-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Ss6Y/HLw4rXZ75CxjAVuRQUrVu7mM1KUCBKV7ZgEhVyXuPoo4XQ8YSZlhBy6Tiyl nwzDflktcJXlmqTOyKiqDw== 0000875729-96-000001.txt : 19960627 0000875729-96-000001.hdr.sgml : 19960627 ACCESSION NUMBER: 0000875729-96-000001 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960515 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BION ENVIRONMENTAL TECHNOLOGIES INC CENTRAL INDEX KEY: 0000875729 STANDARD INDUSTRIAL CLASSIFICATION: 3590 IRS NUMBER: 841176672 STATE OF INCORPORATION: CO FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-19333 FILM NUMBER: 96566318 BUSINESS ADDRESS: STREET 1: 555 17TH ST STREET 2: STE 3310 CITY: DENVER STATE: CO ZIP: 80202 BUSINESS PHONE: 3032940750 FORMER COMPANY: FORMER CONFORMED NAME: RSTS CORP DATE OF NAME CHANGE: 19930328 10-Q 1 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 March 31, 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 equity, as of May 13, 1996: Common Stock, No Par Value, 1,654,642 Series B Convertible Preferred Stock, $.001 Par Value, 18,834 shares Bion Environmental Technologies, Inc. Form 10-QSB March 31, 1996 INDEX PART I FINANCIAL INFORMATION PAGE NO. ITEM 1 FINANCIAL STATEMENTS Consolidated Balance Sheets: June 30, 1995 and March 31, 1996..................... F2 Consolidated Statements of Operations: For the Nine Month Periods Ended March 31, 1995 and March 31, 1996..................... F3 Consolidated Statements of Operations: For the Three Month Periods Ended March 31, 1995 and March 31, 1996..................... F4 Consolidated Statements of Cash Flows: For the Nine Month Periods Ended March 31, 1995 and March 31, 1996..................... F5 Consolidated Statement of Changes in Stockholders' Equity.................... F6 Notes to Consolidated Financial Statements F7-F9 ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION........................ 3 PART II OTHER INFORMATION ITEMS 1-6 ........................................ 6 FINANCIAL INFORMATION PART I ITEM 1. FINANCIAL STATEMENTS Consolidated Balance Sheets
March 31, June 30, 1996 1995 (Unaudited) (Audited) --------- -------- Assets Current assets Cash and cash equivalents $ 290,706 $ 3,801 Marketable securities 298,527 1,274,647 Contract receivables 12,288 60,696 Work in progress 436,503 463,393 Prepaid expenses and other 3,722 2,701 --------- --------- Total current assets 1,041,746 1,805,238 Property and equipment, net 3,821 5,004 --------- -------- Other assets Patents, net 26,021 25,758 Deferred long term contract costs 117,442 117,442 -------- -------- Total other assets 143,463 143,200 ---------- ---------- Total assets $1,189,030 $1,953,442 ========== ========== Liabilities and Stockholder Equity Current liabilities Accounts payable $ 228,028 $ 280,902 Notes payable - stockholders 136,463 166,463 Accrued payroll expense 22,264 15,718 Accrued payroll 174,167 159,350 ------- ------- Total current liabilities 560,922 622,433 Long-term liabilities Notes payable - stockholders 2,007,035 1,926,114 Deferred contract revenue 382,500 382,500 --------- --------- Total liabilities 2,950,457 2,931,047 --------- --------- Commitments and contingency Stockholders' (deficit) Preferred stock, Series B, $.001 par value 85,000 shares authorized, 18,834 (March 31, 1996 and June 30, 1995) shares issued and outstanding 95,482 95,482 Preferred stock, Series A, $.001 par value 10,000,000 shares authorized, 0 (March 31, 1996) and 90 (June 30, 1995) shares issued and outstanding 0 20,250 Common stock, no par value, 100,000,000 shares authorized, 1,654,642 (March 31, 1996) and 1,449,959 (June 30, 1995) shares issued and outstanding 3,422,324 2,926,142 Common stock subscribed 33,190 19,338 Accumulated deficit (5,312,423) (4,038,817) ----------- ---------- Total stockholders (deficit) (1,761,427) (977,605) ----------- ---------- Total liabilities and stockholders (deficit) $1,189,030 $1,953,442 ========== ==========
See Notes to Consolidated Financial Statements Consolidated Statements of Operations
