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   December 31, 1997 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      (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  February  12,  1998:

     Common  Stock,  No  Par  Value,  8,602,455

<PAGE>

Bion  Environmental  Technologies,  Inc.                           Form 10-QSB
           December  31,  1997




     INDEX



PART  I   FINANCIAL INFORMATION                                PAGE NO.
-------   ---------------------                                --------


ITEM  1   FINANCIAL  STATEMENTS

          Consolidated  Balance  Sheets:
          June  30,  1997  and
          December  31,  1997                                     F2

          Consolidated  Statements  of  Operations:
          For  the  Six  Month  Periods  Ended
          December  31,  1996  and
          December  31,  1997                                     F3

          Consolidated  Statements  of  Operations:
          For  the  Three  Month  Periods  Ended
          December  31,  1996  and
          December  31,  1997                                     F4

          Consolidated  Statement  of  Changes  in
          Stockholders'  Equity                                   F5

          Consolidated  Statements  of  Cash  Flows:
          For  the  Six  Month  Periods  Ended
          December  31,  1996  and
          December  31,  1997                                  F6-F7

          Notes  to  Consolidated  Financial  Statements       F8-F11


ITEM  2   MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OR
           PLAN  OF  OPERATION                                  3



PART  II   OTHER  INFORMATION
--------   ------------------


ITEMS  1-6                                                     20



<PAGE>



     FINANCIAL  INFORMATION


PART  I

ITEM  1.    FINANCIAL  STATEMENTS


<PAGE>
                       BION ENVIRONMENTAL TECHNOLOGIES, INC.
                                AND SUBSIDIARIES


                           Consolidated  Balance  Sheets
<TABLE>
<CAPTION>

                                           December  31,        June  30,
                                               1997                1997
                                           ------------        ------------
                                            (Unaudited)          (Audited)
<S>                                          <C>                   <C>
     Assets
Current  assets
 Cash  and  cash  equivalents               $    56,939         $    9,232
 Accounts receivable/contract receivable
  (net of allowance of $32,000)                  56,057             72,963
 Work in progress (net of allowance
   of  $30,000)                                 224,612            168,000
 Assets held for resale                         338,000            600,000
     Total  current  assets                     675,608            850,195

Property  and  equipment,  net                  227,712            244,824

Other  assets
 Patents,  net                                   44,654             38,660
 Deferred  long-term  contract  costs            77,333             77,333
 Other                                           21,694             11,694
     Total  other  assets                       143,681            127,687

     Total  assets                         $  1,047,001       $  1,222,706


     Liabilities  and  Stockholder  (Equity)
Current  liabilities
 Accounts  payable                         $    282,779       $    302,820
 Accounts  payable  -  related  party            13,251             29,426
 Line-of-credit  -  stockholder                 130,000            105,000
 Notes  payable                                 192,000            325,000
 Notes  payable  -  stockholders                 82,171             82,171
 Capital  lease  obligations                     65,198             62,546
 Accrued  expenses                               14,741             36,359
 Accrued  payroll                               219,250            135,500
     Total  current  liabilities                999,390          1,078,822

Long-term  liabilities
 Capital  lease  obligation                     115,258            149,488
 Deferred  contract  revenue                    181,000            181,000
     Total  liabilities                       1,295,648          1,409,310

Commitments  and  contingencies

Stockholders'  (deficit)
 Preferred  stock,  $.001  par  
  value  10,000,000 Series  B 
  shares  authorized,  0
  (December  31,  1997)  and 
  18,834  June  30,  1997
  shares  issued  and  outstanding                    0             95,482
 Common  stock,  no  par  value,  100,000,000
  shares  authorized,  4,019,869  (December  31,
  1997)  and  3,696,816  (June  30,  1997)
  shares  issued  and  outstanding            9,118,840          7,983,274
 Common  stock  subscribed                      600,815            627,822
 Accumulated  deficit                        (9,968,302)        (8,893,182)
     Total  stockholders'  (deficit)           (248,647)          (186,604)

     Total  liabilities  and  
       stockholders'(deficit)              $  1,047,001       $  1,222,706
</TABLE>

     See  Notes  to  Consolidated  Financial  Statements

<PAGE>
                   BION ENVIRONMENTAL TECHNOLOGIES, INC.
                              AND SUBSIDIARIES

                  Consolidated  Statements  of  Operations

<TABLE>
<CAPTION>

                                                   Six  Months  Ended
                                                      December  31
                                                 -----------------------
                                                    1997         1996
                                                 ---------     ---------
                                                (Unaudited)   (Unaudited)
<S>                                              <C>              <C>

Contract  revenues                             $    140,749    $     61,807

Contract  costs                                     280,992         285,702
                                                -----------      ----------

     Gross  profit  (loss)                         (140,243)       (223,895)

General  and  administrative  expenses              776,102         796,533
                                                 ----------      ----------

Loss  from  operations                             (916,345)     (1,020,428)

Other  income  (expense)
 Interest  income                                     2,786         107,194
 Interest  expense                                  (46,814)       (141,334)
 Research  and  development                        (109,855)        (66,887)
 Gain  (loss)  on  sale  of  assets                    (239)              0

 Net  (loss)                                    $(1,070,467)    $(1,121,455)
                                                 ==========      ==========

Basic (Loss) per weighted average share of
 common  stock                                  $     (0.28)    $     (0.63)
                                                 ==========      ==========

Weighted  common  shares  outstanding             3,865,514       1,768,698
                                                 ==========      ==========

</TABLE>



     See  Notes  to  Consolidated  Financial  Statements


                         BION ENVIRONMENTAL TECHNOLOGIES, INC.
                                   AND SUBSIDIARIES

                       Consolidated  Statements  of  Operations

<TABLE>
<CAPTION>
                                                  Three  Months  Ended
                                                      December  31
                                                 ---------------------
                                                   1997         1996
                                                 --------     --------
                                                (Unaudited) (Unaudited)
<S>                                            <C>             <C>

Contract  revenues                              $  115,912    $   26,260

Contract  costs                                    187,423       173,520
                                                 ---------     ---------

     Gross  profit  (loss)                         (71,511)     (147,260)

General  and  administrative  expenses             305,005       455,101
                                                 ---------      ---------

Loss  from  operations                            (376,516)     (602,361)

Other  income  (expense)
 Interest  income                                      927         2,064
 Interest  expense                                 (23,910)      (73,399)
 Research  and  development                        (57,098)      (32,336)
 Gain  (loss)  on  sale  of  assets                   (369)            0
                                                  --------     ---------

Net  (loss)                                      $(456,966)    $(706,032)
                                                  ========      ========

Basic (loss) per weighted average share of
 common  stock                                   $   (0.12)    $   (0.39)
                                                  ========      ========


Weighted  common  shares  outstanding             3,957,371    1,819,820
                                                  =========    =========

</TABLE>



     See  Notes  to  Consolidated  Financial  Statements

<PAGE>



                     BION  ENVIRONMENTAL  TECHNOLOGIES,  INC.
                                AND  SUBSIDIARIES

      Consolidated  Statement  of  Changes  in  Stockholders'  Equity

<TABLE>
<CAPTION>

                              Series B                                Common
                           Preferred Stock       Common Stock         Stock
                         Shares      Amount    Shares     Amount    Subscribed
                        --------   ---------  --------   --------  -----------
<S>                       <C>         <C>        <C>         <C>        <C>


Balances at June 30,
 1997                    18,834  $   95,482  3,696,816 $7,983,274  $    627,822

Conversion of common
 stock subscriptions
 to common stock            --          --         598     $2,503        (2,503)

Common stock subscriptions
 for services               --          --         --         --         47,500

Issuance of common stock
 for  cash                  --          --     123,849    340,721            --

Issuance of common stock
 for services               --          --      19,659     76,553            --

Dividends declared, preferred
 stock Series B             --          --         --         --             --

Net (loss) for the period 
 ended September 30, 1997   --          --         --         --             --

Balances at September 30,
 1997                     18,834     95,482  3,840,922 8,403,051        672,819 

Conversion of common stock
 subscriptions to common
 stock                      --          --         --        723          2,504

Common stock subscriptions
 for services               --          --         --         --        (69,500)

