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   March 31, 
      1998 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 OF       (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  May  11,  1998:

     Common  Stock,  No  Par  Value,  8,691,821

<PAGE>



     INDEX



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


ITEM  1       FINANCIAL  STATEMENTS

              Consolidated  Balance  Sheets:
               June  30,  1997  and
               March  31,  1998                                F2

              Consolidated  Statements  of  Operations:
               For  the  Nine  Month  Periods  Ended
               March  31,  1997  and March  31,  1998          F3

              Consolidated  Statements  of  Operations:
               For  the  Three  Month  Periods  Ended
               March  31,  1997  and March  31,  1998          F4

              Consolidated  Statement  of  Changes  in
               Stockholders'  Equity                           F5-F6

              Consolidated  Statements  of  Cash  Flows:
               For  the  Nine  Month  Periods  Ended
               March  31,  1997  and March  31,  1998          F7-F8

              Notes  to  Consolidated  Financial  Statements   F9-F12


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



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


ITEMS  1-6                                                      21



     FINANCIAL  INFORMATION


PART  I

ITEM  1.    FINANCIAL  STATEMENTS




                BION  ENVIRONMENTAL  TECHNOLOGIES,  INC.
                           AND  SUBSIDIARIES
 
                      Consolidated Balance Sheets
<TABLE>
<CAPTION>


                                              March  31,          June  30,
                                                1998                1997 
                                              ----------        ------------
                                              (Unaudited)         (Audited)
<S>                                               <C>                <C>
     Assets
Current  assets
 Cash  and  cash  equivalents               $    19,996           $  9,232
 Accounts  receivable/contract  receivable
  (net  of  allowance  of  $32,000)              27,587             72,963
 Work  in  progress  (net  of  allowance 
  of  $30,000)                                  318,962            168,000
 Assets held for resale                         338,000            600,000
    Total  current  assets                      704,545            850,195

Property  and  equipment,  net                  219,549            244,824

Other  assets
 Patents,  net                                   43,874             38,660
 Deferred  long-term  contract  costs            77,333             77,333
 Other                                           11,694             11,694
    Total  other  assets                        132,901            127,687
                                              ----------         ----------
    Total  assets                            $1,056,995         $1,222,706
                                              ==========         ==========

     Liabilities  and  Stockholder  (Equity)
Current  liabilities
 Accounts  payable                           $  300,519         $  302,820
 Accounts  payable  -  related  party             9,873             29,426
 Line-of-credit  -  stockholder                 160,000            105,000
 Notes  payable                                 192,000            325,000
 Notes  payable  -  stockholders                 82,171             82,171
 Capital  lease  obligations                     64,973             62,546
 Accrued  expenses                               20,479             36,359
 Accrued  payroll                               251,750            135,500
                                               --------          ----------
     Total  current  liabilities              1,081,765          1,078,822

Long-term  liabilities
 Capital  lease  obligation                      99,095            149,488
 Deferred  contract  revenue                    181,000            181,000
                                               ---------        ----------
     Total  liabilities                       1,361,860          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,  8,650,321  (March  31,
  1998)  and  3,696,816  (June  30,  1997)
  shares  issued  and  outstanding          10,128,782           7,983,274
 Common  stock  subscribed                      11,500             627,822
 Accumulated  deficit                      (10,445,147)         (8,893,182)
                                            ----------           ---------
     Total  stockholders'  (deficit)          (304,865)           (186,604)
                                            ----------           ---------

     Total  liabilities  and 
       stockholders'(deficit)               $1,056,995          $1,222,706
                                            ==========           =========
</TABLE>

     See  Notes  to  Consolidated  Financial  Statements


              BION  ENVIRONMENTAL  TECHNOLOGIES,  INC.
                        AND  SUBSIDIARIES

               Consolidated  Statements  of  Operations

<TABLE>
<CAPTION>

                                              Nine  Months  Ended
                                                    March  31
                                            -----------------------
                                               1998          1997
                                            -----------    --------
<S>                                          <C>             <C>
                                            (Unaudited)   (Unaudited)

Contract  revenues                          $  357,916     $    99,646

Contract  costs                                409,222         396,169
                                             ----------     -----------

     Gross  profit  (loss)                     (51,306)       (296,523)

General  and  administrative  expenses       1,258,494       1,267,632
                                            -----------     ----------

Loss  from  operations                      (1,309,800)     (1,564,155)

Other  income  (expense)
 Interest  income                                2,454         107,200
 Interest  expense                             (71,483)       (212,811)
 Research  and  development                   (168,244)       (118,855)
 Gain  (loss)  on  sale  of  assets               (239)              0
                                            ------------     -----------

Net  (loss)                                $(1,547,312)    $(1,788,621)
                                            ============    =============

Basic  (Loss)  per  weighted  average
 share  of common  stock                   $     (0.28)    $     (0.97)
                                            ============    =============


Weighted  common  shares  outstanding        5,447,590          1,836,763
                                            ============     =============
</TABLE>


                   See notes to consolidated financial statements.


