accepted the proposed
terms. A total of 40 holders accepted, comprising of $3,824,091.00 in
principal outstanding convertible notes and 3 holders did not accept, totaling
$500,000.00 in principal outstanding convertible notes.
The significant terms of the Convertible Bridge Notes and Warrants for
all holders prior to the February 6, 2001 amendment were as follows:
(1) the maturity date was set for July 1, 2001,
(2) the conversion price was to be equal to the market price at the
time of conversion with a maximum conversion price of $5.00 per
share,
(3) the Bridge Warrant exercise price was $2.00,
(4) the Note (principal and interest) would automatically convert to
common stock one year from issuance, if not previously paid or
converted,
(5) the Bridge Warrants could be called for redemption if the closing
bid price exceeded $5.90 for 20 of 30 consecutive trading days.
The new terms for those that accepted the amendment are as follows:
(1) the maturity date was extended to April 30, 2002,
(2) the notes (principal and interest) will automatically convert to
our Common Stock on April 29, 2002, if not previously paid or
converted,
(3) the maximum conversion price is reduced to $2.50 per share,
(4) the call price of the Bridge Warrants was reduced to $3.50, and
(5) the warrant exercise price was reduced to $1.50.
17
The significant terms of the Convertible Notes and Warrants for the 3
holders that did not accept the February 6, 2001 amendment, remain as they
were prior to the amendment, except the Note (principal and interest) would
automatically convert to common stock on June 30, 2001, if not previously paid
or converted. In addition, since the Bridge Warrant call price was amendable
by agreement of a majority in principal, the call price was reduced for all
holders by the February 6, 2001 amendment from $5.90 to $3.50.
Any interest that may accrue on the convertible notes after April 30,
2001 (approximately) will be subsequently registered. The number of shares
which may be issued upon conversion of the convertible notes is based on an
assumed conversion rate of $1.00 per share and interest is calculated through
the automatic conversion date of each note at a rate of 10% per annum. The
actual conversion rate may be greater, and so fewer shares may actually be
issued. It is currently unknown how many of the Converting Holders will
exercise their warrants to purchase shares of our Common Stock. The actual
number of shares that would be issued upon conversion of the notes is also
unknown. We also do not know whether any Converting Holders will decide to
sell any of these shares into the market.
The Common Stock registered hereunder may be sold from time to time by
the Converting Holders. Such sales may be made in the over-the-counter market
or otherwise at prices and at terms then prevailing or at prices related to
the then current market price, or in negotiated transactions. In connection
with such sales the Converting Holders may be deemed to be "underwriters"
within the meaning of the Securities Act. In accordance with the terms of our
agreements with the Converting Holders, all of the Converting Holders
purchased their Convertible Notes in the ordinary course of their business
and, at the time of their purchase of the securities to be resold, none of the
Converting Holders had any agreements or understandings, directly or
indirectly, with any person to distribute the securities.
The Converting Holders will not receive any commissions or other
compensation from us. The only Converting Holders that have a material
relationship with us are Salvatore J. Zizza, who is one of our Directors and
our Governmental Affairs Liaison, and D2 Co., LLC ("D2"). D2 is owned by
David Mitchell, our President, Chief Executive Officer and a Director. We
also have a Management Agreement with D2. We have agreed to indemnify the
Converting Holders against certain liabilities including liabilities arising
under the Securities Act.
The Common Stock may be sold by one or more of the following methods:
(i) a block trade in which the broker or dealer so engaged will attempt to
sell the Common Stock as agent for the Converting Holders; and (ii) ordinary
brokerage transactions and transactions in which the broker solicits
purchasers. In effecting sales, brokers or dealers engaged by the Converting
Holders may arrange for other brokers or dealers to participate. Brokers or
dealers will receive commissions from the Converting Holders in amounts to be
negotiated by the holders immediately prior to the sale. Such brokers or
dealers and any other participating brokers or dealers may be deemed to be
"underwriters" within the meaning of the Securities Act in connection with
such sales.