Nine Months Ended March 31 1996 1995 (Unaudited) (Unaudited) ----------- ----------- Contract revenues $ 97,735 $ 50,580 Contract costs 96,096 198,412 -------- -------- Gross profit (loss) 1,639 (147,832) General and administrative expenses 1,209,005 900,533 ----------- ----------- Loss from operations (1,207,366) (1,048,365) Other income (expense) Interest income 1,324 99,117 Interest expense (146,357) (6,364) Research and development (58,760) (47,149) Gain (loss) on marketable equity securities 137,553 (17,756) Stock for services (315,000) ------------ ------------ Net (loss) $(1,273,606) $(1,335,517) ============ ============ (Loss) per weighted average share of common stock $ (0.81) $ (0.95) ============ ============ Weighted common shares outstanding 1,575,016 1,406,094 =========== ===========
See Notes to Consolidated Financial Statements Consolidated Statements of Operations
Three Months Ended March 31 1996 1995 (Unaudited) (Unaudited) ----------- ----------- Contract revenues $ 12,747 $ 8,281 Contract costs 30,964 64,713 -------- -------- Gross profit (loss) (18,217) (56,432) General and administrative expenses 462,633 334,163 --------- --------- Loss from operations (480,850) (390,595) Other income (expense) Interest income 1,303 99,117 Interest expense (52,421) (5,914) Research and development (20,942) (10,882) Gain (loss) on marketable equity securities (35,675) 1,918 Net (loss) $(588,585) $(306,356) ========== ========== (Loss) per weighted average share of common stock $ (0.36) $ (0.21) ========== ========== Weighted common shares outstanding 1,648,709 1,445,477 ========== =========
See Notes to Consolidated Financial Statements Consolidated Statements of Cash Flows
Nine Months Ended March 31, 1996 1995 (Unaudited) (Unaudited) ----------- ----------- Cash flows from operating activities Net (loss) $(1,273,606) $(1,335,517) Adjustments to reconcile net loss to net cash provided/used by operating activities - Depreciation and amortization 2,515 3,158 (Increase) decrease in valuation allowance (137,553) 79,406 Issuance of stock for services and interest 123,054 322,338 Change in assets and liabilities - Contract receivables 75,298 (177,284) Prepaid expenses (1,021) (4,085) Accounts payable (52,874) 115,242 Accrued compensation 21,363 31,266 Deferred contract revenue --- 198,100 Deferred long-term contract costs --- (66,726) ----------- --------- Net cash (used in) operating activities (1,242,824) (834,102) ----------- --------- Cash flows from investing activities Investments in patents (1,595) (11,628) Sale of marketable equity securities 1,113,673 --- Net cash (used in) provided by investing --------- --------- activities 1,112,078 (11,628) --------- --------- Cash flows from financing activities Proceeds from shareholder notes - net 50,921 250,000 Proceeds from sale of stock 366,730 107,982 Payment on investment instrument --- 474,677 ------- ------- Net cash provided by financing activities 417,651 832,659 Net increase (decrease) in cash and cash equivalents 286,905 (13,071) Cash and cash equivalents at beginning of period 3,801 21,416 ------- ------- Cash and cash equivalents at end of period $ 290,706 $ 8,345 ========= ======== Footnote: Supplemental Cash Flow Information Cash Paid for Interest: $40,682 $8,766
See Notes to Consolidated Financial Statements BION ENVIRONMENTAL TECHNOLOGIES, INC. and Its Wholly Owned Subsidiary Bion Technologies, Inc. Consolidated Statement of Changes in Stockholders' Equity
Series A Series B Preferred Stock Preferred Stock Shares Amount Shares Amount ------------------- --------------------- Balances at June 30, 1995 90 $ 20,250 18,834 $ 95,482 Common stock subscriptions for services -- -- -- -- Conversion of Preferred A Stock into common stock (90) $(20,250) -- -- Issuance of common stock for cash -- -- -- -- Issuance of common stock for services -- -- -- -- Net (loss) for the period ended September 30, 1995 -- -- -- -- ---- ------- ------ -------- Balances at September 30, 1995 -0 $ -0 18,834 $ 95,482 Common stock subscriptions for services -- -- -- -- Issuance of common stock for cash -- -- -- -- Issuance of common stock for services -- -- -- -- Net (loss) for the period ended December31, 1995 -- -- -- -- ---- ------ ------ -------- Balances at December 31, 1995 0 0 18,834 $ 95,482 Common stock subscriptions for services -- -- -- -- Issuance of common stock for cash -- -- -- -- Issuance of common stock for services -- -- -- -- Net (loss) for the period ended March 31, 1996 -- -- -- -- ---- ----- ------ -------- Balances at March 31, 1996 0 0 18,834 $ 95,482 ==== ===== ====== ========
