Note 10 - Subsequent Events:

9 Months Ended

Mar. 31, 2013

10. SUBSEQUENT EVENTS:

The Company has evaluated events that occurred subsequent to March 31, 2013 for recognition and disclosure in the financial statements and notes to the financial statements.

From April 1, 2013 through May 10, 2013 the Company has issued 9,962 shares of the Company’s common shares to an employee and a consultant valued at approximately $17,000 and 126,000 shares of restricted common stock to investors for gross proceeds of $157,500.

As of May 10, 2013, the Company has accrued additional deferred compensation totaling approximately $59,500 of which $26,000 and $21,000, respectively, is owed to Bassani and Smith, and $12,500 is due to Schafer.

During April 2013, Bassani advanced the Company $100,000 which, effective May 15, 2013 pursuant to the agreement with Bassani described in the paragraph immediately below, when combined with prior advances (and accrued interest thereon) will be represented by a demand promissory note in the initial principal amount of approximately $204,000_from the Company to Bassani which shall be due and payable on July 1, 2013 if not paid sooner.

On May 5, 2013, the Board of Directors approved agreements with Bassani and Smith, with effective dates of May 15, 2013, under which, Bassani and Smith have agreed to continue to defer their respective cash compensation for up to an additional year until April 30, 2014 (unless the Board of Directors elects to re-commence cash payment on an earlier date) and to extend the due date of their respective deferred cash compensation until January 15, 2015 on the same terms as are set forth Note 5. The Company will provide Bassani and Smith with convertible promissory notes which reflect all the terms of these agreements to which future accruals will be added as additional principal. Smith has agreed to add $25,000 of loans payable - affiliates he made to the Company and approximately $30,000 of unreimbursed expenses to the principal of his convertible promissory note. As part of the agreements, Bassani and Smith have also forgiven any possible obligations that Bion may have owed each of them in relation to unused vacation time for periods (over 10 years) prior to the current fiscal year. In consideration of these agreements, Bassani and Smith: a) have been granted ‘execution/exercise’ bonuses to be effective upon future exercise of outstanding (or subsequently acquired) options and warrants owned by Bassani and Smith (and their respective donees) and in relation to contingent stock bonuses; b) their warrants and options, if due to expire prior to December 31, 2018, have been extended to that date (with possible further extensions); and c) other modifications have been made.