The Converting Holders may agree to indemnify any agent, dealer or
broker-dealer that participates in transactions involving sales of the Common
Stock against certain liabilities, including liabilities arising under the
Securities Act of 1933, as amended.
18
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers or persons controlling us
pursuant to the foregoing provisions, we have been informed that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in such Act and is therefore unenforceable.
EXERCISE OF CLASS X WARRANTS
The shares which may be purchased upon the exercise of the outstanding
Class X Warrants are being offered to the holders of those warrants by the
Company on a "best efforts" basis. No commissions or fees will be paid to
anyone for the solicitation of the exercise of the Class X Warrants.
The Class X Warrants are exercisable to purchase one share at a price of
$8.00 per share until December 31, 2001. The Class X Warrants are not
transferrable.
Persons who wish to exercise their Class X Warrants must deliver an
executed Warrant with the form of Election to Purchase, properly executed,
accompanied with payment in check or money order payable to "Bion
Environmental Technologies, Inc." for the number of shares subscribed to the
Company. All payments must be received by the Company prior to the
termination of the exercise period, and Class X Warrants not exercised prior
to the termination of the exercise period will expire.
DESCRIPTION OF COMMON STOCK
We are authorized to issue 100,000,000 shares of our no par value Common
Stock, of which 13,066,685 shares were issued and outstanding as of March 31,
2001. Holders of Common Stock are entitled to cast one vote for each share
held of record on all matters presented to shareholders. Shareholders do not
have cumulative rights; hence, the holders of more than 50% of the outstanding
Common Stock can elect all directors.
We have reserved 17,378,660 shares of our common stock for issuance under
outstanding options, warrants, rights and convertible securities.
Holders of Common Stock are entitled to receive such dividends as may be
declared by the Board of Directors out of funds legally available therefor.
In the event of liquidation, holders of Common Stock will share pro rata in
any distribution of our assets after payment of all liabilities. We do not
anticipate that any dividends on Common Stock will be declared or paid in the
foreseeable future. Holders of Common Stock do not have any rights of
redemption or conversion or preemptive rights to subscribe to additional
shares if issued by us. However, one unaffiliated private investor holds a
contractual preemptive right to purchase additional shares. All of the
outstanding shares of our Common Stock are fully paid and nonassessable.
Penny Stock and NASD Sales Practices Rules
Our common stock is currently defined as a "penny stock" under the
Exchange Act and rules of the Securities and Exchange Commission. The
Exchange Act and such penny stock rules generally impose additional sales
practices and disclosure requirements on broker-dealers who sell our
securities to persons other than "accredited investors" or in transactions not
recommended by the broker-dealer. For transactions covered by the penny stock
rules, the broker-dealer must make a written suitability determination for
each purchaser and receive the purchaser's written agreement prior to the
sale. In addition, the broker-dealer must make certain required disclosures
19
in penny stock transactions, including the actual sale or purchase price and
actual bid and offer quotations, and the compensation to be received by the
broker-dealer and certain associated persons, provide monthly account
statements showing the market value of each penny stock held in a customer's
account, and deliver certain standardized risk disclosures required by the
Securities and Exchange Commission. Consequently, the penny stock rules
affect the ability of broker-dealers to make a market in or trade our shares
and may also affect the ability of purchasers of shares to resell those shares
in the public market.
In addition to the "Penny Stock" rules described above, the NASD has
adopted rules that require that in recommending an investment to a customer
that a broker-dealer have reasonable grounds for believing that the investment
is suitable for that customer. Prior to recommending speculative low priced
securities to their non-institutional customers, broker-dealers must make
reasonable efforts to obtain information about the customers financial status,
tax status, investment objectives and other information. Under
interpretations of these rules, the NASD believes that there is a high
probability that speculative low priced securities will not be suitable for at
least some customers. The NASD requirements make it more difficult for
broker-dealers to recommend that their customers buy our common stock, and
this has an adverse effect on the market for our shares.
EXPERTS
The June 30, 2000 financial statements incorporated by reference in this
Prospectus have been audited by BDO Seidman, LLP, independent certified public
accountants, to the extent and for the periods set forth in their report
incorporated herein by reference, and are incorporated herein in reliance upon
such report given upon the authority of said firm as experts in auditing and
accounting.