See Notes to Consolidated Financial Statements BION ENVIRONMENTAL TECHNOLOGIES, INC. and Its Wholly Owned Subsidiary Bion Technologies, Inc. Consolidated Statement of Changes in Stockholders' Equity Common Common Stock Stock Accumulated Shares Amount Subscribed (Deficit) Total --------------------- ---------- ----------- -------- Balances at June 30, 1995 1,449,959 $2,926,142 $ 19,338 $(4,038,817) $(977,605) Common stock subscriptions for services -- -- $ 2,000 -- $ 2,000 Conversion of Preferred A Stock into common stock 4,500 $ 20,250 -- -- 0 Issuance of common stock for cash 51,260 $ 102,520 -- -- $ 102,520 Issuance of common stock for services 25,000 $ 50,000 -- -- $ 50,000 Net (loss) for the period ended September 30, 1995 -- -- -- (146,296) $ (146,296) ------ --------- -------- --------- ----------- Balances at September 30, 1995 1,530,719 $3,098,912 $ 21,338 $(4,185,113) $(969,381) Common stock subscriptions for services -- -- $ 6,587 -- $ 6,587 Issuance of common stock for cash 75,500 $ 199,500 -- -- $ 199,500 Issuance of common stock for services 16,723 $ 53,502 $(10,003) -- $ 43,499 Net (loss) for the period ended December31, 1995 -- -- -- $ (538,725) $(538,725) ------ --------- ------- ----------- ---------- Balances at December 31, 1995 1,622,942 $3,351,914 $ 17,922 $(4,723,838) $(1,258,520) Common stock subscriptions for services -- -- $ 15,268 -- $ 15,268 Issuance of common stock for cash 29,800 $ 64,710 -- -- $ 64,710 Issuance of common stock for services 1,900 $ 5,700 -- -- $ 5,700 Net (loss) for the period ended March 31, 1996 -- -- -- $(588,585) $ (588,585) --------- ---------- ---------- ---------- ----------- Balances at March 31, 1996 1,654,642 $3,422,324 $ 33,190 $(5,312,423) $(1,761,427) ========= ========== ======== ============ ============
See Notes to Consolidated Financial Statements NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1 - Summary of Accounting Policies The summary of the registrant's significant accounting policies are incorporated by reference to the Company's annual report on Form 10-KSB at June 30, 1995. 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 - Note Payable - Stockholder On May 12, 1995 Bion entered into an agreement with a shareholder whereby the Company received 28,572 shares of common stock of Cyclopss Medical Systems, Inc., valued at $125,000 and a convertible promissory note of Delta Petroleum Corporation ("Delta") with a face value of $660,000 (valued by the parties at $1,220,000 because of the terms of the conversion feature, among other things) all in exchange for a note payable to the shareholder in the amount of $1,345,000. All of the Delta promissory note was converted into Delta common stock at a rate of $3.30 per share for a total of 200,000 shares. In addition, the Company received 8,042 shares of Delta common stock for accrued interest through November 20, 1995. Commencing May 15, 1998, the shareholder will have the option to convert all or part of the outstanding sums due under the note to common stock of the Company at a price equal to the lowest of $2.375 per share, 75% of the closing average market bid price over 30 days prior to conversion or 87 1/2 % of the lowest price for which common stock has been issued during the term. In addition, the shareholder had advanced the Company $235,000 in cash and satisfied $325,000 of Company accounts payable for a total of $560,000, on a note accruing interest at 12% per annum. The shareholder also provided legal service to the Company in the amount of $11,375. Total interest accrued on the note was $24,365. All of the above was rolled into the May 12, 1995 agreement for a total of $1,926,114. During the quarter ended March 31, 1996 the Company converted all of the accrued interest ($80,921) into the long term promissory note ($1,926,114) for a new total of $2,007,035. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont'd)
Notes payable to stockholders, due on demand, interest ranging from 11% to 12%, payable monthly. $ 136,463 Note payable to stockholder, interest at 12% payable monthly, due May 16, 2000. $2,007,035 ---------- $2,143,498 ========== Future maturities of notes payable. 1996 $ 136,463 1997 - 1998 - 1999 - 2000 $2,007,035 ---------- $2,143,498 ==========
Note 3 - Marketable Securities