                        BION ENVIRONMENTAL TECHNOLOGIES, INC.
                                   AND SUBSIDIARIES

                    Consolidated  Statements  of  Operations
<TABLE>
<CAPTION>


                                                 Three  Months  Ended
                                                        March  31
                                                 ---------------------
                                                    1998        1997
                                                 ----------  ---------
                                                 (Unaudited)(Unaudited)
<S>                                                  <C>          <C>

Contract  revenues                              $  217,168    $  37,839

Contract  costs                                    128,229      110,467
                                                ----------    ---------

     Gross  profit  (loss)                          88,939      (72,628)

General  and  administrative  expenses             483,060      471,100
                                                ----------     ---------

Loss  from  operations                            (394,121)    (543,728)

Other  income  (expense)
 Interest  income                                      333            6
 Interest  expense                                 (24,668)     (71,477)
 Research  and  development                        (58,389)     (51,968)
 Gain  (loss)  on  sale  of  assets                      0            0
                                                ------------  -----------

Net  (loss)                                      $(476,845)   $(667,167)
                                                ============  ===========

Basic  (Loss)  per  weighted  average  share of
 common  stock                                   $   (0.06)   $   (0.34)
                                                ============  ===========

Weighted  common  shares  outstanding            8,611,744    1,972,895
                                                ============  ============

</TABLE>



           See notes to consolidated financial statements.




             BION  ENVIRONMENTAL  TECHNOLOGIES,  INC.
                         AND  SUBSIDIARIES

    Consolidated  Statement  of  Changes  in  Stockholders'  Equity

<TABLE>
<CAPTION>

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

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

Conversion  of  common  stock
 subscriptions to common stock    --           --          598       2,503   

Common  stock  subscriptions
  for  services                   --           --           --          --  

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  

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

Common  stock  subscriptions
  for  services                   --           --           --          --    

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

Common  stock  subscriptions
  for  services                   --           --           --          --   

Conversion  of  common  stock
 subscriptions  for  services     --           --      188,572     600,815

Issuance of common stock
 for  cash                        --           --       81,478     378,402

Issuance  of  common  stock
  for  services                   --           --        9,054      30,725   

Transfer of property pursuant
 to section 351 of 
 the Internal Revenue Code 
 of 1986                          --           --    4,351,348         --     

Net (loss) for the period ended
 March  31,  1998                 --           --           --         --    

Balances at March 31, 1998       $--          $--   $8,650,321 $10,128,782

</TABLE>

Continued below

<TABLE>
<CAPTION>

                                Common Stock        Accumulated      
                                 Subscribed          (Deficit)         Total
                               --------------      ------------     ------------
<S>                                  <C>               <C>              <C>

Balances at June 30, 1997         $  627,822        $(8,893,182)    $(186,604)

Conversion of common stock
 subscritions to common
 stock                                (2,503)                -            -

Common stock subscriptions for
 services                             47,500                 -         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       672,819          (9,509,226)    (337,874)

Conversion of common stock
 subscriptions to common stock        (2,504)                 -            -

Common stock subscriptions
 for services                        (69,500)                -        (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)    (456,966)

Balances at December 31, 1997        600,815           (9,968,302)    (248,647)

Common stock subscriptions for
 services                             11,500                 -          11,500

Conversion of common stock 
 subscriptions for services         (600,815)                -            -

Issuance of common stock for cash       -                    -         378,402

Issuance of common stock for services   -                    -          30,725

Issuance of common stock in exchange
 transaction pursuant to section 
 351 of the Internal Revenue Code
 of 1986                                -                    -            -

Net (loss) for the period ended
 March 31, 1998                         -               (476,845)     (476,845)

Balances at March 31, 1998         $11,500          $(10,445,147)   $  (304,865)

