SECURITIES AND EXCHANGE COMMISSION
WASHINGTON DC 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report: March 25, 2003
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(Date of earliest event reported)
Bion Environmental Technologies, Inc.
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(Exact Name of Registrant as Specified in its Charter
Colorado 001-31437 84-1176672
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(State of Incorporation) (Commission File No.) (I.R.S. Employer
Identification No.)
18 East 50th Street, New York, NY 10022
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(Address and Zip Code of Principal Executive Offices)
Registrant's telephone number including area code: (212) 758-6622
Item 5. Other Events.
CHANGES IN OUR MANAGEMENT.
The following changes in our management occurred at a Board of Directors
Meeting, which was held on March 25, 2003:
* Jon Northrop, one of our founders and a former officer and
Director, and Mark Smith, a former officer and director, were
elected to serve on our Board of Directors to fill vacancies
created by recent resignations.
* Mr. Smith was elected to serve as the President of Bion
Environmental Technologies, Inc. ("Bion") and both of its
subsidiaries.
* Jon Northrop was elected to serve as the Secretary of Bion and its
subsidiaries.
* Jere Northrop, also a founder and one of our current directors, was
elected to serve as the Assistant Secretary of Bion and its
subsidiaries. Jere Northrop and Jon Northrop are brothers.
* David Mitchell resigned as an officer and director of Bion and of
its subsidiaries.
LIQUIDITY UPDATE.
During the period from January 10, 2003 through April 11, 2003, Bright
Capital LLC ("Brightcap"), an entity owned and controlled by Dominic Bassani,
a consultant whose services were provided to us as part of our management
agreement with D2CO, LLC ("D2")see discussion below), advanced us $249,500 so
that we could pay operating expenses that are critical to our operations,
primarily consisting of salaries paid to retain critical personnel, which now
consists of six employees. Also, as of April 11, 2003, we owe creditors
approximately $850,000.
We amended our New York City office lease effective March 1, 2003. Under
this amendment the expiration date was changed to December 31, 2003, from the
previous expiration date of December 31, 2010. The amendment calls for the
drawdown of the letter of credit provided to the landlord for the full amount
of $120,561 to be used to pay arrearages and future rent. In addition, two of
our new subtenants, Mitchell & Co. and Zizza & Co., which are controlled by
David Mitchell and Salvatore Zizza, respectively, are former officers and
directors of Bion, and have personally guaranteed the lease with the landlord.
We will not incur additional cash outflows in connection with this lease as a
result of the drawdown of the letter of credit, the subrental income and the
personal guarantees.
We vacated our Buffalo and North Carolina locations. Employees remaining
from those locations have opened up home offices.
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Although we are currently seeking other outside sources of capital, as of
this date we have not been able to secure financing that is necessary for our
current and future operations and there can be no assurance that sufficient
funds will be available from external sources. Further, there can be no
assurance that any such required funds, if available, will be available on
attractive terms or that they will not have a significantly dilutive effect on
our existing shareholders. Since we do not yet have the ability to generate
cash flow from operations, we have substantially curtailed our current
business activities and we may need to cease operations if we are not able to
immediately raise capital from outside sources. This would have a material
adverse effect on our business and our shareholders.
LOAN FROM BRIGHT CAPITAL, LLC.
On March 28, 2003, we executed a promissory note in favor of Brightcap.
The note is in the initial principal sum of $42,500 plus the $27,000 that
Brightcap has loaned since then and any additional amounts that it may loan to
us in the future. The $42,500 sum represents amounts that had already been
loaned to us by Brightcap which enabled us to pay certain of our ongoing
operating expenses. The note bears interest on the unpaid principal at the
simple rate of six percent (6%) per annum. All principal and accrued interest
becomes payable on March 28, 2004. As of April 11, 2003, the principal amount
of the note is $69,500. The note does not cover all of the $249,500 that has
been advanced to us to date from Bright Cap.
Repayment of amounts due under the note is secured by a lien on all of
our tangible assets, including without limitation, all of our computers,
office furniture, file cabinets, equipment and inventory. None of our
intangible assets, including our patents, intellectual property or trade
secrets, is pledged as collateral for the note.
STATUS OF AGREEMENTS WITH D2
The management agreement between us and D2 was terminated effective as of
March 25, 2003. The voting and shareholder agreements to which D2 was a party
were also terminated as of that same date. The Trust Under Deferred
Compensation Plan for D2CO, LLC (the "Trust") will remain in existence until
mutually agreed otherwise and, unless otherwise agreed in writing, the
"payable" balance of $450,000 currently owed by us to the Trust will be
converted into shares of our Common Stock upon the earlier to occur of (a) a
$5 million or greater equity financing(s) by us, in which case the amount
payable will be converted into shares of our Common Stock at the equity price
of the financing (or, in the event that the $5 million in equity financing is
obtained in a series of more than one financing, the price of the equity
financing which pushed the aggregate total of the financings above $5
million), or (b)March 31, 2005, at the then current market price of our Common
Stock.
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Item 7. Financial Statements and Exhibits.
The following documents are filed as exhibits to this Form 8-K:
Exhibit No. Description
10.1 Promissory Note and Security Agreement between Bion
Environmental Technologies, Inc. and Bright Capital, LLC
10.2 First Amendment to Lease between Bion Environmental
Technologies, Inc. and Pan Am Equities Corp.
10.3 Agreement between Bion Environmental Technologies, Inc.
and Bergen Cove
10.4 Agreement between Bion Environmental Technologies, Inc.
and David Mitchell dated April 7, 2003
SIGNATURES
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 hereunto duly authorized.
BION ENVIRONMENTAL TECHNOLOGIES, INC.
Date: April 14, 2003 By: /s/ Mark Smith
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Mark Smith, President
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