The Consolidated Financial Statements of Bion Environmental Technologies,
Inc. as of June 30, 1999, and for each of the years in the two-year period
ended June 30, 1999, have been incorporated by reference herein and in the
Registration Statement in reliance upon the separate report Ehrhardt Keefe
Steiner & Hottman, independent certified public accountants, incorporated by
reference herein, and upon the authority of said firms as experts in
accounting and auditing.
LEGAL MATTERS
The validity of the issuance of the Common Stock offered hereby will be
passed upon for us by Krys Boyle Freedman & Sawyer, P.C., Denver, Colorado.
Officers, directors and employees of this law firm own an aggregate of
approximately 100,000 shares of our Common Stock.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN
THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY
SECURITIES OTHER THAN THE COMMON STOCK OFFERED BY THIS PROSPECTUS. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER
TO BUY ANY COMMON STOCK IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR
SOLICITATION IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY
SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN OUR AFFAIRS SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED BY REFERENCE HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT
TO ITS DATE.
20
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR
SECURITIES ACT LIABILITIES
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the small business issuer pursuant to the forgoing provisions, or otherwise,
the small business issuer has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents that we have filed with the Commission shall be
deemed to be incorporated in this Prospectus and to be a part hereof from the
date of the filing of such documents:
1. Annual Report on Form 10-KSB for the fiscal year ended June 30, 2000
filed on September 28, 2000, as amended on Form 10-KSB/A on
January 19, 2001 and April 4, 2001, Exchange Act reporting number
0-19333.
2. Current Report on Form 8-K dated February 6, 2001, Exchange Act
reporting number 0-19333.
3. Current Report on Form 8-K dated December 1, 2000, Exchange Act
reporting number 0-19333.
4. Current Report on Form 8-K dated August 10, 2000, Exchange Act
reporting number 0-19333.
5. Current Report on Form 8-K dated August 9, 2000, Exchange Act
reporting number 0-19333.
6. Current Report on Form 8-K dated August 3, 2000, Exchange Act
reporting number 0-19333.
7. Quarterly Report on Form 10-QSB for the quarter ended December 31, 2000
filed on February 14, 2001, Exchange Act reporting number 0-19333.
8. Quarterly Report on Form 10-QSB for the quarter ended September 30, 2000
filed on November 14, 2000, Exchange Act reporting number 0-19333.
9. Quarterly Report on Form 10-QSB/Amendment No. 1 for the quarter ended
March 31, 2000 filed on October 24, 2000, Exchange Act reporting number
0-19333.
10. Quarterly Report on Form 10-QSB/Amendment No. 1 for the quarter ended
December 31, 1999 filed on October 24, 2000, Exchange Act reporting
number 0-19333.
11. Quarterly Report on Form 10-QSB/Amendment No. 1 for the quarter ended
September 30, 1999 filed on October 24, 2000, Exchange Act reporting
number 0-19333.
12. All documents filed by us, subsequent to the date of this Prospectus,
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934, prior to the termination of the offering described
herein.
21
Any statement contained in a document incorporated by reference herein
shall be deemed to be modified or superseded for all purposes to the extent
that a statement contained in this Prospectus or in any other subsequently
filed document which is also incorporated herein by reference modifies or
replaces such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of
this Prospectus.
We will provide without charge to each person to whom this Prospectus is
delivered, on written or oral request of such person, a copy of any or all
documents incorporated by reference in this Prospectus. Requests for such
copies should be directed to Bion Environmental Technologies, Inc., 18 East
50th Street, 10th Floor, New York, New York 10022, or (212) 758-6622.
22
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
--------------------------------------
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table itemizes our estimated expenses in connection with
the issuance and distribution of the securities being registered hereby.
