**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D. C. 20549**




**Form
      10-QSB**




x QUARTERLY
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934




For
      the
      quarterly period ended September 30, 2007




o TRANSITION
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934




For
      the
      transition period from _________ to __________




Commission
      File Number 0-50520









**Biomass
      Processing Technology, Inc.**


(Name
      of
      Small Business Issuer as Specified in Its Charter)




**Delaware**
            
            **65-0638890**(State
                or Other Jurisdiction of
              Incorporation
                or Organization)
            
            (I.R.S. Employer
              Identification
                No.)**3222
                Commerce Place, Suite A, West Palm Beach,
                Florida**
            
            **33407**(Address
                of Principal Executive Offices)
            
            (Zip
                Code)




**(561)
      684-6611**


(Issuer’s
      Telephone Number, Including Area Code)




Check
      whether the issuer: (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Exchange Act during the past 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
o No
x




Indicate
      by check mark whether the registrant is a shell company (as defined in Reul
      12b-2 of the Exchange Act)


Yes
oNo
x




As
      of
      October 24, 2007, there were 79,543,874 shares of Common Stock issued and
      outstanding.




Transitional
      Small Business Disclosure Format: Yes x No
o









**BIOMASS
      PROCESSING TECHNOLOGY, INC. AND SUBSIDIARIES**




**QUARTERLY
      PERIOD ENDED SEPTEMBER 30, 2007**




**TABLE
      OF CONTENTS**




PART
                I FINANCIAL INFORMATIONItem
                1. Financial Statements (Unaudited)
            
            
            4Item
                2. Plan of Operation
            
            
            20Item
                3. Controls and Procedures
            
            
            27PART
                II OTHER INFORMATIONItem
                1. Legal Proceedings
            
            
            28Item
                2. Unregistered Sales of Equity Securities and Use of Proceeds
            
            
            28Item
                6. Exhibits
            
            
            29SIGNATURES
            
            
            30




Certifications:
      Exhibits 31.1 and 31.2




Certifications:
      Exhibits 32.1 and 32.2




2




**CAUTION
        REGARDING
        FORWARD-LOOKING
        INFORMATION**


This
      quarterly report contains both historical and forward-looking statements that
      reflect the Company’s current views with respect to future events. All
      statements, other than statements of historical facts, that address future
      activities, events or developments are forward-looking statements, including,
      but not limited to, statements containing the words "believe," "anticipate,"
      "expect" and words of similar import. These statements are based on certain
      assumptions and analyses made by us in light of our experience and our
      assessment of historical trends, current conditions and expected future
      developments as well as other factors we believe are appropriate under the
      circumstances. Whether actual results will conform to the expectations and
      predictions of management, however, is subject to a number of risks and
      uncertainties that may cause actual results to differ materially. These risks
      include, among others, the risks described under "Description of Business -
      Risk
      Factors" in the Company's Annual Report on Form 10-KSB for the year ended
      December 31, 2006.




Consequently,
      all of the forward-looking statements made in this quarterly report are
      qualified by these cautionary statements and there can be no assurance that
      the
      actual results anticipated by management will be realized or, even if
      substantially realized, that they will have the expected consequences to or
      effects on the Company's business operations. Furthermore, forward-looking
      statements that were true at the time made may ultimately prove to be incorrect
      or false. Readers are cautioned to not place undue reliance on forward-looking
      statements, which reflect our management’s view only as of the date of filing of
      this report.




Forward-looking
      statements are made in reliance upon the safe harbor provisions of Section
      27A
      of the Securities Act of 1933, as amended, and Section 21E of the Securities
      Exchange Act of 1934, as amended, and the Company undertakes no obligation
      to
      update forward-looking statements to reflect further developments or information
      obtained after the date of filing of this quarterly report and disclaims any
      obligation to do so.


3




**PART
      I.**  **FINANCIAL
      INFORMATION**




**ITEM
      1.**  **FINANCIAL
      STATEMENTS (unaudited)**




**BIOMASS
        PROCESSING TECHNOLOGY, INC. AND SUBSIDIARIES**
 **(A
        DEVELOPMENT STAGE COMPANY)**
 **CONSOLIDATED
        BALANCE SHEET (UNAUDITED)**
 **SEPTEMBER
        30, 2007**


