<PAGE>
As Filed with the Securities and Exchange Commission on November 3, 2000
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
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. -- --
<PAGE>
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a)of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.
CALCULATION OF REGISTRATION FEE
==============================================================================
Proposed Proposed
Maximum Maximum
Title of Each Class Offering Aggregate Amount of
of Securities to be Amount to be Price Per Offering Registration
Registered Registered Share Price Fee
------------------------------------------------------------------------------
Common Stock, 4,372,882 $1.75 $7,652,544 $2,020
no par value (1) (2) (2)
Common Stock, 481,552 $8.00 $3,852,416 $1,017
no par value (3) (4) (4)
Total $3,037
==============================================================================
(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 November 1, 2000 was $1.75 per share.
(3) To be offered to holders of Class X Warrants.
(4) Based on exercise price of the Class X Warrants.
<PAGE>
PROSPECTUS SUBJECT TO COMPLETION DATED NOVEMBER 3, 2000
----------------------------------------------------------------------------
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.
4,372,882 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
Included in the securities being offered hereby are a total of 1,654,856
shares that may be issued upon the exercise of ten different classes of
warrants that we currently have outstanding and an additional 2,718,026 shares
that may be issued upon the conversion of convertible notes that are also
currently outstanding, to be offered for resale by the holders of the warrants
and debt instruments. 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 Class X Warrants outstanding. 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 November 1, 2000, the reported closing price for our Common Stock
on the OTC Bulletin Board was $1.75.
____________________________
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 5.
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 Holders or to broker-dealers
who may purchase the Common Stock as principals and thereafter sell the shares
from time to time in the over-the-counter market, in negotiated transactions
or otherwise. Sales, if any, will be made at market prices prevailing at the
times of the sales or at negotiated prices. See "Plan of Distribution"
beginning on page 16.
The date of this Prospectus is ____________, 2000
<PAGE>
AVAILABLE INFORMATION
We are subject to the information requirements of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and in accordance therewith file
reports and other information with the Securities and Exchange Commission (the
"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
(together with all exhibits, amendments and supplements, the "Registration
Statement") of which this Prospectus constitutes a part, under the Securities
Act of 1933, as amended (the "Securities Act"). 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
<PAGE>
TABLE OF CONTENTS
Part I
PAGE
PROSPECTUS SUMMARY ......................................... 4
RISK FACTORS ............................................... 6
USE OF PROCEEDS ............................................ 11
DETERMINATION OF OFFERING PRICE ............................ 11
RECENT MATERIAL CHANGES IN OUR BUSINESS ................... 11
CONVERTING HOLDERS . ....................................... 11
PLAN OF DISTRIBUTION ....................................... 16
DESCRIPTION OF COMMON STOCK ................................ 17
EXPERTS .................................................... 17
LEGAL MATTERS .............................................. 17
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION OF
OFFICERS AND DIRECTORS ......... .......................... 18
DOCUMENTS INCORPORATED BY REFERENCE ........................ 18
Part II
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION ................ II-1
INDEMNIFICATION OF OFFICERS AND DIRECTORS .................. II-1
EXHIBITS ................................................... II-2
UNDERTAKINGS ............................................... II-2
3
<PAGE>
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 constitute a complete recitation of facts necessary
to make an investment decision.
The Offering
------------
Securities Offered: Included in the shares being offered hereby are a total
of 1,654,856 shares that may be issued upon the exercise
of ten different classes of warrants that we currently
have outstanding and an additional 2,718,026 shares
that may be issued upon the conversion of convertible
notes that are also currently outstanding 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 $1.75 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 (up to $5.00 per share), 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
Class X Warrants outstanding. 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 17,896,119 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. Prior to this offering, as of November 1,
2000, we had 13,041,685 shares issued and outstanding.
Dividend Policy We do not anticipate paying dividends on our common
stock in the foreseeable future.
4
<PAGE>
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:
- Lack of operating history;
- No profitable operations;
- Immediate need for additional capital and "Going
Concern" qualification of independent certified
public accountants' report;
- New management team;
- Conflicts of interest;
- Control by management and existing shareholders;
- Limited development of technology and uncertain
market acceptance;
- Competition;
- Obsolescence and technological change;
- Potential lack of adequate patent and trade secret
protection;
- Governmental regulations;
- Risk of litigation resulting from improper
operations of system;
- Use of proceeds not certain;
- Determination of warrant exercise price;
- Shares available for resale;
- No cash dividends and none anticipated
- Potential liabilities and lack of insurance coverage
for damage to the environment;
- Market for our shares;
- Non-cash charges; and
- Conversion of outstanding convertible debt to stock
and exercise of warrants will diminish the ownership
percentage of existing shareholders.
