SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD
ENDED September 30, 1996 OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 OR THE TRANSITION PERIOD
FROM __________ TO __________
Commission file number 0-19333
Bion Environmental Technologies, Inc.
(Exact name of registrant as specified in its charter)
Colorado 84-1176672
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
555 17th Street, Suite 3310
Denver, Colorado 80202
(Address of principal (Zip Code)
executive offices)
(303) 294-0750
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No___
The number of shares outstanding of registrant's classes of
common stock, as of November 12, 1996:
Common Stock, No Par Value, 1,747,806
Series B Convertible Preferred Stock, $.001
Par Value, 18,834 shares
Bion Environmental Technologies, Inc. Form 10-QSB
September 30, 1996
INDEX
PART I FINANCIAL INFORMATION PAGE NO.
ITEM 1 FINANCIAL STATEMENTS
Balance Sheets:
June 30, 1996 and
September 30, 1996................. F2
Statements of Operation:
For the Three Month Periods Ended
September 30, 1995 and
September 30, 1996................. F3
Statements of Cash Flows:
For the Three Month Periods Ended
September 30, 1995 and
September 30, 1996................. F4
Statement of Changes in Stockholders
Equity.................................. F5
Notes to Financial Statements............ F6-F7
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS
OF OPERATIONS............................ 3
PART II OTHER INFORMATION
ITEM 1-6 ......................................... 6
FINANCIAL INFORMATION
PART I
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheets
<TABLE>
<CAPTION>
September 30, June 30,
1996 1996
(Unaudited) (Audited)
<S> <C> <C>
Assets
Current assets
Cash and cash equivalents $ 47,502 $ 118,612
Contract receivables 35,738 22,070
Work in progress (net of allowance
of $20,000) 222,802 219,686
Prepaid expenses and other 532 2,128
Total current assets 306,574 362,496
Property and equipment, net 130,495 66,216
Other assets
Patents, net 40,092 40,778
Deferred long-term contract costs 82,433 82,433
Other 5,802 4,387
Total other assets 128,327 127,598
Total assets $565,396 $556,310
Liabilities and Stockholder (Equity)
Current liabilities
Accounts payable and accrued liabilities $283,936 $228,712
Accounts payable - related party 0 23,351
Notes payable - stockholders 96,050 96,050
Capital lease obligations 32,667 18,482
Accrued payroll - officers 239,167 206,667
Total current liabilities 651,820 573,262
Long-term liabilities
Notes payable - stockholders 2,007,035 2,007,035
Line-of-credit 75,000 0
Capital lease obligation 89,601 43,047
Deferred contract revenue 206,500 206,500
Total liabilities 3,029,956 2,829,845
Commitments and contingency
Stockholders' (deficit)
Preferred stock, $.001 par value
10,000,000 shares authorized, 18,834
series B (September 30, 1996 and
June 30, 1996) shares issued and
outstanding 95,482 95,482
Common stock, no par value, 100,000,000
shares authorized, 1,747,806 (September 30,
1996) and 1,683,777 (June 30, 1996)
shares issued and outstanding 3,691,276 3,485,270
Common stock subscribed 70,473 49,538
Accumulated deficit (6,321,791) (5,903,824)
Total stockholders' (deficit) (2,464,560) (2,273,534)
Total liabilities and
stockholders'(deficit) $565,396 $556,310
</TABLE>
Consolidated Statements of Operations
<TABLE>
<CAPTION>
Three Months Ended
September 30
1996 1995
(Unaudited) (Unaudited)
<S> <C> <C>
Contract revenues $ 35,547 $ 38,185
Contract costs 112,182 27,002
Gross profit (loss) (76,635) 11,183
General and administrative expenses 341,432 313,225
Loss from operations (418,067) (302,042)
Other income (expense)
Interest income 105,130 ---
Interest expense (67,935) (40,876)