</TABLE>

     See  Notes  to  Consolidated  Financial  Statements




                  BION  ENVIRONMENTAL  TECHNOLOGIES,  INC.
                             AND  SUBSIDIARIES
  
                 Consolidated  Statements  of  Cash  Flows

<TABLE>
<CAPTION>
                                              Nine  Months  Ended
                                                   March  31,
                                              --------------------
                                                1998        1997
                                              --------      ------
                                             (Unaudited) (Unaudited)
<S>                                             <C>           <C>
Cash  flows  from  operating  activities
 Net  (loss)                                $(1,547,312)      $(1,788,621)
 Adjustments  to  reconcile  net  loss  
  to  net cash  provided/used  by  
  operating  activities  -
  Depreciation  and  amortization                41,464            22,785
  Issuance  of  stock and increase in
   subscribed stock for services
   and  interest                                108,628           471,228
   Change  in  assets  and  liabilities  -
    Contract  receivables and work-in
     progress                                  (105,586)          (35,849)
    Prepaid  expenses                                 0           (14,782)
    Accounts  payable  and  accrued  
     liabilities                                (11,426)          168,718
    Accrued  payroll                            116,250           (99,501)
                                              ---------          ---------

     Net  cash (used in) operating 
      activities                             (1,397,982)       (1,276,022)
                                              ----------       ----------

Cash  flows  from  investing  activities
 Investments  in  patents                       (7,707)                 0
 Investments  in  equipment                    (13,696)           (20,662)
 Proceeds from the sale of assets              262,000                  0
                                              ----------       -----------
     Net  cash  (used  in)  provided 
      by  investing activities                 240,597           (20,662)
                                              ----------       -----------

Cash  flows  from  financing  activities
 Payments  on  notes  payable                 (133,000)                 0
 Line  of  credit                               55,000            445,991
 Proceeds  from  sale  of  stock             1,294,115            741,768
 Payments  on  capital  lease  obligations     (47,966)           (29,912)
 Proceeds  from  the  sale  of  warrants             0             31,250
                                             ---------          ----------

     Net  cash  provided  by  financing 
      activities                             1,168,149          1,189,097
                                             ---------           ---------

Net  increase (decrease) in cash and
 cash equivalents                               10,764          (107,587)

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

Cash  and  cash  equivalents  at  
 end  of  period                             $  19,996          $ 11,025
                                              ========           =======
</TABLE>


    Footnote:
Supplemental  disclosure  of  cash  flow  information
     Cash  paid  for  interest  was  $9,457  (1998)  and  $100,522  (1997).

Supplemental  disclosure  of  non-cash  financing  activities
   For  the  nine  months  ended  March  31,  1998  -
      Declared  and  accrued  dividends  of  $4,653  for preferred stock Series
      B.
     Converted  $605,822 of common stock subscribed into 189,893 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.
     Issued  4,351,348  shares of restricted stock and 2,832,909 Class Z 
      warrants at  $15.00 per share in an exchange transaction (see note  4).

   For  the  nine  months  ended  March  31,  1997  -
     Entered  into  a  capital  lease  for  equipment  for  $165,801.
     Declared  and  accrued  dividends of $7,629 for preferred stock Series B.
     Converted  $261,000  of  shareholders'  notes  payable  into common stock.


                See notes to consolidated financial statements.



                  BION AND ENVIRONMENTAL TECHNOLOGIES, INC.
                               AND SUBSIDIARIES
                 Notes to Consolidated Financial Statements
<PAGE>
------

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 dis-closures
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  March  31,  1998,  the  Company  has  incurred accumulated losses totaling
$10,445,147,  resulting  in  a  accumulated stockholders' deficit of $304,865.
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>

                                          March  31,            June  30,
                                            1998                  1997
                                        -------------         ------------
<S>                                          <C>                   <C>
     Costs  incurred  on  contracts       $1,829,777           $1,434,719
     Estimated  (losses)                   (588,164)             (536,858)
                                           ---------            ---------
                                          1,241,613               897,861
     Less  billings  to  date            (1,026,318)             (833,528)
                                          ---------             ---------
                                       $    215,295           $    64,333
                                          =========             =========
</TABLE>


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

The following details the capital structure of the Company as of May 11, 1998:

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

The  Company  had 8,691,821 shares of Common Stock issued and outstanding
and  2,300  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  ($6.00)              21,556
     Employee  ($6.25)              10,000
     Employee  ($6.75)               5,000
     Employee  ($7.25)              32,500
     Employee  ($7.50)              25,000
     Employee  ($7.75)              25,000
     Employee  ($8.00)              25,554
     Employee  ($10.00)             10,000
     Employee  ($12.50)             10,000
     Employee  ($15.00)             10,000
                                   -------
                                   228,672
</TABLE>

Warrants  outstanding  as  of  May  11,  1998  consist  of  the  following:

<TABLE>
<CAPTION>
<S>                                                          <C>
     $3.00  warrants:
       exercisable  1/22/96  through  1/21/01:              1,003
       exercisable  8/21/96  through  8/20/01:             14,500
       exercisable  9/13/96  through  9/12/01:                827
                                                       -----------
       Total  $3.00  warrants                              16,330

     $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
        Total  $8.00  warrants                             10,000

     $10.00  warrants:
       exercisable  2/1/97  through  12/31/01:             10,000
        Total  $10.00  warrants                            10,000

     $12.50  warrants:
       exercisable  2/1/97  through  12/31/01:             10,000
        Total  $12.50  warrants                            10,000

     $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   3,127,161
</TABLE>

Effective  January 1, 1998, holders of 84% of the Company's common stock (post
transaction)  transferred property to the Company pursuant to  Section  351  of
the Internal Revenue Code of 1986, as amended.  The transaction resulted in the
transfer 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  5  -  Subsequent  Events
------------------------------

Effective  April  17, 1998 the Company made awards to five employees under the
1994  Incentive Stock Plan.  The Company granted 25,000 options at an exercise
price  of  $7.75  per  share  (exercisable  from  4/17/98  -  12/31/98).

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.
     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  March  31, 1998 was 0.65 : 1.0 as
compared  to  0.79  :  1.0  as  of  June  30, 1997.  Cash and cash equivalents 
as of March 31, 1998 increased  to  $19,996  as  compared  to  $9,232  as  of 
June  30,  1997.

     During  the nine months ended March 31, 1998, 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  March 31, 1998 the Company has drawn $160,000 against the October
26,  1996 line-of-credit with a shareholder. (See 8-K dated December 1, 1996.)

     Also,  during  the  nine  months  ended  March  31, 1998 the Company sold
349,701  shares  of  restricted  and  legended  common  stock  for net cash of
$1,294,115,  issued  33,405  shares  of  restricted  and legended common stock
valued  at  $119,128  for services, and converted 189,893 shares of subscribed
stock  to  189,893  shares  of  restricted and legended common stock valued at
$605,822.   The Company had additional subscribed stock of $59,000 for legended
and restricted common stock awarded but not issued to certain employees and an
officer  as  additional  compensation.

<PAGE>

     Effective  January  1, 1998, holders of 84% of the Company's common stock
(post  transaction) transferred property to the Company pursuant to  Section  
351  of the Internal Revenue Code of 1986, as amended.  The transaction resulted
in the transfer 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.)

     During the nine months ended March 31, 1998, 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 September 15, 1997, and the
second  and  last  third  shall  vest twelve and twenty-four months thereafter
respectively.    The Company also made nine awards to employees under the 1994
Incentive Stock Plan.  The Company granted 25,000 options at an exercise price
of $7.25 per share (exercisable from 1/26/98 - 12/31/98) and 25,000 options at
an  exercise  price  of $7.50 per share (exercisable from 2/23/98 - 12/31/98).

     During  the  nine months ended March 31, 1998, 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

<PAGE>

in  this  paragraph  are  to purchase restricted and legended shares of common
stock  of  the Company and will expire on December 31, 2001.  The Company also
issued to M. Duane Stutzman 20,000 options under the 1994 Incentive Stock Plan
at an exercise price of $7.25 per share (exercisable from 1/26/98 - 12/31/98).

     During  the  nine  months  ended  March  31, 1998, 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.

     During the nine months ended March 31, 1998 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 $10,445,147 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  Nine  Months  Ended  March  31,  1998  with
     ----------------------------------------------------------------
     Nine  Months  Ended  March  31,  1997
     -------------------------------------

     Revenue  in the nine months ended March 31, 1998 was $357,916 compared to
$99,646  for  the  corresponding  nine  month  period  in 1997, an increase of
$258,270.    Contract  costs were higher $13,053 in the 1998 nine month period
due  to  increased  expenses  associated  with  system  design  and  BionSoil
processing.