Dividends declared, preferred
 stock Series B             --          --         --         --            -- 

Conversion of Preferred B
 Stock into common stock (18,834)   (95,482)   18,834     95,482            -- 

Issuance of common stock
 for cash                   --          --    144,374    574,992            -- 

Issuance of common stock
 for services               --          --      4,692     11,850            -- 

Issuance of common stock for
 series B preferred 
 dividends                  --          --     10,324     30,961            --

Net (loss) for the period
 ended December 31, 1997    --          --        --         --             --

Balances at December 31,
 1997                   $   --     $    --  4,019,869  $9,118,840      $600,815

continued below

                                             Accumulated            
                                              (Deficit)                Total
                                           --------------           -----------

Balances at June 30, 1997                   $(8,893,182)          $   (186,604)

Conversion of common stock subscriptions
 to common stock                                    --                     --

Common stock subscriptions
 for services                                       --                  47,500

Issuance of common stock for cash                   --                 340,721

Issuance of common stock for services               --                  76,553

Dividends declared, preferred stock
 Series B                                        (2,543)                (2,543)

Net (loss) for the period ended
 September 30, 1997                            (613,501)              (613,501)

Balances at September 30, 1997               (9,509,226)              (337,874)

Conversion of common stock 
 subscriptions to common stock                      --                      --

Common stock subscriptions for 
 services                                           --                 (69,500)

Dividends declared, preferred
 stock Series B                                  (2,110)                (2,110)

Conversion of Preferred B Stock
 into common stock                                  --                      --

Issuance of common stock for cash                   --                 574,992

Issuance of common stock for services               --                  11,850

Issuance of common stock for series B
 preferred dividends                                --                  30,961

Net (loss) for the period ended 
 December 31, 1997                              (456,966)                  --

Balances at December 31, 1997                  ($248,647)              $   --

</TABLE>

     See  Notes  to  Consolidated  Financial  Statements

<PAGE>
                        BION ENVIRONMENTAL TECHNOLOGIES, INC.
                                   AND SUBSIDIARIES

                     Consolidated  Statements  of  Cash  Flows

<TABLE>
<CAPTION>
                                                   Six  Months  Ended
                                                      December  31,
                                                  ---------------------
                                                    1997          1996
                                                  --------      -------
                                                 (Unaudited)  (Unaudited)
<S>                                                <C>             <C>

Cash  flows  from  operating  activities
 Net  (loss)                                     $(1,070,467) $(1,121,455)
 Adjustments  to  reconcile  net  loss  to 
  net cash  provided/used  by  operating
  activities  -
   Depreciation  and  amortization                    26,586       15,850
   Issuance  of  subscribed  stock
     for  services                                   (27,007)           0
   Issuance  of  stock  for  services
     and  interest                                    93,410      641,145
    Change  in  assets  and  liabilities  -
     Contract  receivables                           (39,706)     (12,785)
     Prepaid  expenses                               (10,000)        (767)
     Accounts  payable  and  accrued
      liabilities                                    (31,526)     140,722
     Accrued  payroll                                 83,750     (139,917)
                                                   ----------    --------

     Net  cash  (used  in)  operating  activities   (974,960)   (477,207)
                                                    --------    --------

Cash  flows  from  investing  activities
 Investments  in  patents                             (7,706)          0
 Investments  in  equipment                           (7,762)          0
                                                    --------    -------- 
     Net  cash  (used  in)  provided  by 
      investing activities                           (15,468)          0
                                                    --------    ---------

Cash  flows  from  financing  activities
 Payments  on  notes  payable                       (133,000)          0
 Line  of  credit                                     25,000      71,120
 Proceeds  from  sale  of  stock                     915,713     304,691
 Payments  on  capital  lease  obligations           (31,578)    (40,431)
 Proceeds  from  the  sale  of  warrants                   0      31,250
 Proceeds  from  the  sale  of  assets               262,000           0
                                                    ---------   --------

     Net  cash  provided  by  financing 
      activities                                   1,038,135     366,630
                                                   ---------     --------

Net  increase (decrease) in cash and 
 cash equivalents                                     47,707    (110,577)

Cash  and  cash  equivalents  at 
 beginning of period                                   9,232     118,612
                                                    --------     -------

Cash  and  cash  equivalents  at  end
   of  period                                      $  56,939    $  8,035
                                                    ========      =======

</TABLE>
                    See notes to consolidated financial statements.

     Footnote:
Supplemental  disclosure  of  cash  flow  information
     Cash  paid  for  interest  was  $26,869  (1997)  and  $73,337  (1996).


Supplemental  disclosure  of  non-cash  financing  activities
     For  the  six  months  ended  December  31,  1997  -
     Declared  and  accrued  dividends of $4,653 for preferred stock Series B.
     Converted  $5,007  of common stock subscribed into 1,321 shares of common
     stock.
     Converted 18,834 shares of Series B preferred stock to 18,834 shares of 
     common stock  valued  at  $95,482.

     Issued  $30,961  of  common  stock  (10,324 shares) as payment of accrued
     Series  B  preferred  dividends.

     For  the  six  months  ended  December  31,  1996  -
     Entered  into  a  capital  lease  for  equipment  for  $135,052.
     Declared  and  accrued  dividends  of  $5,085  for  preferred  stock 
     Series B.


<PAGE>
                        BION ENVIRONMENTAL TECHNOLOGIES, INC.
                                   AND SUBSIDIARIES

                     Notes to Consolidated Financial Statements




Note  1  -  Summary  of  Accounting  Policies
---------------------------------------------

The  summary  of  the  significant  accounting  policies of Bion Environmental
Technologies,  Inc.  ("Company") is incorporated by reference to the Company's
annual  report  on  Form  10-KSB  at  June  30,  1997.

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 of the Company.  The results of operations for the periods indicated
are  not  necessarily  indicative  of  the  results  for  a  full  year.

Note  2  -  Continued  Operations
---------------------------------

The  accompanying  financial  statements have been prepared on a going concern
basis  which  contemplates  the  realization  of  assets  and  liquidation  of
liabilities  in  the ordinary course of business.  In prior years, the Company
had  been  in the development stage and its principal activities had consisted
of  raising  capital,  performing  research and development activities and the
development  of  their  products.    The  Company  has  not  yet begun earning
significant  revenue  from its planned principal operations.  Consequently, as
of  December  31,  1997,  the Company has incurred accumulated losses totaling
$9,968,302,  resulting  in  a  accumulated  stockholders' deficit of $248,647.
Cash  flows from current operations are not sufficient to meet the obligations
of  the  Company.    Management  plans  include  continuing  efforts to obtain
additional capital to fund operations until contract sales along with sales of
BionSoil'  are  sufficient to fund operations.  There can be no assurance that
the Company will be able to successfully attain profitable operations or raise
sufficient  capital.

Note  3  -  Cost  and  Estimated  Earnings  on  Uncompleted  Contracts
----------------------------------------------------------------------

The  Company's  costs  and  estimated earnings on uncompleted treatment system
contracts  consist  of  the  following:

<TABLE>
<CAPTION>

                                   December  31,            June  30,
                                       1997                   1997
                                   ------------            -----------
<S>                                  <C>                     <C>
  Costs incurred on contracts       $1,710,766              $1,434,719
  Estimated  (losses)                 (677,101)               (536,858)
                                    ----------               ---------
                                     1,033,665                 897,861
     Less  billings  to  date         (905,318)               (833,528)
                                    ----------               ---------
                                    $  128,347               $  64,333
                                     =========                ========
</TABLE>


<PAGE>
                     BION ENVIRONMENTAL TECHNOLOGIES, INC.
                               AND SUBSIDIARIES


                  Notes to Consolidated Financial Statements


Note  4  -  Capital  Structure
------------------------------

The  following  details the capital structure of the Company as of February 5,
1998:

   Common  Stock
   -------------

     The  Company  had 8,586,455 shares of Common Stock issued and outstanding
     and  334  shares  of  subscribed  stock.