March 31, 1996 June 30, 1995 Market Value Cost Market Value Cost ------------ ------- ------------ --------- Common Stock Delta Petroleum $ 298,527 $ 278,164 $1,178,720 $1,201,538 Cyclopps Medical Systems -- -- $ 95,927 $ 98,750 $ 298,527 $ 278,164 $1,274,647 $1,300,288
Market values for the common stock were estimated using the closing price of NASDAQ on March 31, 1996. As of March 31, 1996, the Company established a $20,363 valuation allowance to recognize the increase in market value. The Company has recorded during the first three quarters a net unrealized holding gain of $20,363 and realized a gain of $117,190 on the sale of the marketable securities outlined above. Delta is "thinly" traded and the market for its securities may not support a sale of all the Company's holding of Delta securities. Accordingly, the Company anticipates selling these securities in a manner and a time period that will not cause a large decrease in the stock price. There can be no assurance, since Delta's securities are thinly traded, that the market price will remain at the current level for a sufficient time period that will allow the Company to realize its investments. Note 4 - Cost and Estimated Earnings on Uncompleted Contracts - - ------------------------------------------------------------- The Company's costs and estimated earnings on uncompleted treatment system contracts consist of the following:
March 31, 1996 June 30, 1995 -------------- ------------- Costs incurred on contracts $1,045,900 $949,804 Estimated (losses) (141,868) (145,558) ----------- --------- 904,032 804,246 Less billings to date (631,062) (545,911) ----------- --------- $191,445 $258,335
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION The Company is a service provider to customers with wastewater treatment requirements and is engaged in the business of designing, marketing, and monitoring the installation and operation of proprietary systems for the biological treatment of wastewater produced from agricultural, food processing, and similar sources. The Company currently has systems treating swine, dairy, juice processing, and sugar plantation waste streams in Florida, New York, North Carolina, and Washington. The Company is in the process of designing or monitoring the installation of seven 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 - - ------------------------------- At March 31, 1996 based on the Financial Statements, the Company's total assets were $1,189,030 as compared to $1,953,442 as of June 30, 1995. The decrease of $764,412 is due to the sale of the Cyclopss Medical Systems and a portion of the Delta Petroleum Corporation ("Delta") stock, partially offset by an increase in the market value of the remaining Delta stock. The Company recorded a $68,000 write off of contract receivables and work in progress and reduced the reserves for bad debt by $30,000 during the quarter ended March 31, 1996. Accounts payable decreased $52,874 due to the conversion of accrued interest on the shareholder note into the principal (see Note 2 to the Consolidated Financial Statements), partially offset by professional expenses associated with the year-end financial audit and legal review of the June 30, 1995 10-KSB. The Company also repaid $30,000 of its short term notes payable during the nine month reporting period. The Company's current ratio as of March 31, 1996 was 1.86:1 as compared to 2.90:1 as of June 30, 1995. Cash as of March 31, 1996 increased to $290,706 as compared to $3,801 as of June 30, 1995. Also, during the nine months ended March 31, 1996 the Company converted all of its Series A Preferred Stock to common stock (4,500 shares valued at $20,250) and sold 156,560 shares of restricted and legended common stock for cash of $366,730. Additionally, the Company entered into a consulting agreement with Miller Financial Group, Inc. to provide investment banking services and issued 25,000 shares of restricted and legended common stock valued at $50,000 as partial compensation. The Company also had issued 43,623 shares of restricted and legended common stock valued at $109,202 for services rendered. The Company has incurred losses since inception totaling $5,312,423 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 BionSoilTM are sufficient to fund operations. The Company is currently negotiating with independent third parties to obtain the necessary additional funding for the Company. Currently the Company intends to sell the balance