Research and development (34,551) (15,921)
Gain (Loss) on marketable
equity securities 0 212,544
Net (loss) $(415,423) $(146,295)
(Loss) per weighted average share
of common stock $ (0.24) $ (0.10)
Weighted common shares outstanding 1,717,575 1,497,379
</TABLE>
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Three Months Ended
September 30,
1996 1995
(Unaudited) (Unaudited)
<S> <C> <C>
Cash flows from operating activities
Net (loss) $(415,423) $ (146,295)
Adjustments to reconcile net loss to
net cash provided/used by
operating activities -
Depreciation and amortization $4,960 805
Increase in valuation allowance 0 (212,544)
Issuance of stock for services
and interest 44,475 52,000
Change in assets and liabilities -
Contract receivables (16,784) 6,065
Prepaid expenses 181 2,644
Accounts payable and accrued
liabilities 29,330 14,806
Accrued payroll - officers 32,500 0
Net cash (used in) operating
activities (320,761) (282,519)
Cash flows from investing activities
Investments in patents 0 1,669
Sale of marketable equity securities 0 260,924
Net cash (used in) provided
by investing activities 0 262,593
Cash flows from financing activities
Proceeds from shareholder notes - net 0 (10,000)
Line of credit 75,000 0
Proceeds from sale of stock 151,216 102,520
Payments on capital lease obligations (7,815) 0
Proceeds from the sale of warrants 31,250 0
Net cash provided by financing
activities 249,651 92,520
Net increase (decrease) in cash
and cash equivalents (71,110) 72,594
Cash and cash equivalents at beginning
of period 118,612 3,801
Cash and cash equivalents at end of period $ 47,502 $ 76,395
Footnote:
Supplemental Cash Flow Information
Cash paid for Interest $67,935 $40,876
Supplemental disclosure of non-cash
financing activities
The Company entered into capital leases
for equipment in the amount of $69,239.
The Company declared accrued dividends
of $2544 for the Series "B" preferred
stock.
</TABLE>
BION ENVIRONMENTAL TECHNOLOGIES, INC.
AND SUBSIDIARIES
Consolidated Statement of Changes in Stockholders' Equity
<TABLE>
<CAPTION>
Series "B" Common
Preferred Stock Common Stock Stock
Shares Amount Shares Amount Subscribed
<S> <C> <C> <C> <C> <C>
Balances at
June 30,
1996 18,834 $ 95,482 1,683,777 $3,485,270 $ 49,538
Common stock
subscriptions
for services -- -- -- -- 20,935
Warrants issued
for cash -- -- -- 31,250 --
Issuance of common
stock for cash -- -- 56,183 151,216 --
Issuance of common
stock for services -- -- 7,846 23,540 --
Dividends declared,
preferred stock
Series B -- -- -- -- --
Net (loss) for the
period ended
September 30, 1996 -- -- -- -- --
Balances at
September 30, 1996 18,834 $ 95,482 1,747,806 $3,691,276 $ 70,473
</TABLE>
Continued below
BION ENVIRONMENTAL TECHNOLOGIES, INC.
AND SUBSIDIARIES
<TABLE>
<CAPTION>
Accumulated
Deficit Total
<S> <C> <C>
Balances at June 30, 1996 $(5,903,824) $(2,273,534)
Common stock subscriptions
for services -- 20,935
Warrants issued for cash -- 31,250
Issuance of common stock
for cash -- 151,216
Issuance of common stock
for services -- 23,540
Dividends declared, preferred
stock Series B (2,544) (2,544)
Net (loss) for the period
ended September 30, 1996 (415,423) (415,423)
Balance at September 30, 1996 $(6,321,791) $(2,464,560)
</TABLE>
Note 1 - Summary of Accounting Policies
The summary of the registrant's significant accountin policies
are incorporated by reference to the Company's annual report
on Form 10-KSB/A at June 30, 1996.
The accompanying unaudited condensed financial statements
and disclosures reflect all adjustments (all of which are
normal recurring accruals) in the ordinary course of business
which in the opinion of management are necessary for a
fair presentation of the results of operations, financial
positions, and cash flow.