   Options  and  Warrants
   ----------------------

     The  Company  has outstanding options and warrants (including all options
listed  in  Footnote  5,  Subsequent  Events)  as  follows:

Options outstanding under the Fiscal Year 1994 Incentive Compensation Plan and
the  Non  Employee  Director  Compensation  Plan:

<TABLE>
<CAPTION>
<S>                                         <C>

Director  ($1.72)                      10,000
Director  ($2.27)                      10,000
                                     --------
                                       20,000

Employee  ($4.00)                      34,062
Employee  ($5.00)                      17,500
Employee  ($6.00)                      26,556
Employee  ($6.25)                      15,000
Employee  ($6.75)                      21,000
Employee  ($7.25)                      55,000
Employee  ($8.00)                      26,554
Employee  ($10.00)                     10,000
Employee  ($12.50)                     10,000
Employee  ($15.00)                     10,000
                                       ------
                                      225,672
</TABLE>

Warrants  outstanding  as  of  November  5,  1997  consist  of  the following:

<TABLE>
<CAPTION>
<S>                                                 <C>
 $3.00  warrants:
 exercisable  1/22/96  through  1/21/01:               3,678
 exercisable  8/21/96  through  8/20/01:              14,500
 exercisable  9/13/96  through  9/12/01:                 827
                                                 -----------
     Total  $3.00  warrants                           19,005

$4.00  warrants:
 exercisable  6/5/97  through  6/30/99:               35,000
                                                    --------
     Total  $4.00  warrants                           35,000

$5.00  warrants:
 exercisable  6/20/96  through  6/20/99:              25,000
 exercisable  8/21/96  through  8/20/01:              10,000
                                                    --------
     Total  $5.00  warrants                           35,000

$6.00  warrants:
 exercisable  6/5/97  through  6/30/00:              100,000
 exercisable  3/1/98  through  10/1/99:               50,000
 exercisable  6/9/98  through  12/31/01:               3,750
 exercisable  2/1/97  through  12/31/01:              10,000
 exercisable  4/21/97  through  4/20/02:               4,172
                                                   ---------
     Total  $6.00  warrants                          167,922

$8.00  warrants:
 exercisable  2/1/97  through  12/31/01:              10,000
 exercisable  6/9/99  through  12/31/01:               3,750
                                                   ---------
     Total  $8.00  warrants                           13,750

$10.00  warrants:
 exercisable  2/1/97  through  12/31/01:              10,000
 exercisable  6/9/99  through  12/31/01:               3,750
                                                   ---------
     Total  $10.00  warrants                          13,750

$12.50  warrants:
 exercisable  2/1/97  through  12/31/01:              10,000
 exercisable  6/9/99  through  12/31/01:               3,750
                                                   ---------
     Total  $12.50  warrants                          13,750

$15.00  warrants:
 exercisable  2/1/97  through  12/31/01:              10,000
 exercisable  1/1/00  through  12/31/01:           2,832,909
                                                   ---------
     Total  $15.00  warrants                       2,842,909

 Total  of  all  warrants  currently  outstanding  3,141,086

</TABLE>


NOTE  5  -  Subsequent  Events
------------------------------

Effective January 26, 1998 the Company made awards to four employees under the
1994  Incentive Stock Plan.  The Company granted 25,000 options at an exercise
price  of  $7.25  per  share  (exercisable  from  01/26/98  -  12/31/98).

Effective  January  26,  1998  the  Company  issued  to M. Duane Stutzman, the
Company's  Chief  Financial  Officer,  20,000  options at an exercise price of
$7.25  per  share  (exercisable  from  01/26/98  -  12/31/98).

<PAGE>
------
Effective  January  1, 1998 the Company converted 188,238 shares of subscribed
stock  to  188,238  shares  of  common  stock.    The subscribed stock was for
deferred  compensation  to  various  officers  and  employees.

Effective  January 1, 1998, holders of 84% of the Company's common stock (post
transaction)  participated  in  an  exchange  transaction  (the  "EXCHANGE")
conducted  pursuant  to  Section  351  of the Internal Revenue Code of 1986 as
amended that resulted in the exchange of 7,463,012 warrants of various classes
for  4,351,348  shares  of  restricted stock and 2,832,909 Class Z Warrants at
$15.00  per  share for a 24 month period commencing on January 1, 2000.  ( See
8K/A  dated  December  1,  1997.)

Note  6  -  Basic  and  Fully  Diluted  Loss  Per  Common  Share
----------------------------------------------------------------

During  the  second quarter of fiscal 1998, the Company adopted the provisions
of  Statement  of  Financial Accounting Standard No. 128, "Earnings Per Share"
(FAS 128).  FAS 128 established new definitions for calculating and disclosing
basic  and  diluted earnings per share.  In accordance with FAS 128, all prior
periods  have  been  restated to conform to the new methodology.  The restated
amounts  did  not  differ materially from amounts previously reported.  Due to
the  Company's  loss  from  operations, all dilutive potential common stock is
antidilutive  and  therefore  no  diluted  earnings  per  share  is presented.

<PAGE>
                    BION ENVIRONMENTAL TECHNOLOGIES, INC.
                             AND SUBSIDIARIES


ITEM  2.       MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS  OF  OPERATIONS

     The  Company designs, installs and operates advanced waste and wastewater
treatment  systems.    These  systems,  which  incorporate patented biological
technologies, are capable of removing solids, nutrients and other contaminants
from  agricultural,  industrial  and  municipal  wastewater.  In addition, the
agricultural  systems  installed  on  animal  raising  facilities  produce  a
marketable,  nutrient-rich  soil-like  product,  BionSoil.

     The  Company currently has systems treating swine, dairy, fruit and juice
processing,  and  sugar  cane  plantation  waste streams in Florida, New York,
North  Carolina, and Washington. The Company is in the process of designing or
monitoring  the installation of over forty additional systems, 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
----------------------------------

     The  Company's  current  ratio  as of December 31, 1997 was 0.68 : 1.0 as
compared  to  0.79  :  1.0  as of June 30, 1997.  Cash as of December 31, 1997
increased  to  $56,939  as  compared  to  $9,232  as  of  June  30,  1997.

     During  the  six  months  ended  December  31, 1997, the Company borrowed
$7,000 from a shareholder at 1% interest per month.  The Company also sold two
of  the  three  Properties  Held  For Resale for $262,000. As a result of this
transaction  the  Company repaid a note payable plus interest in the amount of
$145,401,  received cash in the amount of $116,360, and recorded a loss on the
sale  of  assets  of  $239.

     As  of  December  31,  1997  the  Company  has drawn $130,000 against the
October 26, 1996 line-of-credit with a shareholder. (See 8-K dated December 1,
1996.)

     Also,  during  the  six  months  ended December 31, 1997 the Company sold
268,223  shares  of  restricted  and  legended  common  stock  for net cash of
$915,713,  issued 24,351 shares of restricted and legended common stock valued
at  $88,403  for  services,  and converted 1,321 shares of subscribed stock to
1,321  shares  of  restricted and legended common stock valued at $5,007.  The
Company  has increased subscribed stock by $47,500 for legended and restricted
common  stock  awarded  but  not issued to certain employees and an officer as
additional  compensation.

<PAGE>
     During  the six months ended December 31, 1997, the Company issued awards
to  all  current  employees  (excluding  the Company's officers and directors)
under  the  Company's  Fiscal Year 1994 Incentive Plan totaling 27,762 options
with  an  exercise  price  of $4.00 per share, 27,756 options with an exercise
price  of  $6.00 per share, 27,754 options with an exercise price of $8.00 per
share,  10,000  options  with  an  exercise  price of $10.00 per share, 10,000
options with an exercise price of $12.50 per share, and 10,000 options with an
exercise  price  of  $15.00  per  share;  all  of  the above options expire on
December  31, 2001.  The options will vest as follows: for employees with less
than  one  year  of  service,  the  first  third  shall vest on their one year
employment  anniversary  date,  the  second  third  shall  vest  on the second
anniversary  date,  and  the  last  third  on  their  third  anniversary.  For
employees  with  more  than one year of service, the first third shall vest on
the  above effective date, and the second and last third shall vest twelve and
twenty-four  months  thereafter  respectively.