of the Delta common stock it received from the shareholder note (see June 30, 1995 10-KSB "Notes to Consolidated Financial Statements"). If the Company is successful in raising operating capital through other means, it may delay selling the Delta stock if it is determined to be in the Company's best interest. Although the Company has sold the balance of the Cyclopss Medical Systems, Inc. stock and 158,750 shares of the Delta stock during the last three quarters, the Company can provide no assurances it will be able to continue to sell the Delta stock at any time in the future. Results of Operations - - --------------------- Comparison of the Nine Months Ended March 31, 1996 with Nine Months Ended March 31, 1995 ------------------------------------------------------------------- Revenue in the March 31, 1996 period was $97,735. This was an increase of $47,155 from the corresponding period ended March 31, 1995 and is mainly attributable to increased sales and construction activity. Contract costs were lower in the 1996 period by $102,316 due to more efficient management and use of personnel. The above results in a gross revenue for the period ended March 31, 1996 of $1,639 as compared to a gross loss of $147,832 for the same period in 1995. General and administrative expenses were higher for the nine month period ended March 31, 1996 ($308,472) when compared to the corresponding period in 1995 due to more management and employee time being focused on management issues and sales activity, increased compensation expenses, and higher consulting fees. The Company also recorded a $68,000 write-off of contract receivables and work in progress during this period. The company entered into an investment banking services agreement with Miller Financial Group, Inc. on August 1, 1995 and the operating statement reflects the associated $60,000 charge for consulting services. The Company recorded $146,357 in interest expense on its notes to shareholders, $58,760 in research and development costs, and a gain of $137,553 in the valuation allowance on marketable securities to recognize the increase in market value of the Delta stock during the nine months ended March 31, 1996. As a result of the above, the Company recorded a net loss of $1,273,606 as compared to a net loss of $1,335,517 for the nine month period ended March 31, 1995. Comparison of the Three Months Ended March 31, 1996 with Three Months Ended March 31, 1995 -------------------------------------------------------- Revenue in the three months ended March 31, 1996 was $12,747 compared to $8,281 for the corresponding three month period in 1995, an increase of $4,466 due to increased sales and construction activity. Contract costs were lower in the 1996 three month period by $33,749. The above results in a gross loss for the period ended March 31, 1996 of $18,217 as compared to a gross loss of $56,432 for the same three month period in 1995. The improvement can be attributable to more efficient use of personnel. General and administrative expenses were higher in the 1996 ($128,470) period due to increased compensation partially offset by lower professional fees. The Company also recorded a $68,000 write-off of contract receivables and work in progress that is included in the general and administrative expenses. The Company recorded $52,421 in interest expense on its notes to shareholders, $20,942 in research and development costs, and a loss of $35,657 in the valuation allowance on marketable securities to recognize the decrease in market value of the Delta stock during the quarter ended March 31, 1996. As a result of the above, the Company recorded a net loss of $588,585 compared to a net loss of $306,356 for the three month period ended March 31, 1995. 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 - none EX-27 Financial Data Schedule 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. (Registrant) Bion Environmental Technologies, Inc. BY (Signature) /s/ M. Duane Stutsman (Date) May 13,1996 (Name and Title) M. Duane Stutzman, Chief Financial Officer EX-27 2
5 3-MOS JUN-30-1995 MAR-31-1996 290,706 298,527 12,288 0 0 1,041,746 0 0 1,189,030 560,922 0 1,654,642 0 95,482 0 1,189,030 97,735 97,735 96,096 1,305,101 66,240 0 146,357 (1,273,606) 0 0 0 0 0 (1,273,606) (.81) (.81)
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