5
<PAGE>
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. Lack of Operating History. Substantially all of our business
activities are conducted through our subsidiaries. Potential investors should
be aware of the difficulties encountered 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 commercial operations have only recently commenced our
history is limited and without significant revenues.
2. No Profitable Operations. 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 them to continue
in business. 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. Immediate Need for Additional Capital and "Going Concern"
Qualification of Independent Certified Public Accountants' Report. 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.
4. New Management Team. On December 23, 1999 we entered into a
Management Agreement with D2 Co., LLC which has substantially modified our
management team. We are wholly dependent upon the personal 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.
6
<PAGE>
5. Conflicts of Interest. 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. Control by Management and Existing Shareholders. At this time,
present management (including new management personnel as a result of the
Management Agreement entered into on December 23, 1999 with D2 Co., LLC
together with its affiliates) 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. Limited Development of Technology and Uncertain Market Acceptance.
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.
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.
7
<PAGE>
8. Competition. 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 substantially greater financial and
other resources than we do.
9. Obsolescence and Technological Change. 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. Potential Lack of Adequate Patent and Trade Secret Protection. We
have limited patent protection on our soils products and also on certain
aspects of our wastewater treatment systems technology, and we 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 effectively 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. Governmental Regulations. 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 (EPA) at the
federal level to state and local agencies; (2)our system design and
performance criteria must be responsive to the changes in federal (ie: recent
CAFO regulations), state and local environmental agencies' effluent standards
and other requirements; and (3) our system installations and operations
require governmental permits or approvals in many jurisdictions.
We are also a manufacturer and provider of BionSoil (R) products such as
potting soils, soil amendments and fertilizers. Some state and federal
regulatory agencies have standards these products must meet to be sold as soil
amendment or fertilizer products in various markets. The production and sales
of our BionSoil (R) products currently meet relevant federal dn state
requirements. These regulations can, however, experience change, which
creates a level of unpredictability in future outcomes. 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.
8
<PAGE>
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 (both directly and indirectly) 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 considerable 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 (or similar 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. Risk of Litigation Resulting from Improper Operation of 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 seeking, 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, we (through one of our
subsidiaries) were 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. While 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 prevail in the
Illinois litigation, however, our reputation might be severely damaged by this
and other similar litigation and the resulting publicity.
13. Use of Proceeds Not Certain. To the extent that we receive any
proceeds from the exercise of currently outstanding warrants, these proceeds
have been allocated by us to working capital for general corporate purposes.
Specific uses of these funds will depend upon the business judgment of our
management.
14. Determination of Warrant Exercise Price. 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, and in no event
should such price 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.
9
<PAGE>
15. Shares Available for Resale. 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 (the "Act"). 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 who is not an "affiliate" (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, have a depressive
effect on the price of our Common Stock.
16. No Cash Dividends and None Anticipated. 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. Potential Liabilities and Lack of Insurance Coverage for Damage to
the Environment. 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 (and do not ourselves discharge
any wastewater into the environment), 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, which management deems to be adequate coverage for our current
operations. It is possible, however, that circumstances might potentially
exist whereby we could be held liable for damage to the environment (i.e., the
negligent design of a system resulting in the aggravation of, as opposed to
the resolution of, an existing wastewater problem) or for other liabilities
resulting from other business risks in excess of our current policy amounts
(i.e., personal injury to an employee, breach of contract, etc.). Any such
liability, if imposed, could be substantial and would, in all likelihood, be
an adverse effect on our business, results of operations and financial
condition.
18. Market for Shares. 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. 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
10
<PAGE>
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.
20. Conversion of outstanding convertible debt to stock and exercise of
warrants will diminish 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.
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.
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 which, if exercised, we would receive
certain proceeds. Any proceeds received pursuant to the exercise of these
warrants would be used by us 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 November 1,
2000, the reported closing price for our Common Stock on the OTC Bulletin
Board was $1.75.
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 current reports on Form 8-K
dated August 3, 9 and 10, 2000.
CONVERTING HOLDERS
Included in the securities being offered hereby are 4,372,882 shares
being offered for resale by the Converting Holders. Up to 2,718,026 of those
shares are issuable upon conversion of notes held by investors. Up to
1,654,856 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.