     During the six months ended December 31, 1997, the Company authorized the
issuance  of  restricted  stock  and  warrants  to  purchase stock to M. Duane
Stutzman, the Company's Chief Financial Officer, as follows: (a) 10,000 shares
of  the Company's restricted and legended common stock (subscribed stock), (b)
20,000  warrants  with  an  exercise  price  of  $6.00 per share commencing on
January  1,  2001,  (c)  25,000  warrants  with an exercise price of $4.00 per
share,  25,000  warrants with an exercise price of $6.00 per share, and 20,000
warrants  with  an  exercise  price  of  $8.00 per share, all three classes of
warrants  will  vest and become exercisable commencing September 15, 1997; (d)
40,000 warrants with an exercise price of $10.00 per share which will vest and
become exercisable on September 15, 1998; (e) 30,000 warrants with an exercise
price of $12.50 per share and 30,000 warrants with an exercise price of $15.00
per  share  which will vest and become exercisable on September 15, 1999.  All
classes of warrants discussed in this paragraph are to purchase restricted and
legended shares of common stock of the Company and will expire on December 31,
2001.

     During  the  six  months  ended December 31, 1997, the Company issued the
following: to Jon Northrop, the Company's Chief Executive Officer, and to Jere
Northrop, President of the Company, 75,000 Class E-1 warrants each to purchase
the Company's restricted and legended common stock at $6.00 per share with the
exercise  period  commencing  on  January 1, 2001 and expiring on December 31,
2001,  and  150,000  Class X warrants each to purchase restricted and legended
common  stock  of the Company at a price of $10.00 per share with the exercise
period  commencing  January  1,  2003  and  expiring  December  31,  2003.

<PAGE>

     During  the  six  months  ended  December  31,  1997 the Company granted,
pursuant to the Company's 1996 Nonemployee Director Stock Option Plan, options
to  the two outside directors Mr. Cullis and Mr. Schwanekamp for 10,000 shares
each  (5,000  shares  for  the year ended June 30, 1996 and 5,000 for the year
ended  June  30,  1997)  at  an  exercise  price of $1.72 and $2.27 per share,
respectively  commencing  on  August 20, 1997 and expiring on August 19, 2002.

   The  Company  has  incurred  losses  since  inception  of $9,968,302 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  BionSoil  are  sufficient  to fund operations. No
assumptions  can  be made that the Company will be able to successfully attain
profitable  operations  and/or raise sufficient capital to sustain operations.

Results  of  Operations
-----------------------

     Comparison  of  the  Six  Months  Ended  December  31,  1997  with
     ------------------------------------------------------------------
     Six  Months  Ended  December  31,  1996
     ---------------------------------------

     Revenue  in  the six months ended December 31, 1997 was $140,749 compared
to  $61,807  for  the  corresponding  six month period in 1996, an increase of
$78,942.   Contract costs were lower ($4,710) in the 1997 six month period due
to  reduced  costs  associated  with  the  BionSoil processing in New York and
Florida.

     General  and  administrative  expenses  were  lower by $20,421 in the six
month  period  ended  December  31,  1997  due  to  lower con-sulting expenses
($279,000).  The  lower  consulting  expenses  are  due  to  reduced  use  of
consultants  and  the cancellation of a consulting agreement that was recorded
as an expense in the fourth quarter  of the prior year ($231,000). This credit
was  partially  offset  by increased compensation ($144,000), public relations
($84,000),  and  marketing  and  selling  expenses  ($27,000).


<PAGE>
     The  Company recorded $104,412 less in interest income for the six months
ended  December  31,  1997.   This is the result of the one time sale of Delta
Petroleum,  Inc.  stock  associated  with the Settlement Agreement and General
Release  on the UFG note in the first quarter of 1996 (see Form 10-KSB/A dated
June 30, 1996). This was the final amount to be collected on the UFG note. The
total  amount collected is $191,581 in excess of the original principal of the
note.  The  Company  also recorded $46,814 in interest expense on its notes to
shareholders  and  capital  equipment  leases,  and  $109,855  in research and
development  costs.  As a result of the above, the Company recorded a net loss
of  $1,070,467  in the six month period ended December 31, 1997, compared to a
net  loss  of  $1,121,455  for  the  six month period ended December 31, 1996.

     The  Company  will  need  to  increase  sales  significantly  to  obtain
profitability.

     Comparison  of  the  Three  Months  Ended  December  31,  1997  with
     --------------------------------------------------------------------
     Three  Months  Ended  December  31,  1996
     -----------------------------------------

     Revenue in the three months ended December 31, 1997 was $115,912 compared
to  $26,260  for  the corresponding three month period in 1996, an increase of
$89,652. Contract costs were higher by $13,903 in the three month period.  The
higher  contract  costs  were  due to increased activities associated with the
bagging  operations  at the New York processing site.  The above resulted in a
gross  loss for the period ended December 31, 1997 of $71,511 as compared to a
gross  loss  of  $147,260  for  the  same  three  month  period  in  1996.

     General and administrative expenses were lower by $150,096 in the period.
The  lower  consulting  expenses  ($297,000)  were  due  to  reduced  use  of
consultants  and  the cancellation of a consulting agreement that was recorded
as  an expense in the fourth quarter of the prior year ($231,000). This credit
was  partially  offset  by  increased compensation ($83,000), public relations
($47,000),  and  marketing  and  selling  expenses  ($25,000).

     The  Company  recorded  $73,399  in  interest  expense  on  its  notes to
shareholders  and  capital  equipment  leases  and  $32,336  in  research  and
development  costs.  As a result of the above, the Company recorded a net loss
of  $456,966  for  the three months ended December 31, 1997, compared to a net
loss  of  $706,032  for  the  three  months  ended  December  31,  1996.

<PAGE>

General  Discussion  of  Current  and  Proposed  Operations
-----------------------------------------------------------

     THE DISCUSSION BELOW CONTAINS FORWARD-LOOKING STATEMENTS (IDENTIFIED WITH
AN  ASTERISK  "*" AT THE END OF EACH SUCH STATEMENT) MADE IN RELIANCE UPON THE
PROVISIONS OF RULE 175 PROMULGATED UNDER THE SECURITIES ACT OF 1933 AND SHOULD
BE  READ  IN  CONJUNCTION WITH THE COMPANY'S CONSOLIDATED FINANCIAL STATEMENTS
AND  THE  NOTES  THERETO.

     The  unaudited  financial  statements  contained in this Form 10-QSB show
that  over  $9,700,000  of equity has been invested in the Company through the
close  of  the  fiscal  quarter  ended  December  31,  1997.   These financial
statements  also  show  that,  as of that date, the Company had a negative net
worth  of  $248,647, cumulative losses of $9,968,000, limited current revenues
and substantial current operating losses.  Continued losses without additional
outside funding raise doubt about the Company*s ability to continue as a going
concern.  Management  plans  to  continue  raising  additional capital to fund
operations  until such time, if ever, as systems sales along with the sales of
BionSoil  and  BionSoil  products  are  sufficient  to  fund  operations.

     Management believes, however, that additional information is necessary to
evaluate the Company and its progress relative to the business it is pursuing,
its  plans, and the associated value the Company has developed during the last
several  years.  Therefore,  the  following  section  of  this  Form 10-QSB is
presented  by  management  to  give  the  reader a better understanding of the
development  of  the business of the Company to date, and its goals for growth
in  the  future.

     WHILE  THIS  10-QSB  IS  FOR  THE  PERIOD  ENDED  DECEMBER  31, 1997, FOR
TIMELINESS, CLARITY AND ACCURACY, THE DISCUSSION IN THIS SECTION WILL BE BASED
ON  OPERATIONS  THROUGH  JANUARY  31, 1998 AND THE CONDITION OF THE COMPANY ON
THAT  DATE.

     Business  Development
     ---------------------


<PAGE>
     The  Company's mission is to provide services, systems and products which
solve  environmental  problems  with wastes and wastewater and, in appropriate
situations,  recycle  wastes  into  high  value  horticultural  products which
produce superior plant growth performance.  The Company currently conducts its
business  in  two  complimentary  areas:  first, the Company designs, markets,
installs  and  oversees  the  operation  of  waste, wastewater and storm water
treatment systems, primarily in the agricultural and food processing area; and
second,  markets  BionSoil products such as organic fertilizers, potting soils
and  soil  amendments  which  are  produced  from  the nutrient rich biosolids
harvested  from  certain types of the Company's agricultural systems installed
on  large  dairy  and  swine  farms.