**ASSETS**Current
                assetsCash
                and cash equivalents
            
            $
            34,085Prepaid
                expenses and other current assets
            
            
            53,957Total
                Current Assets
            
            
            88,042Property
                and equipment, net
            
            
            22,595,767Other
                assetsEquipment
                system
            
            
            287,280Spare
                parts
            
            
            1,233,911Patent
                application costs
            
            
            499,030Deposits
                and other assets
            
            
            38,665Total
                Other Assets
            
            
            2,058,886Total
                Assets
            
            $
            24,742,695**LIABILITIES
                AND STOCKHOLDERS' EQUITY**Current
                liabilitiesAccounts
                payable
            
            $
            912,419Accrued
                liabilities
            
            
            1,276,569Total
                Current Liabilities
            
            
            2,188,988Commitments
                and Contingencies
            
            
            -Stockholders'
                equityCommon
                stock, $.02 par value; 100,000,000 sharesauthorized;
                issued and outstanding, 79,392,489
            
            
            1,587,850Additional
                paid in capital
            
            
            55,525,366Deficit
                accumulated during the development stage
            
            
            (34,559,509
            )Total
                Stockholders' Equity
            
            
            22,553,707Total
                Liabilities and Stockholders' Equity
            
            $
            24,742,695




**See
        accompanying notes to unaudited consolidated financial
        statements**




4




**BIOMASS
        PROCESSING TECHNOLOGY, INC. AND SUBSIDIARIES**
 **(A
        DEVELOPMENT STAGE COMPANY)**
 **CONSOLIDATED
        STATEMENTS OF OPERATIONS (UNAUDITED)**


CumulativeDuring
                  Development
                    Stage
            
            For
                    the Three
                  Months
                    Ended
                  September
                    30,
            
            For
                    the Nine
                  Months
                    Ended
                  September
                    30,(Unaudited)
            
            2007
            
            2006
            
            2007
            
            2006Revenues
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            -Operating
                Expenses:Research
                and development
            
            
            25,684,725
            
            
            504,326
            
            
            1,626,236
            
            
            1,436,040
            
            
            4,008,007Depreciation
            
            
            5,555,608
            
            
            265,071
            
            
            277,146
            
            
            799,926
            
            
            832,964Valuation
                adjustment -Equipment
                system
            
            
            1,793,681
            
            
            -
            
            
            -
            
            
            -
            
            
            -Loss
                on disposal of assets
            
            
            790,563
            
            
            -
            
            
            -
            
            
            4,807
            
            
            100Total
                Operating Expenses
            
            
            33,824,577
            
            
            769,397
            
            
            1,903,382
            
            
            2,240,773
            
            
            4,841,071Interest
                Expense
            
            
            (409,704
            )
            
            -
            
            
            (1,059
            )
            
            -
            
            
            (5,792
            )Loss
                from continuing operation
            
            
            (34,234,281
            )
            
            (769,397
            )
            
            (1,904,441
            )
            
            (2,240,773
            )
            
            (4,846,863
            )Discontinued
                Operations:Net
                income (loss) from discontinuedlandfill
                contract activities
            
            
            (325,228
            )
            
            -
            
            
            -
            
            
            -
            
            
            8,659NET
                LOSS
            
            $
            (34,559,509
            )
            $
            (769,397
            )
            $
            (1,904,441
            )
            $
            (2,240,773
            )
            $
            (4,838,204
            )**Loss
                per Common Share, Basic and Diluted:**From
                Continuing Operations
            $
            (0.01
            )
            $
            (0.03
            )
            $
            (
                0.03
            )
            $
            (
                0.07
            )From
                Discontinued Operations
            $
            0.00
            
            $
            0.00
            
            $
            0.00
            
            $
            0.00Net
                loss per share
            $
            (0.01
            )
            $
            (0.03
            )
            $
            (0.03
            )
            $
            (0.07
            )Weighted
                average number of common shares outstanding
            
            79,275,161
            
            
            71,719,680
            
            
            75,184,889
            
            
            71,340,932


**See
        accompanying notes to unaudited consolidated financial
        statements**
  5




**BIOMASS
      PROCESSING TECHNOLOGY, INC. AND SUBSIDIARIES**


**(A
      DEVELOPMENT STAGE COMPANY)**


**CONSOLIDATED
      STATEMENT OF STOCKHOLDERS’ EQUITY**


**(UNAUDITED)**


DeficitAccumulatedNumber
                of
            
            Common
            
            Additional
            
            During
                theCommon
            
            Stock,
            
            Paid
                in
            
            DevelopmentShares
            
            at
                Par Value
            
            Capital
            
            Stage
            
            Total**Balances
                as of December 31, 2006**
            
            
            77,649,954
            
            $
            1,553,000
            
            $
            54,577,005
            
            $
            (32,318,736
            )
            $
            23,811,269Issuance
                of common shares
            