     General  and  administrative  expenses  were  lower by $9,138 in the nine
month  period  ended  March  31,  1998  due  to  lower  consulting
expenses  ($293,000).  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 ($89,000), public relations
($115,000),  and  marketing  and  selling  expenses  ($58,000).

     The Company recorded $104,746 less in interest income for the nine months
ended  March  31,  1998.    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 $71,483 in interest expense on its notes to
shareholders  and  capital  equipment  leases,  and  $168,244  in research and
development  costs.  As a result of the above, the Company recorded a net loss
of $1,547,312 in the nine month period ended March 31, 1998, compared to a net
loss  of  $1,788,621  for  the  nine  month  period  ended  March  31,  1997.

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

     Comparison  of  the  Three  Months  Ended  March  31,  1998  with
     -----------------------------------------------------------------
     Three  Months  Ended  March  31,  1997
     --------------------------------------

     Revenue in the three months ended March 31, 1998 was $217,168 compared to
$37,839  for  the  corresponding  three  month  period in 1997, an increase of
$179,329.  Contract  costs  were  higher by $17,762 in the three month period.
The  higher  contract  costs  were due to increased activities associated with
system design and New York BionSoil processing.  The above resulted in a gross
profit  for  the period ended March 31, 1998 of $88,939 as compared to a gross
loss  of  $72,628  for  the  same  three  month  period  in  1997.

     General  and administrative expenses increased by $11,960 in the period.

     The  Company  recorded  $24,668  in  interest  expense  on  its  notes to
shareholders  and  capital  equipment  leases  and  $58,389  in  research  and
development  costs.  As a result of the above, the Company recorded a net loss
of  $476,845 for the three months ended March 31, 1998, compared to a net loss
of  $667,167  for  the  three  months  ended  March  31,  1997.

<PAGE>

Year  2000  Issue
-----------------

     The  Company  is aware of the issues associated with the programming code
in  existing  computer  systems as the millennium (year 2000) approaches.  The
"year  2000"  problem  is  pervasive  and  complex as virtually every computer
operation  will  be affected in some way by the rollover of the two-digit year
value  to  00.   The issue is whether computer systems will properly recognize
date-sensitive information when the year changes to 2000.  Systems that do not
properly  recognize  such information could generate erroneous data or cause a
system  to  fail.    After  a  review  of  the  Company's computer systems and
associated  software,  management  does  not  believe  year  2000  will have a
material  effect  on  the  operations  or  financial condition of the Company.

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  $10,000,000 of equity has been invested in the Company through the
close  of the fiscal quarter ended March 31, 1998.  These financial statements
also  show  that,  as  of  that  date, the Company had a negative net worth of
$304,865,  cumulative  losses  of  $10,445,147,  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.

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

     The Company's mission is to provide services, systems and products, which
solve  environmental  problems  with  wastes  and  wastewater.  In appropriate
applications,  the biological processes utilized will produce a nutrient rich,
organic soil product, BionSoil. 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 solids 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  solids  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 performed studies for, sold, had
under construction and/or in operation systems in four distinct regions: North
Carolina,  New  York,  Florida,  and  the  Pacific  Northwest (see footnote 1,
below).  As  of March 31, 1998 the Company's business activities have expanded
into  eight  additional  states  including  Colorado,  Kansas, Illinois, Iowa,
Missouri,  Nebraska,  Oklahoma  and  Utah  (see  footnote  2,  below).

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

     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.    With  the
establishment of this credibility and recent contract signings, the Company is
positioned  to  attempt  to  gain  significant market penetration in these new
geographic areas*. To date the Company's geographic expansion has been limited
due  to  financial  and  personnel  constraints.    However,  as  a  result of
heightened  awareness  about  the  major  problem  facing  the  animal raising
industry  and  due  to  the  current  proliferation  of  state  and  national
legislation  being  considered,  management  believes  that  major  geographic
expansion  is  now  essential  to  the  Company's  ongoing  success*.

     The  Company  estimates  that  the  cost  associated  with  the  required
staffing,  servicing, and marketing for expansion into 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*.  Management  believes  that
achieving  a  greater  rate  of  geographic  expansion  will  require  capital
expenditures  greater than those expensed for previous expansion*. (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).

