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Bion Environmental Technologies, Inc. Announces Close of Offering and Debt Conversion, New Technology Testing Results and Patents Granted

Bion Environmental Technologies, Inc. ('Bion') (Pink Sheets: BNET) announced today that on September 30,2005 it closed, through its subsidiary, Bion Dairy Corporation ('Dairy'), a convertible debt offering of $1,917,500.

The offering, together with Bion having met certain criteria, has triggered the conversion of all of Dairy's debt, ($5,239,489.00 in aggregate, including both principal and accrued interest) into 3,763,878 restricted shares of Bion's common stock. As of this date, following the conversion, Bion now has 8,090,499 shares of common stock outstanding ---including 30,000 escrowed but not yet earned and 399,011 shares beneficially owned by Bion due its 57.7% ownership of its Centerpoint subsidiary---for an equivalent net of 7,691,488 shares of common stock outstanding. This closing and conversion mark the completion of Bion's recovery from the crisis it faced during 2003. For more details, see Bion's website: www.biontech.com.

During the period from 2003 to date, Bion has:

Bion is now positioned to pursue the following business initiatives:

The Company expects initial sales and joint venture installations of its second-generation technology applications will commence during the current fiscal year.

New Tests Show Bion's Process Produces Only 0.08 pounds per Cow per Year of Volatile Organic Compounds ('VOCs')

Tests completed by Bion during August 2005 at the 1250 cow DeVries Dairy in Dublin, Texas have documented (based on independent lab results) that the atmospheric emissions of VOCs from the Bion system were limited to only 0.08 pounds per 1400 pound dairy cow per year. These results, based on the most current testing methods that have been developed in California over the past 18 months, represent particularly good news for Bion and the environment in general, when viewed in the context of new California regulations and standards. (See http://www.biontech.com/news/pressreleases/release20050811.shtml ).

Bion's latest test results supplement previously published findings from extensive testing conducted at the DeVries Dairy during December 2003 through July 2004 that were peer-reviewed by independent academic and industry experts. The study demonstrated reductions of polluting nutrient releases to water of 74% for the nitrogen and 79% for the phosphorus. In addition, the report documented the reduction of gaseous emissions to the atmosphere of various polluting and greenhouse gases ranging from 92%-99+% (for full report click on "Technology Report" at www.biontech.com ).

On August 1, the San Joaquin Valley Air Pollution Control District, after extended public hearings, set the base-line atmospheric VOC emissions factor for dairy cows at 19.3 pounds of VOCs per cow per year, based upon recently completed research funded by the California Air Resources Board. According to this standard, VOCs from dairy cows in the Central Valley exceed the VOC emissions from both cars and refineries combined. California is now committed to regulate all dairy farms of greater than 1,000 cows (CAFOs) in areas which are in non-attainment with the federal Clean Air Act.

Bion believes that its patented and proprietary technology provides a comprehensive solution to both air and water pollution problems for concentrated livestock operations. Systems based on Bion's technology produce pollution reductions greatly exceeding any existing or proposed environmental requirements for CAFO facilities. To the best of Bion's knowledge, no other technology even claims to offer a comprehensive environmental solution. Further, no other technology has independent, peer-reviewed data to support even the more limited claims that have been made.

Bion anticipates that its technology is the key to environmental permitting for new dairy farms in California and elsewhere - at this time such permitting is not possible in most locations. Further, Bion's technology will enable existing dairy farms to retrofit to meet current & future environmental standards for their present operations, and, as importantly, allow for future permitting of dairy herd expansion.

Because Bion's technology so greatly reduces the livestock operations' environmental "footprint," it allows for the siting of significantly more animals in a given location. This, in turn, creates economies of scale for the dairy, as well as opportunities for integration of the dairy with alternative energy production (electricity, ethanol and methane) and dairy industry end-users (i.e. milk bottling, cheese and/or ice cream plants) in a way that improves the efficiency, profitability and the environmental sustainability of all participants. In nature there is no waste. Bion's demonstrated technology creates a new paradigm for the dairy industry and transforms what has historically been a waste, with attendant disposal costs, into environmentally benign, desirable by-products such as organic fertilizers and potentially high protein animal feed.


Bion's patented technology is protected by 9 US patents (and several foreign patents). Most recently, Bion was granted a divisional extension patent #6,908,495 on June 21, 2005 and had its US patent #6,689,274 on Low Oxygen Organic Waste Bioconversion System finalized on Aug 2, 2005. These patents cover Bion's unique processes, systems and methods and protect Bion's 'ownership' of the proprietary technological "space" between existing aerobic and anaerobic waste treatment processes, which represents the basis for Bion's process.

America's 9 million dairy cows are but part of this country's agriculture-related animal population that has been identified as one of the single largest contributors of nutrient pollution of our waterways and the degradation of our coastal waters. More recently, large dairies have been named as one of the largest sources of VOC's that directly impact health in California's Central Valley. Based on the demonstrated performance of its technology, which is the only process that offers a comprehensive and cost-effective solution to the environmental impact of large-scale CAFO's, Bion is now ready to realize the potential of its technology.

Contact information:

Mark A. Smith
Craig Scott
Vice President-Capital Markets/IR
303-843-6191 direct

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