            
            1,677,535
            
            
            33,550
            
            
            910,661
            
            
            
            
            
            944,211Contribution
                of common shares
            
            
            (10,000
            )
            
            (200
            )
            
            200
            
            
            
            
            
            -Issuance
                of common shares - consulting
            
            
            75,000
            
            
            1,500
            
            
            37,500
            
            
            
            
            
            39,000Net
                loss for the nine monthperiod
                ended September 30, 2007
            
            
            -
            
            
            -
            
            
            -
            
            
            (2,240,773
            )
            
            (2,240,773
            )**Balances
                as of September 30, 2007**
            
            
            79,392,489
            
            $
            1,587,850
            
            $
            55,525,366
            
            $
            (34,559,509
            )
            $
            22,553,707




See
      accompanying notes to unaudited
      consolidated financial statements






6


**BIOMASS
        PROCESSING TECHNOLOGY, INC. AND SUBSIDIARIES**
 **(A
        DEVELOPMENT STAGE COMPANY)**
 **CONSOLIDATED
        STATEMENT OF CASH FLOWS (UNAUDITED)**


Cumulative
                During
            
            For
                the Nine Months EndedDevelopment
            
            September
                30,Stage
                (Unaudited)
            
            2007
            
            2006**Operating
                Activities**Net
                Loss from continuing operations
            
            $
            (34,234,281
            )
            $
            (2,240,773
            )
            $
            (4,846,863
            )Adjustments
                to reconcile net loss to net cash used in continuing
                operations:Depreciation
            
            
            5,555,608
            
            
            799,926
            
            
            832,964Valuation
                adjustment - equipment system
            
            
            1,793,681
            
            
            -
            
            
            -Loss
                on disposal of assets
            
            
            790,563
            
            
            4,807
            
            
            100Stock-based
                compensation
            
            
            202,700
            
            
            39,000
            
            
            -Non-cash
                expense -common
                stock transactions
            
            
            3,970,000
            
            
            -
            
            
            2,232,500Changes
                in certain assets and liabilities:Prepaid
                expenses and other current assets
            
            
            (102,923
            )
            
            52,667
            
            
            132,164Deposits,
                spare parts and other assets
            
            
            (450,515
            )
            
            72,890
            
            
            (138,904
            )Accounts
                payable and accrued liabilities
            
            
            2,245,137
            
            
            432,049
            
            
            450,952Net
                Cash Used in Continuing Operations
            
            
            (20,230,030
            )
            
            (839,434
            )
            
            (1,337,087
            )Net
                income (loss) fromdiscontinued
                operations
            
            
            (325,228
            )
            
            -
            
            
            8,659Adjustments
                to reconcile net cash used in discontinued operations:Reserve
                (adjustment) for casualty loss
            
            
            366,623
            
            
            -
            
            
            (8,659
            )Changes
                in certain assets and liabilities:Liabilities
                of discontinued operations
            
            
            (415,100
            )
            
            -
            
            
            (184,290
            )Net
                Cash Used inDiscontinued
                Operations
            
            
            (373,705
            )
            
            -
            
            
            (184,290
            )Net
                Cash Used in Operating Activities
            
            
            (20,603,735
            )
            
            (839,434
            )
            
            (1,521,377
            )**Investing
                Activities**Proceeds
                from sale of assets
            
            
            137,230
            
            
            -
            
            
            -****Patent
                application costs
            
            
            (499,030
            )
            
            (21,075
            )
            
            (140,366
            )Construction
                of equipment system
            
            
            (2,331,504
            )
            
            -
            
            
            -Purchases
                of property and equipment
            
            
            (28,414,664
            )
            
            (169,334
            )
            
            (662,964
            )Net
                Cash Used in Investing Activities
            
            
            (31,107,968
            )
            
            (190,409
            )
            
            (803,330
            )*(Continued)*


See
        accompanying notes to unaudited
        consolidated financial statements
  7
  **BIOMASS
        PROCESSING TECHNOLOGY, INC. AND SUBSIDIARIES**
 **(A
        DEVELOPMENT STAGE COMPANY)**
 **CONSOLIDATED
        STATEMENT OF CASH FLOWS (UNAUDITED)**


Cumulative
                  During
              
              For
                  the Nine Months EndedDevelopment
              
              September
                  30,*(Continued)*
              
              Stage
                  (Unaudited)
              
              2007
              
              2006**Financing
                  Activities**Proceeds
                  from long-term debt issuances
              
              
              219,596
              
              
              -
              
              
              -Repayment
                  of debt and capital leases
              
              
              (1,404,324
              )
              