     As  the Company continues its expansion into new areas in the future, and
this  expansion  requires  similar  or greater additional cash resources to be
spent,  these  cash  amounts, when expended, will 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 quarter 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 may occur based
on  this  review and as further applications of the technology are developed*.
The  Company  anticipates  additional  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  technologies  than  for  existing  dairy or swine waste
systems*.

Other  factors  that management has considered in relation to the expansion of
technology  include,  but are not limited to: current and/or new local, state,
and  federal regulations, proximity to current online systems or systems under
contract  and  the  market  size  of  poultry  and  cattle feedlot operations.

     Just  as  there  are  additional  expenses  associated  with  geographic
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.  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*.

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.  The  Company has expensed all of these
costs.

     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 or tech-nology 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
animal  waste  production  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>
<CAPTION>

                                   Table  1
   Animal                         Approximate  Equivalent  BionAnimals
   ------                         ------------------------------------
                                  New  Definition       Old  Definition
                                  ---------------      ---------------
<S>                                    <C>                   <C>
One  dairy  cow                        10.00                    1.000
One  steer                              4.50                    0.450 (2.2 = 1)
One  sow                                1.35                    0.135 (7.4 = 1)
One  market  hog                        0.90 (1.1  =  1)        0.090 (11 = 1)
One  nursery  pig                      0.225 (4.4  =  1)       0.0225 (44 = 1)
One  layer  chicke                      0.02 (50  =  1)         0.002 (500 = 1)
</TABLE>

As Bion NMS systems are brought on-line and biosolids are harvested, BionSoil,
Inc.  (the  Company's  other  wholly-owned  sub-sidiary)  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 potentially 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 sub-stantial
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 may 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  appro-priate
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  in  bulk,  prices  ranged  from $15.00 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 $50.00 to $150.00 per cubic
yard.  The Company currently is distributing bagged BionSoil to retail outlets
in  western  New  York  for  the  spring  1998  season.  The material is being
processed,  blended with Sphagnum peat moss and bagged in both 20 pound and 40
pound  bags at the Company's Hermitage New York facility. The product is being
sold  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).  It  should be noted that a large portion of material harvested from
many  systems has been devoted to both university and private studies intended
to  determine  physical  characteristics,  blends,  and  growth  results using
BionSoil.

     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 13 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  current  BionSoil  sales results, an analysis of the Company's
potential  markets,  the  large number of proposals and preliminary agreements
currently  being prepared (many at the specific request of potential clients),
the  recent  signing  of  major  Bion  NMS  system installation contracts (see
footnote  6,  below) 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 have been established by the Company. In June
1997  the  primary  long range goal established by Company management set 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 established the addition of 40
systems  under  contract  (containing 300,000 BionAnimals) as its sales target
for  June 30, 1998*.  Achieve-ment 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*. 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 re-negotiate 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 re-negotiations
result  in  new  signed  contracts).

     However, in the first nine months of fiscal year 1998 (which period ended
March  31,  1998),  the  Company  has  signed  contracts  for up to 60 systems
containing  approximately  860,000  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 March 31, 1998, has a total of 76 systems
with  approximately  950,000  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 nine 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*.

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

     The long-range sales goals outlined above represent 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 (as shown
below),  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) as well as additional state by state information,
in  some  cases  current as of December 1997, 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 7, 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's systems sales program has
achieved  (through  March  31, 1998) approximately a 0.7% market penetration,
and  the  existing  system sales 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  8, below)*. Batelle calculated that the demand for compost and
compost-like  products  (including  products  ranging from manure to composted
organic  wastes  to manufactured potting soils and soil enhancers) in selected
areas  of  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 appli-cation
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
950,000  BionAnimals  currently  under  contract  (in  excess of 900,000 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 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 $15 per cubic yard when sold unprocessed in bulk, and
will  sell  for higher prices when processed and bagged, prices which may rise
to  $120  per  cubic  yard*.  It should be noted that all prices quoted within
this  Form  10-QSB  are wholesale only and may not be representative of actual
retail  prices.    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 9, 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 footnotes 10
and  11,  below)*.

<TABLE>
<CAPTION>

                                Table  2*
Projected  BionSoil          Projected          Projected  Annual
Wholesale  Price  Per          Bion               Gross  Margin
 Per  Cubic  Yard*           Expenses*          Per  Cubic  Yard*
------------------          ---------          -----------------
<S>                            <C>                      <C>
     $  20*                     15*                    5*
        40*                     30*                   10*
        60*                     40*                   20*
        80*                     49*                   31*
       100*                     61*                   39*
       120*                     72*                   48*
</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*.

