EXHIBIT 99.1

                      BION ENVIRONMENTAL TECHNOLOGIES, INC.

                                  MEMORANDUM

DATE:    February 20, 2008

TO:      Ron Kreider, Kreider Farms

FROM:    David Mager and Steve Pagano, Bion

RE:      Draft Memorandum of Understanding between Bion Environmental
         Technologies and Kreider Farms

                    --------------------------------------

The purpose of this MOU is to describe the intent of the parties in
proceeding towards a final agreement for the installation of a Bion waste
treatment system (System) at Kreider Farms (KF). Upon execution of this non-
binding MOU, Bion will proceed to work with various branches of Pennsylvania
(PA) state government as well as its federal representatives.  Bion will be
seeking definitive direction and in some cases agreements related to the
following:

     1.  Nutrient credit purchase on a long term basis for the credits that
         will be generated from the KF installation.
     2.  Protocols for nutrient certification testing.
     3.  Fast track approval of the modifications required for the initial
         installation at KF to treat the initial 1400 dairy cows.
     4.  Subsidies at the state and federal level to offset some of the costs
         of the project.
     5.  Pricing from local contractors.

All of the above costs will be covered by Bion.  Following the
advancement/completion of these activities, Bion will present KF with a
specific proposal and contractual parameters assuming that the project meets
both parties' requirements. At this point, a firm binding contract would need
to be executed. Prior to this firm agreement, Bion will have spent between
$75--$100K in fees and overhead and once this agreement is executed Bion
would be committed to an additional expenditure of $200,000-$300,000 or more
with the understanding that the project will still be at the mercy of
regulatory approval.

Bion currently anticipates developing this project in two phases. Phase I
will consist of the design, construction and operation of a waste treatment
system for the 1,400 dairy cows currently located in the main barn at KF's
Manheim dairy farm.  This system will be subject to a stringent testing
program that meets the needs of Bion, KF, and the PA DEP. This process will
ultimately determine the number of nutrient credits that get certified to
sell to third party users such as municipal waste water treatment plants to
reduce their nutrient discharges.

Once Phase I has been completed, Bion will work with KF and the DEP to
initiate Phase II which will likely consist of incorporating the full 1,600
milk cows, 350 dry/fresh/sick cows, 1,150 heifers and 200 calves. .We will
review  with KF the feasibility of incorporating the chicken litter into our
waste treatment process based upon its technical and economic feasibility.
At this point we also anticipate that the detailed monitoring and
demonstration programs will be completed and that a scaled down monitoring
program consistent with KF long term needs and the PA DEP requirements will
be left in place for the duration of the 10-year program.

Public support for Project:

Bion will take the lead and Kreider will support Bion's efforts to secure
grant funds from governmental and foundation sources in order to obtain
support for funding of this Project.  Bion will meet with an assortment of
Pennsylvania and US government/regulatory officials.  These meetings will
likely include state general assembly and federal congressional
representatives, executive branch agencies such as the PA Department of
Agriculture, PA Department of Environmental Protection, county extension
agents, USDA officials, and other organizations that may have an impact on
funding, subsidy payments, or general support.  As a part of this process,
Kreider will need to be prepared to receive and respond to calls from various
private and governmental persons/entities to verify facts, clarify plans, and
enter into general discussions related to the Project and be the applicant of
record for grants and loans.  The process may also include a few on-farm
meetings, and, on some rare occasions, Kreider personnel may need to attend
an off-site meeting.  Kreider understands that its participation in this
process will be crucial, with the understanding that Bion will work to
minimize these sorts of distractions to the greatest extent possible.
Ownership of the System:

     1)  Bion will build the System and agree to operate it for a period of
         ten years at the levels required to generate the contracted nutrient
         credits, or
     2)  KF has the option, after completion of the initial demonstration
         phase (about one year), to purchase the System. The purchase price
         will be the unamortized cost of the System at the time of purchase
         plus $200 per dairy cow technology license. For purposes of
         calculating the purchase price, the amortization will start upon the
         approval for credit sales by the PA DEP and will be straight line
         over 10 years.
     3)  The KF option will be for two years after the System has been
         certified for credits by the PA DEP.  If KF did not exercise its
         option, at the conclusion of 10 years Bion will remove the System -
         details of site reconditioning to be part of the final agreement.
     4)  Bion would train KF personnel in the systems operation and
         thereafter provide periodic review of the installation while Kreider
         operates the System for at least the balance of the contracted 10
         year period.
     5)  Kreider agrees to allow access to the Bion facility to those
         designated by Bion to be part of the analysis such as DEP staff and
         to allow Bion to utilize the site for visits from prospective Bion
         project reviewers from other states. A working arrangement for this
         issue needs to be part of any final agreement.
     6)  Bion agrees to waive its annual per cow operating fees at Kreider
         based upon our ability to fast track the project by incorporating
         existing Kreider waste management facilities that are already
         approved by DEP.

The final agreement between the parties will need to address many additional
matters and agree on material terms acceptable to Bion and Kreider including
the following:

     1.  Ultimate disposition of the by-products (coarse and fine solids,
         nutrients) from the System.
     2.  Operating standards for the System if operated by Kreider to
         continue to qualify for the nutrient credits.
     3.  Agreed upon procedure to enable Bion to bring visitors to the site.
     4.  Normal contractual requirements and provisions for both parties.

If the above reflects your understanding of the intent of the parties, please
sign below and return to Bion together with the executed
Confidentiality/Proprietary Information Agreement.

Yours,

Bion Environmental Technologies, Inc.


By: /s/ David Mager, 2-20-08



Kreider Farm



By: /s/ Ronald Kreider, 2-20-08






Reference Materials:
January 30, 2008 Memo from Bion to Kreider Farms
February 20, 2008 Memo from Bion to Kreider Farms