     The main emphasis of the Company's business during the past two years has
been  on the application of the Bion NMS for large animal raising agricultural
facilities.    As a result, the Company's focus has been more specifically on:
first,  the  design, sales, installation oversight, operations management, and
material  harvesting of Bion NMS systems for large dairy and swine facilities;
and,  second,  BionSoil:  the  processing,  blending,  packaging,  marketing,
distribution  and  sales  of  BionSoil  and  BionSoil-based products which are
produced  from  the  biosolids  harvested  from  these  Bion  NMS  systems.

     From  prior  to September 20, 1989, (when Bion Technologies, Inc., one of
the  subsidiaries  of the Company, was incorporated) through at least June 30,
1997, the Company was in the technology development mode with limited sales of
primarily  first-of-a-kind  wastewater  and/or  Bion  NMS  systems.

     As  of June 30, 1997 the Company had, in the aggregate, performed studies
for,  sold,  had  under  construction or in operation systems in four distinct
regions:  North  Carolina,  New  York, Florida, and the Pacific Northwest (see
footnote  1 , below). As of January 31, 1998 the Company's business activities
have expanded into Illinois, and western Nebraska in addition (see footnote 2,
below).

     Geographic  Expansion
     ---------------------


<PAGE>
     The  activities  of  the  Company  to design, permit, install and operate
these  systems  have  established  credibility  with federal, state, and local
regulators  and  environmental  and  agricultural  professionals.  The Company
estimates  that the cost associated with the required staffing, servicing, and
marketing  for  its systems in new geographic regions, including initial sales
calls,  design,  regulatory  approvals, installation and operation through the
cash-flow  break-even  point  (the  Company  has  not  yet  achieved cash-flow
break-even  in  any of its regional operations), is not less than $500,000 per
region, and may exceed $1,500,000.  Based on experience to date in the regions
where  system  sales  and installation activity have been focused, the Company
estimates  that  approximately $5.0 million has been expensed related to these
matters which has created what might be called "good will," "marketing" and/or
"regulatory"  value  *.  (An example of the accumulation of these costs can be
understood  by  reference to the development and installation of the Company's
initial  hog farm Bion NMS system in North Carolina which is described in more
detail  in  footnote  3,  below.)

     The  Company  anticipates  continuing  its  expansion  into  new
areas  in  the future, and this expansion will require similar additional cash
resources which, when expended, will also be expensed and not shown as balance
sheet  assets  *.

     Technology  Expansion
     ---------------------

     The  Company has six issued patents (see footnote 4, below) which provide
broad  coverage  of  the  fundamental  technology that underlies the Company's
systems  and  processes. During the remaining two quarters of fiscal year 1998
(which  will  end  on June 30, 1998) the Company is conducting a review of its
existing  patent  position and anticipates that additional patent filings will
occur  based  on this review and as further applications of the technology are
developed.

     The Company estimates that a large portion of the net loss through fiscal
year  1995  (then  shown  on  the  financial  statements as approximately $4.0
million)  was  actually  expended on system development and the enhancement of
the technology and construction of prototype systems that are the basis of the
Company's  planned  future expansion. All of these costs have been expensed by
the  Company.

     Just  as  there  are  additional  expenses  associated  with geographical
expansion,  there  also are additional expenses associated with the adaptation
of  existing technology for use in regions where climate, soil, and regulatory
conditions  are  different from those experienced in other already established
installations.    Further,  the Company anticipates additional expenditures in
the  near  future associated with expansions of the technology into the cattle
feedlot  and  poultry raising businesses where adaptation of the technology is
necessary  to  treat  waste  with both different characteristics and different
collection  tech-nologies  than  for  existing dairy or swine waste systems *.
The  majority of such expenses (which are investments in the Company's future)
will  not  show  as  balance  sheet  assets  despite  the  fact that long term
technological  value  is  being  created  *.

     Financial  Discussion
     ---------------------

     The  Company receives two distinct revenue streams from Bion NMS systems:
1)  fees  for  system design, permitting, start-up and initial operation (and,
for  selected  systems,  periodic  management

<PAGE>
or  technology  license fees); and, 2) after the initial start-up period for a
system  (commencing  approximately  12  to  15  months  after the agreement is
signed),  revenue  from  the  sale  of  BionSoil  and  BionSoil-based products
produced  from  the  systems.

     BionSoil  Economics
     -------------------

     THE  COMPANY  TRACKS  ITS  BIONSOIL  BUSINESS  ON  THE BASIS OF A COMPANY
DEFINED  STANDARD  UNIT (A "BIONANIMAL"), WHICH RELATES BIONSOIL PRODUCTION TO
CONFINED  ANIMAL  WEIGHT.    WHEN  ALL  THE  MANURE  AND URINE PRODUCED BY ONE
BIONANIMAL  IS  COLLECTED  AND  CONVERTED INTO BIONSOIL, THE COMPANY ESTIMATES
THAT  EACH  BIONANIMAL  WILL  YIELD  APPROXIMATELY  1  CUBIC YARD OF PROCESSED
BIONSOIL  PER  YEAR  *.  [NOTE: PRIOR TO JANUARY 31, 1998, THE BIONANIMAL UNIT
WAS DEFINED SUCH THAT EACH BIONANIMAL PRODUCED APPROXIMATELY 10 CUBIC YARDS OF
PROCESSED  BIONSOIL  PER  YEAR.]  THE DEFINITION WAS CHANGED BY THE COMPANY ON
                                  --------------------------------------------
JANUARY  31,  1998  TO  MAKE THE TRACKING OF THE NUMBER OF BIONANIMALS AND THE
  ----------------------------------------------------------------------------
ANNUAL  PRODUCTION  OF  BIONSOIL  ESSENTIALLY  IDENTICAL.
  -------------------------------------------------------


     Using  this  definition  of  BionAnimal  the  Company  has  developed the
following  table  relating  the  number  of  confined  animals in agricultural
installations  to the number of BionAnimal equivalents they represent based on
data  available  from  the  American  Society  of Agricultural Engineers (ASAE
D384.1 - 1989) to show the BionAnimal count of animals raised in typical large
animal  raising  facilities  where  all  wastes  are  captured:

     Table  1

<TABLE>
<CAPTION>

   Animal                          Approximate Equivalent BionAnimals
   ------                          -----------------------------------
   <S>                                    <C>                 <C>

                                     New  Definition    Old  Definition
One  dairy  cow                           10.00                 1.000
One  steer                                 4.50                 0.450 (2.2 = 1)
One  market  hog                           0.90                 0.090 (11 = 1)
One turkey                                 0.05 (20 = 1)        0.005 (200 = 1)
One  layer chicken                         0.02 (48 = 1)        0.002 (475 = 1)
</TABLE>

     As  Bion  NMS  systems  are  brought on-line and biosolids are harvested,
BionSoil, Inc. (the Company's other wholly-owned subsidiary) will purchase the
harvested  material  from  Bion  Technologies,  Inc.  to process it into final
products  for  sale to customers *.  Subsequently, some farms may be paid fees
as  royalty  for  the  biosolids *.  These payments may represent an important
part  of the strategy developed by the Company for the successful marketing of
Bion  NMS  systems  *.   Most large animal raising facilities have substantial
operating  costs  associated  with  the  disposal  of waste products which are
produced in large quantities at these facilities *.  With the construction and
operation  of  a  Bion  NMS  on  a  farm  site,  many  of  these  costs can be
substantially  reduced  or eliminated, and the farm may also receive a revenue
stream  from  the  cash  payments  made  by  the  Company  to  the  farm  *.