The results of operations for the periods indicated are not
necessarily indicative of the results for a full year.
Note 2 - Continued Operations
The accompanying financial statements have been prepared on a
going concern basis which contemplates the realization of assets
and liquidation of liabilities in the ordinary course of
business. In prior years, the Company had been in the
development stage and its principal activities had consisted of
raising capital, performing research and development activities
and the development of their products. The Company has not yet
begun earning significant revenue from its planned principal
operations. Consequently, as of September 30, 1996, the Company
has incurred accumulated losses totaling approximately
$6,300,000, resulting in a accumulated stockholders' deficit of
approximately $2,500,000. Cash flows from current operations are
not sufficient to meet the obligations of the Company.
Management plans include continuing efforts to obtain additional
capital to fund operations until contract sales along with sales
of BionSoilO are sufficient to fund operations. There can be no
assurance that the Company will be able to successfully attain
profitable operations or raise sufficient capital.
Note 3 - Cost and Estimated Earnings on Uncompleted Contracts
The Company's costs and estimated earnings on uncompleted
treatment system contracts consist of the following:
<TABLE>
<CAPTION>
September 30, June 30,
1996 1996
<S> <C> <C>
Costs incurred on contracts $1,135,711 $1,023,774
Estimated (losses) (277,956) (201,321)
857,755 822,453
Less billings to date (739,020) (706,834)
$ 118,735 $ 115,619
</TABLE>
Note 4 - Stockholders' Deficit
The Company has various classes of warrants, please refer to the
Company's 10-KSB/A dated June 30, 1996 for details.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The Company designs, installs and operates advanced waste and
wastewater treatment systems. These systems, which incorporate
patented biological technologies, are capable of removing solids,
nutrients and other contaminants from agricultural, industrial
and municipal wastewater. In addition, the agricultural systems
installed on animal raising facilities produce a marketable,
nutrient-rich soil-like product, BionSoil.
The Company currently has systems treating swine, dairy, fruit
and juice processing, and sugar cane plantation waste streams in
Florida, New York, North Carolina, and Washington. The Company is
in the process of designing or monitoring the installation of
twelve projects, raising capital for operations and future
growth, reviewing strategic partners for various aspects of the
business, continuing a research and development effort on both
systems applications and byproducts, and strengthening its patent
coverage.
Liquidity and Capital Resources
The Company's current ratio as of September 30, 1996 was .47 :
1 as compared to .63 : 1 as of June 30, 1996. Cash as of
September 30, 1996 decreased to $47,502 as compared to $118,612
as of June 30, 1996.
During the three months ended September 30, 1996, the Company
secured a $250,000 line-of-credit from a shareholder, interest at
12% per annum payable monthly, with all outstanding principal and
interest due December 31, 1998. As of September 30, 1996, $75,000
was outstanding on this line of credit. In consideration for the
establishment of the line-of-credit, the Company issued Class G
warrants to purchase 200,000 shares of common stock for a 36
month period beginning January 1, 1998 and ending January 1, 2001
at a price of $4.50 per share. Should the company pay off the
outstanding balance on the line-of-credit on or before December
31, 1997, the warrants to purchase 200,000 shares will be reduced
to 100,000 shares.
On August 20, 1996, the Company issued warrants to purchase
14,500 shares of common stock at a price of $3.00 per share and
10,000 shares of common stock at a price of $5.00 per share for
$30,000. The warrants are effective beginning August 21, 1996 and
exercisable for a 60 month period ending August 21, 2001.
On August 30, 1996, the Company issued warrants to employees
under the fiscal year 1994 Incentive Compensation Plan, to
purchase
60,000 shares of common stock at $5.00 per share. The warrants
are effective for a 60 month period beginning September 1, 1996
through September 1, 2001.
Also, during the three months ended September 30, 1996 the
Company sold 56,183 shares of restricted and legended common
stock for net cash of $151,216 and issued 7,846 shares of
restricted and legended common stock valued at $23,540 to a
shareholder in exchange for rent.