     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  contri-bute  $40  of  revenue  per  year  to  the Company, resulting in
projected  gross  margins  of $10 per year*.  Under the terms of most Bion NMS
agreements,  this  contribution to revenue and gross margin is anti-cipated 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 $84 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 10, below)*.

<PAGE>

<TABLE>
<CAPTION>

                              Table  3*
     Projected  BionSoil          Projected  15  Year  Net
     Selling  Price  Per          Present  Value  of  Per
        Cubic  Yard*          BionAnimal  Annual  Gross  Margins*
     ------------          -----------------------------------
         <S>                           <C>
     $    20*                          $  42*
          40*                             84*
          60*                            167*
          80*                            259*
         100*                            326*
         120*                            402*
</TABLE>

     In  the  past  the  Company  has  lost money on system design, permitting
support, construction oversight and initial system operation. However, through
installing  these  systems  at a loss the Company has been able to establish a
number of Bion NMS systems to use for test sites, demonstrations and to refine
the  technology.  Based  on  experience  to  date, the Company is establishing
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*.

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.

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
pro-cessing  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;  and,
(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.

2.      The systems in these states are primarily 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, an additional
engineer,  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,  has  signed  agreements  for  five  additional  system
instal-lations,  and  has  one additional Bion NMS that has come on line for a
9,600  finishing  hog  farm.  Management estimates that, to date, in excess of
$800,000  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.          Representatives of North Carolina State University ("NCSU"), North
Carolina Department of Agriculture ("NCDA") and the North Carolina Cooperative
Extension  Service  conducted  an  independent on-farm research trial in 1996.
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. Representatives of NCSU, NCDA, and Bion
Technologies,  Inc  conducted  a  further  independent  study  in  1997.  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
plus  other  additives.   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.    The Company has an extensive program of additional
university  and  company  tests  designed  and  being implemented for the 1998
summer  growing  season.

6.       As reported in the Company's February 23, 1998, Form 8-K, the Company
entered  into  an agreement with Murphy Family Farms, Inc. of Rose Hill, North
Carolina,  to  design,  install  and  operate  multiple  Bion  NMS swine waste
treatment systems in six additional states. Also, as reported in the Company's
December  31,  1997,  Form  10-QSB, the Company entered into an agreement with
Bowman  Family  Farms,  Inc. of Wray, Colorado, to design, install and operate
approximately  thirty-six  Bion  NMS  swine  waste  treatment  systems  in two
additional  states.

7.        All numbers of animals are taken from the 1992 Census of Agriculture
published  by  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
     *   Poultry (chickens and turkeys) based on layers, broilers and turkeys

8.     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.
    -----------------------

9.          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.

10.  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.

11.  Due  to  the Company's lack of experience and start-up nature in the soil
processing  area,  the  profit  margins are based on management's estimate and
therefore  are  subject  to  significant variation. Actual production costs to
date  are  higher  than  those  shown  in  Table 2 due to significant start-up
inefficiencies.    Management believes, however, that as greater quantities of
BionSoil  are  harvested  and the processing techniques become more efficient,
the  profit  margins  will  equal or exceed the projected Annual Gross Margins
shown  in  Table  2*.

     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 nine month period ended
    March  31,  1998 without registering the securities under the 
    Securities Act.:

210,475  shares  of  restricted  and  legended  Common  Stock to six private
investors  and  fourteen  existing  shareholders  in  privately  negotiated
transactions  for  an  aggregate  amount  of  $711,425.

32,826  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 $63,938.65.

206,600  shares of restricted and legended Common Stock to four employees in
lieu  of  cash  for  services  rendered  valued at, in aggregate, $672,775.34.

16,698  shares  of  restricted  and  legended  Common  Stock  to an existing
shareholder  for  rent  and  services  valued  in  aggregate  at  $52,175.

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.
                  None

ITEM  6.          Exhibits  and  Reports  on  Form  8-K.
                  (a)    Exhibits:
10.1  Agreement  between Bion Technologies, Inc. and Murphy Family Farms, Inc.
dated  March  3,  1998.
27  Financial  Data  Schedule
    (b)    Reports  on  Form  8-K:
    Form  8-K  (dated  February  23,  1998)
    reporting  on  item  5  &  7.






     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:        May  13,  1998
          ------------------