     BionSoil  harvests  to date have been from relatively new systems and the
Company has been devoting substantial effort to develop appropriate technology
and  sites  for processing the material for sale.  Relatively small quantities
of  BionSoil have been sold during the last twelve months.  Of the amount sold
approximately  1,640  cubic  yards  of  BionSoil  were  sold in bulk at prices
ranging  from  $10.00  to  $25.00 per yard.  Small quantities of processed and
bagged  BionSoil,  in  20 to 75 pound bags, have been sold to organic farmers,
nurseries,  and  at  farmers markets and green markets in New York and Florida
for  the  equivalent of $40.00 to $100.00 per cubic yard.  The Company's first
distribution  to  retail  outlets  was  initiated in 1997 with Agway stores in
western  New York.  Deliveries averaging six pallets per store were made to 15
Agway retail stores.  This product was sold to Agway at introductory prices of
$65.00  per  cubic  yard  ($1.625  per  25-pound  bag).   Additionally, at the
Company's  Hermitage  New  York facility, BionSoil is being processed, blended
with  Sphagnum  peat  moss and bagged in both 20 pound and 40 pound bags.  The
Company  estimates  it  will  manufacture  approximately  200,000  bags  in
preparation  for  sale to the retail market in the Spring of 1998 at wholesale
prices  to  the  Company  of $1.97 and $2.97 for 20 and 40 pounds respectively
(resulting  in  prices  per  cubic  yard of $80.00 and $108.00 *.  The average
selling  price  for  BionSoil during the past fiscal year was $12.40 per cubic
yard  for  bulk, unprocessed BionSoil, and $68.50 per cubic yard for processed
and  bagged  BionSoil.  It should be noted, however, that a large part of this
BionSoil  was  from  first  harvests of various systems which, due to start-up
issues,  yield  a  lower  quantity  of  high  quality  product.

     While  sales  of  Bion  NMS systems have been sporadic over the last four
years,  and  significant  quantities  of  BionSoil  have  only recently become
available, the Company believes it has clearly demonstrated the success of the
technology with 12 agricultural Bion NMS systems in operation, 7 of which have
been  on  line  for  more  than two years.  Additionally, through both Company
performed  and  independent  university  sponsored  testing, BionSoil has been
shown  to  clearly  enhance  plant growth performance (see footnote 5, below).

     Based  on  these results, an analysis of the Company's potential markets,
historical  sales  during  the  past  year,  the large number of proposals and
preliminary  agreements  currently  being  prepared, and the apparent steadily
increasing  interest in Bion NMS systems in the large animal agriculture area,
a  series  of  aggressive  goals  for  system  sales  and  installations  were
established  by  the  Company  at  the  start  of  the  current fiscal year *.

     The  primary  long  range  goal established by Company management in June
1997  sets  as  a  target  a  level  of  250 systems under contract containing
2,000,000  BionAnimals  by June 30, 2000, the end of the Company's fiscal year
2000  *.    To  support  achievement  of  this long range goal the Company has
established  the  addition  of  40  systems under contract (containing 300,000
BionAnimals)  as  its  sales  target for June 30, 1998 *.  Achievement of this
short term goal would result in the Company having contracts for a total of 64
systems  containing  389,000  BionAnimals  by  June  30, 1998.  The Company is
developing  strategic  plans with each of its regional offices to  achieve the
fiscal year 2000 sales goal as well as the short range plans to accomplish the
fiscal year 1998 goal *.  If the Company's goal for growth through fiscal 2000
is  met  and  all  of  the  targeted  systems  are  brought into production in
accordance  with  the  goals  established  by  management,  after  appropriate
start-up  period, approximately 2,000,000 cubic yards per year of BionSoil and
BionSoil products would be available for sale in fiscal years commencing after
fiscal  year  2000  *.

     Note  that  the  Company  did  not  meet the systems sales and BionAnimal
                               --------
projections  it had established for the fiscal year ended June 30, 1997 due to
a  number  of  factors, including but not limited to capital availability, the
decision  to  close  the  Company's  Washington  state operations, uncertainty
created  in  certain  markets  due to pending legislation which could directly
impact  animal  waste treatment and disposal practices, the decision to cancel
certain  agreements and/or contracts for systems that were not profitable, and
the  decision to renegotiate certain of its existing agreements for systems to
establish  more  equitable  terms  (which  systems  have been removed from all
system  and  BionAnimal totals until such time, if ever, as the renegotiations
result  in  new  signed  contracts).

     However,  in  the  first  seven  months of fiscal year 1998 (which period
ended  January  31,  1998),  the  Company  has signed contracts for 45 systems
containing  620,000  BionAnimals  as  compared  to  its  goal  of  signing  40
additional  systems  containing  300,000 BionAnimals for the fiscal year ended
June  30, 1998.  As a result the Company has currently exceeded its target for
June  30,  1998  and  as  of  January 31, 1998, has a total of 55 systems with
710,000  BionAnimals  under  contract. In response to this accelerated growth,
management is currently reviewing the goals it had established and anticipates
establishing revised plans to attempt to continue the accelerated growth trend
experienced  the  last  seven  months  *.    Further,  management  anticipates
formalizing  such new goals for the period through June 30, 2000 for inclusion
in  the  Company's  10-KSB  for  the  year  ended  June  30,  1998.

<PAGE>

     Market  Size
     ------------

     The long range sales goal outlined above represents aggressive growth for
the  Company *.  Although an examination of the size of the target markets for
system  sales  and  installations and BionSoil sales shows that the percent of
total  market  penetration  which these goals represent are very modest, there
can  be  no  assurance  that  the  Company will be successful in achieving its
targeted  goals  *.

     The  Company  has analyzed the 1992 U.S. Department of Agriculture Census
statistics  (the  most  recent  detailed  information  available from the U.S.
Department  of  Agriculture)  and  developed  the data presented below for the
target  market  segments  for  system  sales.  The  Company  has  analyzed the
economics  of  system installation and operation as they relate to the size of
farms,  and based on this analysis has established a potential target universe
of  not  less  than  140  million  BionAnimals  which  are on large farms (see
footnote  6, below), and therefore are believed by the Company to be potential
candidates  for  system installation *.  On the basis of these assumptions and
the  analysis  done,  the  Company  has  achieved  (through  January 31, 1998)
approximately a 0.5% market penetration, and the existing goal for fiscal year
2000,  if achieved, would represent approximately a 1.4% market penetration *.

     The  Company  believes that the potential market for BionSoil and blended
BionSoil  products  can be illustrated and quantified based on research by the
Battelle Institute in a study conducted for the Solid Waste Composting Council
(see  footnote 7, below) *. Batelle calculated that the demand for compost and
compost-like  products  (including  products ranging from manures to composted
organic  wastes  to manufactured potting soils and soil enhancers) in the U.S.
alone  is projected to be in excess of one billion cubic yards per year.  This
demand far exceeds projected supply in nine application segments: landscapers,
delivered  topsoil,  bagged  retail,  nurseries, landfill final cover, surface
mine  reclamation,  sod production, silvaculture, and agriculture *.  Targeted
markets for BionSoil include these segments in addition to state and municipal
park  and  transportation  departments,  golf  courses,  athletic fields, home
gardeners,  reforestation  projects  for  timber and mining companies, and the
U.S.  Park  Service  *.   On the basis of this projected market potential, the
BionSoil  that  the  Company  anticipates  will  be  produced from the 710,000
BionAnimals  currently under contract (in excess of 700,000 cubic yards) would
result  in  less  than a 0.1% market penetration, and the goal for fiscal year
2000,  if achieved, would represent approximately a 0.2% market penetration in
this  broadly  defined  market  *.    As  part  of  its

<PAGE>
current  planning  process  the  Company  is developing a detailed analysis of
targeted market segments and is establishing plans to penetrate these segments
with  appropriate  BionSoil  products  *.

     Based  on  current  pricing  experience, a review of prices for soils and
soil-enhancing  products in the market, target market segment strategies being
developed,  and limited sales to date, the Company believes that BionSoil will
sell  at  no  less  than $10 per cubic yard when sold unprocessed in bulk, and
will  sell  for higher prices when processed and bagged, prices which may rise
to  $100 per cubic yard *.  Additionally, based on actual costs experienced in
BionSoil  harvesting  and  processing  to  date,  anticipated  improvements in
processing  technologies  and  efficiencies, and projected lower unit costs as
volume  levels  increase  to  the forecast levels, the Company has established
projected costs for the various levels of processing required to sell BionSoil
products  *.    Therefore,  given  the  contract  terms and projected costs of
production  and  sales,  the  potential  gross  margin (see footnote 8, below)
returned  to the Company from BionSoil products sales alone has been projected
for  a  series  of  potential  price points (and the implied processing levels
required to achieve the products to be sold at these price points) *.  Table 2
presents  this  information  for  six selected price points *.  This table has
been  prepared  based  on  the  Company's  limited experience to date with the
harvesting  and  processing  of  BionSoil and BionSoil products *.  While this
information  represents  management's  best  estimates  for  possible  future
performance, there can be no guarantee that these projections will be achieved
(see  footnote  9,  below)  *.