SEC Registration Fee.................... $ 3,600
Transfer Agent Fees..................... 1,000
Legal Fees and Expenses................. 20,000
Accounting Fees and Expenses............ 5,000
Miscellaneous........................... 400
--------
Total .............................. $ 30,000
========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Colorado Business Corporation Act generally provides that a
corporation may indemnify its directors, officers, employees and agents
against liabilities and reasonable expenses (including attorneys' fees)
incurred in connection with any threatened, pending or completed action, suit
or proceeding, whether civil, criminal, administrative or investigative, and
whether formal or informal (a "Proceeding"), by reason of being or having been
a director, officer, employee, fiduciary or agent of the Corporation, if such
person acted in good faith and reasonably believed that his conduct in his
official capacity with the Corporation was in the best interests of the
Corporation (or, with respect to employee benefit plans, was in the best
interests of the participants in or beneficiaries of the plan), and in all
other cases his conduct was at least not opposed to the Corporation's best
interests. In the case of a criminal proceeding, the director, officer,
employee or agent must have had no reasonable cause to believe his conduct was
unlawful. The Corporation may not indemnify a director, officer, employee or
agent in connection with a proceeding by or in the right of the Corporation if
such person is adjudged liable to the Corporation, or in a proceeding in which
such person is adjudged liable for receipt of an improper personal benefit.
Unless limited by the Corporation's Articles of Incorporation, the Corporation
shall be required to indemnify a director or officer of the Corporation who is
wholly successful, on the merits or otherwise, in defense of any proceeding to
which he was a party, against reasonable expenses incurred by him in
connection with the proceeding. The foregoing indemnification is not exclusive
of any other rights to which those indemnified may be entitled under
applicable law, the Corporation's Articles of Incorporation, Bylaws,
agreement, vote of shareholders or disinterested directors, or otherwise.
The Corporation's Articles of Incorporation and Bylaws generally provide
for indemnification of directors, officers, employees and agents to the
fullest extent allowed by law.
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ITEM 16. EXHIBITS
Exhibit
Number Description of Exhibit
5.1 Opinion of Krys Boyle Freedman & Sawyer, P.C. regarding legality.*
10.1 Second Amendment to the Convertible Bridge Notes and Warrants.*
23.1 Consent of BDO Seidman, LLP.*
23.2 Consent of Ehrhardt Keefe Steiner & Hottman P.C.*
23.3 Consent of Krys Boyle Freedman & Sawyer, P.C. Contained in Exhibit
5.1.*
99.1 Form of Class X Warrants is incorporated by reference from the
Company's Form 8-K dated May 21, 1999, Exhibit 10.4.*
______________
* Previously filed.
ITEM 17. UNDERTAKINGS
The undersigned Company hereby undertakes:
(1) to file, during any period in which offers or sales are being made,
a post-effective amendment to the registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
the registration statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.
(2) That for purposes of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering.
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(4) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the Registrant's annual report pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934 that is incorporated by
reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at the time shall be deemed to be the initial bona
fide offering.
(5) That, insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Company pursuant to the foregoing provisions, or otherwise, the
Company has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Company of expenses incurred or paid by a director, officer or controlling
person of the Company in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Company will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Amendment No. 2 to the Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of New York, State of
New York, on April 12, 2001.
BION ENVIRONMENTAL TECHNOLOGIES, INC.
By: /s/ David J. Mitchell
David J. Mitchell, Chief Executive
Officer, President and Director
(Principal Executive Officer)
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 2 to the Registration Statement has been signed below by the
following persons in the capacities and on the date(s) indicated.
Signatures Title Date
---------- ----- ----
/s/ David J. Mitchell Chief Executive Officer, April 13, 2001
David J. Mitchell President and Director
/s/ David Fuller Principal Accounting Officer April 13, 2001
David Fuller
/s/ Jon Northrop Executive Vice President, April 13, 2001
Jon Northrop Asst. Secretary and Director
/s/ Mark A. Smith Chairman and Secretary April 13, 2001
Mark A. Smith
/s/ Jere Northrop Chief Technical Officer April 13, 2001
Jere Northrop and Director
____________________________ Director
Ronald G. Cullis
/s/ Salvatore J. Zizza Director April 13, 2001
Salvatore J. Zizza
____________________________ Director
Andrew G. Gould