The Company has incurred losses since inception approximating
$6,300,000 and is currently experiencing liquidity problems.
Continued losses without the infusion of additional capital raise
doubt about its ability to continue as a going concern.
Management plans include continuing efforts to obtain additional
capital to fund operations until such time, if ever, as contract
sales and the sale of BionSoil are sufficient to fund
operations. The Company is currently negotiating with independent
third parties to obtain the necessary additional funding for the
Company. No assumptions can be made that the Company will be able
to successfully attain profitable operations and/or raise
sufficient capital to sustain operations.
Results of Operations
Comparison of the Three Months Ended September 30, 1996 with
Three Months Ended September 30, 1996
Revenue in the three months ended September 30, 1996 was
$35,547 compared to $38,185 for the corresponding three month
period in 1995, a decrease of $2,638. Contract costs were higher
in the 1996 three month period by $85,180 due to startup expenses
for the BionSoil processing sites in New York and Florida. The
above resulted in a gross loss for the period ended September 30,
1996 of $76,635 as compared to a gross profit of $11,183 for the
same three month period in 1995.
Included in the higher contract costs are start up expenses
for the BionSoil processing sites in New York and Florida,
facilities (rent, utilities, maintenance, etc.), equipment, and
additional personnel.
General and administrative expenses were higher ($28,207) in
the 1996 period due to increased compensation.
The Company recorded $105,000 in interest income from the sale
of Delta stock associated with the Settlement Agreement and
General Release on the UFG note. This is the final amount to be
collected on the UFG note. The total amount collected is
$191,581 in excess of the original principal of the note. The
Company also recorded $63,684 in interest expense on its notes to
shareholders and $34,551 in research and development costs. As a
result of the above, the Company recorded a net loss of $415,423
in the three month period ended September 30, 1996, compared to a
net loss of $146,295 for the three month period ended September
30, 1995.
The Company will need to increase sales significantly to
obtain profitability.
OTHER INFORMATION
PART II
ITEM 1. Legal Proceedings.
The Company knows of no material pending legal proceedings to
which the Company (or the Subsidiary) is a party or to which any
of its systems is the subject and no such proceedings are known
to the Company.
ITEM 2. Changes in Securities. None
ITEM 3. Defaults Upon Senior Securities. None
ITEM 4. Submission of Matters to a Vote of Security Holders.
None
ITEM 5. Other Information. None
ITEM 6. Exhibits and Reports on Form 8-K.
(a) Exhibits - none
(b) Reports on Form 8-K:
Form 8-K (dated August 30, 1996) reporting on
items 5 & 7.
SIGNATURE
Pursuant to the requirements 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.
Bion Environmental Technologies, Inc.
/s/ M. Duane Stutzman, Chief Financial Officer
M. Duane Stutzman, Chief Financial Officer
Dated: November 12, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> SEP-30-1996
<CASH> 47,502
<SECURITIES> 0
<RECEIVABLES> 35,738
<ALLOWANCES> 0
<INVENTORY> 222,802
<CURRENT-ASSETS> 306,574
<PP&E> 141,999
<DEPRECIATION> 11,504
<TOTAL-ASSETS> 565,396
<CURRENT-LIABILITIES> 651,820
<BONDS> 0
0
95,482
<COMMON> 3,691,276
<OTHER-SE> (8,715,878)
<TOTAL-LIABILITY-AND-EQUITY> 565,396
<SALES> 35,547
<TOTAL-REVENUES> 35,547
<CGS> 112,182
<TOTAL-COSTS> 341,432
<OTHER-EXPENSES> (70,579)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 67,935
<INCOME-PRETAX> (415,423)
<INCOME-TAX> 0
<INCOME-CONTINUING> (415,423)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (415,423)
<EPS-PRIMARY> (.24)
<EPS-DILUTED> (.24)
</TABLE>