     Table  2  *

<TABLE>
<CAPTION>

     Projected
 BionSoil  Selling          Projected                        Projected
 Price  Per  Cubic            Bion                      Annual Gross Margin
       Yard  *             Expenses  *                  Per  Cubic  Yard  *
   ------------            -----------                  ---------------------
<S>                            <C>                             <C>
     $  10  *               $    8  *                            $  2  *
        20  *                   13  *                               7  *
        40  *                   28  *                              12  *
        60  *                   37  *                              23  *
        80  *                   40  *                              40  *
       100  *                   43  *                              57  *
</TABLE>

     Revenue  to the Company from BionSoil sales is anticipated to begin in an
average of one and a half to two years after the signing of an agreement for a
Bion  NMS system *.  These gross margins would be expected to be repeated each
year  thereafter  for  as long as the installations remain in operation *.  No
fees  for  system installation, licensing, or management are included in these
projections  *.


<PAGE>

     If  the  Company  is  successful  in  bringing  targeted  systems on line
producing BionSoil within the 12 to 15 month start-up time frame (which cannot
be  assured  and  is  subject  to  numerous and substantial risks as explained
below)  and is successful in realizing a target average sales price of $40 per
cubic  yard (starting in fiscal year 1998)(which also cannot be assured and is
subject to numerous and substantial risks as explained below), each BionAnimal
would  contribute  $40  of  revenue  per  year  to  the  Company, resulting in
projected  gross  margins of $12 per year *.  Under the terms of most Bion NMS
agreements,  this  contribution  to revenue and gross margin is anticipated to
continue  for  at  least  a  15-year  period (the term of most Bion NMS system
contracts  before  extension  (if  any)  for  additional years) *.  If the net
present value (discounted at 10%) of this gross margin cash flow is calculated
for  this  15-year  period,  the  Company  projects that each BionAnimal under
contract  is  anticipated  to  have approximately $95 net present value to the
Company  *.

     Table  3,  below,  summarizes  this  net present value projection for the
BionSoil selling prices reflected in Table 2, above (see footnote 9, below) *.

     Table  3  *

<TABLE>
<CAPTION>

       Projected                                Projected
   BionSoil  Selling                      15  Year  Net  Present
      Price  Per                        Value  of  Per  BionAnimal
    Cubic  Yard  *                       Annual  Gross  Margins  *
---------------                          -------------------------
<S>                                                 <C>
     $    10  *                                    $ 16  *
          20  *                                      56  *
          40  *                                      96  *
          60  *                                     183  *
          80  *                                     318  *
         100  *                                     453  *
</TABLE>

     In  the  past  the  Company  has  lost money on system design, permitting
support,  construction oversight and initial system operation.  However, based
on  experience  to date, the Company has established pricing for its contracts
that  the  Company  believes  will,  independent  of  BionSoil  revenues,  be
sufficient  to  cover  direct  expenses  (such  as  system  design, permitting
support, construction oversight and initial system operation) related to these
system  installations  *.    Even  though  the  Company  is extremely small at
present,  has not yet developed substantial market penetration, needs to raise
additional  capital, and has (and is continuing to accrue) losses to date, the
potential  return  based  on  the  Company's  growth  goals is apparent if the
Company  is  successful  in  achieving  its  targets  *.


<PAGE>

     As  the  discussion  above  includes  forward  looking statements made in
reliance  upon the provisions of Rule 175 promulgated under the Securities Act
of 1933, readers are cautioned that, although management believes it currently
has  a reasonable good faith basis for disclosing the substance of some of its
internal  projections  to  the  public at this time, there can be no assurance
given  that the Company will ever be successful in achieving any of its stated
goals.    The  Company intends to periodically report on its progress, or lack
thereof,  in attaining the goals set forth above.  The ultimate realization of
most (if not all) of the Company's goals will require significant expenditures
of  funds  which  as  of this date are not currently available to the Company.

     It  is  currently  anticipated  that  the  selling  and  installation  of
additional  BionSoil  systems  will  require  the  Company  to hire additional
personnel,  make  significant  capital expenditures and generally increase its
overhead.    Further, the marketing and sale of BionSoil products will require
the  implementation  of a distribution network of wholesalers and/or retailers
and  a  transportation  system  for  delivery  of  the product to the intended
recipients,  and  may  require permitting in some locations, none of which the
Company may be successful in achieving.  Additional expenditures for personnel
and equipment will be necessary to harvest, process, package, sell and deliver
the  product.    The  projections stated by management assume that the Company
will be successful in obtaining the requisite funds on commercially reasonable
terms and that the other stated obstacles will be successfully overcome in the
process  of  making  sales  of  products  in  the  future.

     As  the  Company  has  never  operated at a profit and has a negative net
worth  at  the  present  time,  its  ability to successfully confront even the
currently identified challenges which lie ahead in meeting its stated goals is
far  from  certain.    It  is  likely  that  the  Company will face additional
challenges  which  have  not  as  yet  even been identified.  In the event the
Company  is  not  able  to obtain sufficient outside funding to accomplish its
goals  within  the  time periods indicated, the goals will not be met.  In the
event  the  Company  is  not  able  to  successfully overcome the other stated
obstacles  in  the  process  of  making  future  sales within the time periods
indicated,  the  goals  will  not be met.  As the Company's operations are not
currently  profitable,  readers  are further cautioned that, if the Company is
not  successful in obtaining outside funding in an amount sufficient for it to
meet its operating expenses even at its current level, the Company's continued
existence  is  uncertain.

<PAGE>

FOOTNOTES  to  General  Discussion  of  Current  and  Proposed  Operations
--------------------------------------------------------------------------

1.    The  systems  in  these  regions establish multiple applications for the
Company's  technology  including:
     (a)        Dairy farm wastewater treatment and nutrient reduction systems
which  treat  wastewater  from  dairy farms to remove phosphorus, nitrogen and
other  nutrients  and  create  water  suitable  for  discharge  or  reuse;
     (b)          Dairy  farm  Bion  NMS systems which solve the environmental
problems  associated  with  dairy  farms  and  also  create  BionSoil;
(c)          Hog  farm Bion NMS systems which solve odor, waste and wastewater
problems  associated  with  hog  farms  and  also  create  BionSoil;
     (d)        Combination food processing and manure waste treatment systems
which  treat  nutrients  and  solid wastes in waste streams from combined food
processing  plants  and  animal  confinement  areas;
(e)       Fruit processing wastewater treatment systems which treat wastewater
from  fruit  processing  plants  to  remove  solids,  nutrients  and  other
contaminants  to  create  water  suitable  for  discharge  or  reuse;
(f)        Storm water and surface water run-off treatment systems which treat
storm  water  run-off from agricultural and industrial installations to remove
nutrients  and  other  contaminants  to create water suitable for discharge or
reuse;  and,
     (g)     A feasibility study for the installation of a Bion system for the
treatment  of  all  wastewater  generated  in  a  small mobile home community.

2.    The  systems in these regions currently are all additional hog farm Bion
NMS  systems  which  solve odor, waste and wastewater problems associated with
hog  farms  and  also  create  BionSoil.

3.  During  February  1994  the Company opened its office in Smithfield, North
Carolina  with  one  full  time sales employee. Numerous contacts were made in
both  the  hog  raising  and dairy farming industries, and the first agreement
(for  a hog system) was signed in December 1994.  A second full time employee,
required  to  provide  design,  engineering, construction and system operation
expertise,  was  transferred  to  North  Carolina  in  February 1995.  Adverse
weather  conditions  during  the  construction  period  resulted  in  a longer
construction  time  than anticipated; however, system start-up was achieved in
June  of 1995, and the system has been in continuous operation since. Based on
this investment of time and effort and the successful operation of the system,
the  Company  has  expanded  its  efforts in North Carolina including hiring a
horticulturist  for BionSoil product development and testing and a manager for
the  region.    Currently,  the Company has submitted proposals to a number of
potential  customers, is engaged in discussions with several of these, and has
signed  agreements  for  five  additional  system  installations.   Management
estimates  that, to date, in excess of $600,000 has been devoted to the effort
to  build  the  Company's business in North Carolina.  Current projections are
that it will require, at a minimum, an additional nine to twelve months before
sufficient cash flow will be generated from system and BionSoil sales in North
Carolina  to offset ongoing expenses for operations conducted in that state *.