11
<PAGE>
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 *
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 *
12
<PAGE>
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
--------------- ----------- ----------- ---------- ------------
H16 Warrants(7)
Family Trust U/A 3rd
U/W Catherine Northrop(A) 0 38,000 38,000 *
J1 Warrants(8)
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 *
J1 Warrants(8) and Convertible Note(9) holders
Ablamsky, Linda 62,858 30,000 92,858 *
Arab Commerce Bank, LTD 62,858 30,000 92,858 *
Balmore, S.A. 125,715 60,000 185,715 *
Basilice, Joseph P. 22,000 10,500 32,500 *
Battaglia, John L. 15,715 7,500 23,215 *
Berman, Richard J. 15,715 7,500 23,215 *
Bjorge, Victor and
Clark, Karen 15,715 7,500 23,215 *
Blitz, Harvey 31,429 15,000 46,429 *
Brosnan, Patrick J. 15,715 7,500 23,215 *
Burzotta, James 15,715 7,500 23,215 *
Casadonte, Donald A. 15,715 7,500 23,215 *
Casadonte, Renee S. 15,715 7,500 23,215 *
Casadonte, Virginia P. 62,858 30,000 92,858 *
D2 Co., LLC (B) 206,858 30,000 236,858 27.35%(B)
Donnalley, Geralyn E. 15,715 7,500 23,215 *
Dosch, Michael Keith 15,715 7,500 23,215 *
Fleming, Kerry M. 628,572 300,000 928,572 *
Foglia, Joseph A. 15,715 7,500 23,215 *
Frisa, Jean A. 157,143 75,000 232,143 *
Fusco, Joseph 15,715 7,500 23,215 *
Fusco, Robert 15,715 7,500 23,215 *
Growth Ventures, Inc.
Pension Plan & Trust 47,143 22,500 69,643 *
Investor Resource
Services, Inc. 31,429 15,000 46,429 *
JR Squared, LLC 94,286 45,000 139,286 *
Kirby, Charles F. 15,715 7,500 23,215 *
13
<PAGE>
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
--------------- ----------- ----------- ---------- ------------
Kirsch, Jodi 204,286 97,500 301,786 *
Lane, John D. 31,429 15,000 46,429 *
Lohmann, Robert B. 6,286 3,000 9,286 *
Nixon, J. Michael 31,429 15,000 46,429 *
Orphanos, Anthony G 62,858 30,000 92,858 *
Ponte, Vincent J. 31,429 15,000 46,429 *
Posner, Stephen J. 62,858 41,700 104,558 *
R. G. Capital Fund, LLC 157,143 75,000 232,143 *
Reiter, Michael M. and
Loreane M. 15,715 7,500 23,215 *
Santomauro, Angelo 15,715 7,500 23,215 *
Schaan, Austost Austalt 125,715 60,000 185,715 *
Scibelli, James 78,572 37,500 116,072 *
Smith, Harry M. 15,715 7,500 23,215 *
Smith, James 15,715 7,500 23,215 *
Spartz, James G. 15,715 7,500 23,215 *
TCMP(3) Capital, LLC 62,858 30,000 92,858 *
Weiss, Kenneth 15,715 7,500 23,215 *
Zizza, Salvatore J.(C) 31,429 15,000 46,429 *(C)
J2 Warrants (10)
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.
14
<PAGE>
(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 converted pursuant to the terms of the note
or automatically convert one year from the date of issuance.
(10) 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.
(B) We entered into a Management Agreement with D2 Company, LLC ("D2") on
December 23, 1999, which was amended August 10, 2000 (see our Form 8-K
dated August 3, 2000). Mr. David Mitchell, our Chief Executive Officer,
President and Director is the sole owner of D2. Percent of shares held
after the offering includes 5,000,000 shares underlying currently
exercisable warrants held by D2.
(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%.
15
<PAGE>
PLAN OF DISTRIBUTION
CONVERTING HOLDERS
Included in the shares offered hereby are a total of 1,654,856 shares
that may be issued upon the exercise of ten different classes of warrants that
we currently have outstanding and an additional 2,718,026 shares that may be
issued upon the conversion of convertible notes that are also currently
outstanding. The number of shares which may be issued upon conversion of the
convertible notes is based on an assumed conversion rate of $1.75 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 (up to
$5.00 per share), 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. The Common
Stock may be sold by one or more of the following methods: (i) a block trade
in which the broker or dealer so engaged will attempt to sell the Common Stock
as agent for the Converting Holders; and (ii) ordinary brokerage transactions
and transactions in which the broker solicits purchasers. In effecting sales,
brokers or dealers engaged by the Converting Holders may arrange for other
brokers or dealers to participate. Brokers or dealers will receive
commissions from the Converting Holders in amounts to be negotiated by the
holders immediately prior to the sale. Such brokers or dealers and any other
participating brokers or dealers may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales.