4.   Issued U.S. patents include the following titles:  "Bioconversion Reactor
and  System", "Animal Waste Bioconversion System", "Bioconverted Nutrient Rich
Humus",  "Phosphorous  Treatment  Process",  and  "Storm  Water  Remediatory
Bioconversion  System".    In  addition, the Canadian Patent Office has issued
"Aqueous  Stream  Treatment  Process".

5.    An  independent  on-farm  research  trial  was  conducted  in  1996  by
representatives  of  North  Carolina State University ("NCSU"), North Carolina
Department  of  Agriculture  ("NCDA")  and  the  North  Carolina  Cooperative
Extension  Service.    The  test  compared  the  plant  growth  of  four woody
ornamental  species  grown in three BionSoil product mixes to that of the same
species  grown  in  a  high grade commercial nursery potting soil with soluble
fertilizer  additives.    The  performance of the plants in the BionSoil mixes
exceeded  that  of  the plants in the commercial mix in all trials.  A further
independent  study was conducted in 1997 by representatives of NCSU, NCDA, and
Bion  Technologies,  Inc.    The experiment, located at a research facility on
NCSU's  Raleigh,  North  Carolina  campus,  compared  the plant growth of four
different  species  (a  flowering  shrub,  an annual, a woody ornamental and a
perennial)  grown in three mix rates of BionSoil with pine bark to that of the
same  species  grown  in  a  standard  mix fertilized with a national brand of
synthetic  controlled  release  fertilizer.  The evaluation also evaluated the
performance  of  the  plants  in  all  mixes  under  four  irrigation regimes.
BionSoil  supplied  a  steady  release  of  plant nutrients over a three month
period  and  proved  to  be  a  more efficient source of plant fertility under
limited  water  availability  than  did  the  control fertilizer.  These study
results  support other studies performed by the Company and anecdotal evidence
gathered  through  plant  trials  from  homeowners  and  others.

6.    All  numbers  of  animals  are taken from the 1992 Census of Agriculture
published  be  the  United States Department of Agriculture.  The numbers used
are  for  the  animal  populations  of farms above a specific size as follows:
*    Dairy  cows:    farms  with  200  or  more  cows
*   Beef cattle (steers):  farms with 200 or more cattle fattened on grain and
concentrate
*    Hogs and pigs: farms with 1,000 or more including hogs and pigs, sows for
breeding  and  other  hogs  and  pigs
*    Poultry  (chickens  and  turkeys)  based  on layers, broilers and turkeys

7.    Battelle  estimated the total U.S. market for compost to be 1.04 billion
cubic  yards  per  year.    See  "Compost:  United  States  Supply  and Demand
Potential"  in  Biomass  and  Bioenergy  Vol.3,  Nos  3-4,  pp. 281-299, 1992.
                -----------------------

8.   The Company's gross margin (prior to deduction of G&A expenses, interest,
depreciation,  taxes,  etc.) per cubic yard of BionSoil is calculated from the
projected  price  per yard obtained from sales of bulk or bagged product after
deducting  the  amount paid to the Producer, if appropriate, and the projected
costs  which the Company expects to incur for harvesting, processing, bagging,
and  marketing.

9.    The  following  risk  factors  should  be  considered when reviewing the
projections  in  these  tables:  the Company has not made significant sales or
earnings  to  date,  and  the projections herein represent very large advances
which  management  believes  are  attainable since the Company is now emerging
from  the  development  stage;  there  are  many  difficulties  that  may  be
encountered  by  the  Company (as it is a start-up), especially in view of the
intense  competition  from  existing  and  more  established  companies in the
wastewater,  waste management, the environmental control and organic soils and
products  businesses;  the  Bion  NMS  system  has had limited development and
market  acceptance  is  uncertain;  the  Company is in direct competition with
consulting  and  engineering  firms  (which may be better capitalized than the
Company)  that  may  be  capable  of  developing  competitive technologies and
products;  the  business is susceptible to changing technology and the Company
may  not  have  adequate  patent  and  proprietary information protection; the
Company  may  become  subject to unfavorable governmental regulations, and may
have,  in the future, liability (with no insurance coverage) for damage to the
environment;  and,  the  costs  and  expenses  used  for  all calculations are
estimates  made  on  the  basis  of  limited  information  available.

<PAGE>

     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.

(c)          The  following securities were sold in the six month period ended
December  31,  1997  without  registering  the securities under the Securities
Act.:

  197,800  shares  of  restricted  and  legended  Common  Stock to six private
investors  and  fourteen  existing  shareholders  in  privately  negotiated
transactions  for  an  aggregate  amount  of  $653,400.

  31,523  shares  of  restricted  and  legended  Common  Stock to one existing
shareholder  under  the  terms  of  a  1992 agreement granting such investor a
preemptive right to acquire such shares for an aggregate amount of $60,242.65.

  18,028  shares  of restricted and legended Common Stock to four employees in
lieu  of  cash  for  services  rendered  valued  at,  in  aggregate,  $71,960.

  7,644  shares  of  restricted  and  legended  Common  Stock  to  an existing
shareholder  for  rent  and  services  valued  in  aggregate  at  $21,450.

 18,834  shares  of  restricted  and  legended  Common Stock to seven existing
shareholders  in  exchange  of 18,834 shares of Series B preferred stock in an
aggregate  amount  of  $95,481.25.

 10,324  shares  of  restricted  and  legended  Common Stock to seven existing
shareholders as payment of Series B preferred dividends valued in aggregate at
$30,961.11.

The  shares  of  the  Company's Common Stock which were issued pursuant to the
transactions  set forth above were issued in reliance upon the exemptions from
registration  afforded  by  Sections  3(b),  4(2),  or other provisions of the
Securities  Act  of  1933,  as  amended.    Each  of  the persons to whom such
securities  were  issued  made  an  informed  investment  decision  based upon
negotiation  with  the  Company  and  was  provided  with appropriate offering
documents  and  access  to  material  information  regarding the Company.  The
Company  believes  that such persons had knowledge and experience in financial
and  business matters such that they were capable of evaluating the merits and
risks  of  the  acquisition  of  the Company's Common Stock in connection with
these  transactions.  All certificates representing such common shares bear an
appropriate  legend  restricting  the  transfer  of such securities, except in
accordance  with  the  Securities  Act  of 1933, as amended, and stop transfer
instructions  have been provided to the Company's transfer agent in accordance
therewith.

ITEM  3.          Defaults  Upon  Senior  Securities.    None

ITEM  4.          Submission  of  Matters to a Vote of Security Holders.  None

ITEM  5.          Other  Information.
On  January  16,  1998  the Company executed an Agreement for Phase II  of the
project  with  Bowman Family Farms, Inc. and Crystal Springs Farms, LLC for an
additional  330,000  finishing  hogs in eastern Colorado and western Nebraska.

ITEM  6.          Exhibits  and  Reports  on  Form  8-K.
     (a)    Exhibits:
10.1 Agreement for Phase II of the project between Bion Technologies, Inc. and
Bowman  Family  Farms,  Inc.  and  Crystal  Springs  Farms,  LLC.
27  Financial  Data  Schedule
     (b)    Reports  on  Form  8-K:
Form  8-K  (dated  December  1,  1997)
      reporting  on  item  5  &  7.
Form  8-K/A  (dated  December  1,  1997)
 reporting  on  items  5  &  7.




<PAGE>



     SIGNATURE




     Pursuant  to the requirements of the Securities Exchange Act of 1934, the
Company  has  duly  caused  this  report  to  be  signed  on its behalf by the
undersigned  thereunder  duly  authorized.


     Bion  Environmental  Technologies,  Inc.




          /s/  M.  Duane  Stutzman
     -----------------------------
M.  Duane  Stutzman,  Chief  Financial
   Officer




Dated:        February  17,  1998
          -----------------------


<PAGE>