The Converting Holders may agree to indemnify any agent, dealer or
broker-dealer that participates in transactions involving sales of the Common
Stock against certain liabilities, including liabilities arising under the
Securities Act of 1933, as amended.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers or persons controlling us
pursuant to the foregoing provisions, we have been informed that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in such Act and is therefore unenforceable.
EXERCISE OF CLASS X WARRANTS
The shares which may be purchased upon the exercise of the outstanding
Class X Warrants are being offered 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.
16
<PAGE>
Persons who wish to exercise their Class X Warrants must deliver an
executed Warrant with the form of Election to Purchase, duly 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 13,041,685 shares were issued and outstanding as of November
1, 2000. 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.
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
and, in the event of liquidation, to 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.
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 form 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.
17
<PAGE>
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN
THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY
SECURITIES OTHER THAN THE COMMON STOCK OFFERED BY THIS PROSPECTUS. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER
TO BUY ANY COMMON STOCK IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR
SOLICITATION IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY
SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN OUR AFFAIRS SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED BY REFERENCE HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT
TO ITS DATE.
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR
SECURITIES ACT LIABILITIES
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") 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 fiscal year ended June 30, 2000) filed
on September 28, 2000, Exchange Act reporting number 0-19333.
2. Current Report on Form 8-K dated August 10, 2000, Exchange Act
reporting number 0-19333.
3. Current Report on Form 8-K dated August 9, 2000, Exchange Act
reporting number 0-19333.
4. Current Report on Form 8-K dated August 3, 2000, Exchange Act
reporting number 0-19333.
5. Quarterly Report on Form 10-QSB/Amendment No.1 (for quarter ended March
31, 2000) filed on October 24, 2000, Exchange Act reporting number
0-19333.
6. Quarterly Report on Form 10-QSB/Amendment No.1 (for quarter ended
December 31, 1999) filed on October 24, 2000, Exchange Act reporting
number 0-19333.
7. Quarterly Report on Form 10-QSB/Amendment No.1 (for quarter ended
September 30, 1999) filed on October 24, 2000, Exchange Act Reporting
number 0-19333.
18
<PAGE>
8. 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.
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 Barbara Greenspahn, Bion Environmental
Technologies, Inc., 7921 Southpark Plaza, Suite 200, Littleton, Colorado
80120, or (303) 738-0845.
19
<PAGE>
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.
II-1
<PAGE>
ITEM 16. EXHIBITS
Exhibit
Number Description of Exhibit
5.1 Opinion of Krys Boyle Freedman & Sawyer, P.C. regarding legality.
Filed herewith electronically.
23.1 Consent of BDO Seidman, LLP. Filed herewith electronically.
23.2 Consent of Ehrhardt Keefe Steiner & Hottman P.C. Filed herewith
electronically.
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.
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.
II-2
<PAGE>
(4) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the Registrant's annual report pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934 that is incorporated by
reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at the time shall be deemed to be the initial bona
fide offering.
(5) That, insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Company pursuant to the foregoing provisions, or otherwise, the
Company has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Company of expenses incurred or paid by a director, officer or controlling
person of the Company in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Company will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
II-3
<PAGE>
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
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Littleton, State of Colorado, on
November 3, 2000.
BION ENVIRONMENTAL TECHNOLOGIES, INC.
By:/s/ Jon Northrop
Jon Northrop, Executive Vice President,
Chief Financial Officer, Treasurer
Asst. Secretary and Director
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the date(s) indicated.
Signatures Title Date
---------- ----- ----
/s/ David J. Mitchell Chief Executive Officer, November 3, 2000
David J. Mitchell President and Director
/s/ Jon Northrop Executive Vice President, November 3, 2000
Jon Northrop Chief Financial Officer,
Treasurer, Asst. Secretary
and Director
/s/ Mark A. Smith Chairman and Secretary November 3, 2000
Mark A. Smith
/s/ Jere Northrop Chief Technical Officer November 3, 2000
Jere Northrop and Director
/s/ Ronald G. Cullis Director November 3, 2000
Ronald G. Cullis
/s/ Salvatore J. Zizza Director November 3, 2000
Salvatore J. Zizza
/s/ Andrew G. Gould Director November 3, 2000
Andrew G. Gould