              -
              
              
              (41,935
              )Re-acquisition
                  of common stock
              
              
              (43,500
              )
              
              -
              
              
              -Repayment
                  of Note Payable - Officer
              
              
              -
              
              
              -
              
              
              (1,515
              )Proceeds
                  from common stock issuance
              
              
              52,974,016
              
              
              944,211
              
              
              2,273,853Net
                  Cash Provided by Financing Activities
              
              
              51,745,788
              
              
              944,211
              
              
              2,230,403Net
                  increase (decrease) in cashand
                  cash equivalents
              
              
              34,085
              
              
              (85,632
              )
              
              (94,304
              )Cash
                  and cash equivalentsat
                  the beginning of the period
              
              
              -
              
              
              119,717
              
              
              138,671Cash
                  and cash equivalentsat
                  the end of the period
              
              $
              34,085
              
              $
              34,085
              
              $
              44,367CASH
                  PAID DURING THE PERIOD FOR:Interest
              
              $
              409,704
              
              
              
              
              $
              5,272Income
                  taxes
              
              $
              -
              
              $
              -
              
              $
              -





See
        accompanying notes to unaudited
        consolidated financial statements
  8


**BIOMASS
        PROCESSING TECHNOLOGY, INC. AND SUBSIDIARIES**
 **(A
        DEVELOPMENT STAGE COMPANY)**
 **NOTES
        TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS**
 **SEPTEMBER
        30, 2007**


**NOTE
      1 - ORGANIZATION, BASIS OF PRESENTATION AND GOING CONCERN**





The
      unaudited consolidated financial statements include the accounts of Biomass
      Processing Technology, Inc. (incorporated on January 30, 1996) and its
      wholly-owned subsidiaries, Omni Environmental Corporation (“Omni”), BPT CAV1
      Corporation (“CAV1”), and BPT Intellectual Property Corporation (“IP”)
      (collectively, “the Company”). All significant inter-company transactions have
      been eliminated in consolidation. Omni was incorporated in Delaware on June
      23,
      1989 to develop processing software, CAV1 was incorporated in the State of
      Florida on October 24, 2003, to operate the Company's CAV1 facility when
      operational and IP was incorporated in the State of Delaware on October 24,
      2003, to manage certain intellectual property assets. The consolidated financial
      statements have been prepared in accordance with accounting principles generally
      accepted in the United States of America (“GAAP”).





Going
      Concern Considerations :
      In
      December 2004, the Company commenced operating its combined animal and
      vegetative processing facility (the "CAV1 facility") on a test basis by
      initiating test production of product. The Company continues to be a development
      stage enterprise as defined under GAAP because it has not yet generated
      significant revenues in its intended business. During the initial stages of
      operating the CAV1 facility the Company will concentrate its efforts on testing
      for quality and consistency of product, production technique refinements, and
      building of inventory. Historically, the Company has relied upon outside
      investor funds to maintain its operations and develop its business. The Company
      anticipates it will continue to require funding from investors for working
      capital and expansion during its initial stages of operations. The Company
      cannot provide assurances that additional investor funds will be available
      on
      terms acceptable to the Company. The Company is a development stage company
      with
      a working capital deficit of $2,100,946, has incurred cumulative losses since
      inception and has been dependent on investor capital to sustain its activities.
      The Company also reflected a net loss of $2,240,773 and net cash used in
      operations of $839,434 for the nine months ended September 30, 2007. These
      conditions raise substantial doubt about the Company’s ability to continue as a
      going concern.  The
      Company’s independent registered public accounting firm issued a “going concern”
opinion on the Company’s December 31, 2006 financial statements because the
      Company has incurred significant losses since inception, is not revenue
      generating and is dependent entirely on investment funding. The accompanying
      unaudited consolidated financial statements have been prepared on a going
      concern basis, which contemplates the realization of assets and the settlement
      of liabilities in the normal course of business.




9


**BIOMASS
        PROCESSING TECHNOLOGY, INC. AND SUBSIDIARIES**
 **(A
        DEVELOPMENT STAGE COMPANY)**
 **NOTES
        TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS**
 **SEPTEMBER
        30, 2007**




**NOTE
      1 -** **ORGANIZATION,
      BASIS OF PRESENTATION AND GOING CONCERN** **(continued)**





As
      further detailed in Note 10 - Subsequent Events, during the period since October
      1, 2007 through the filing date of this report, the Company allocated its
      capital resources to the completion of its production facilities and its efforts
      to secure significant additional funding sufficient to support commencing
      operations. During the second half of 2007 and first half of 2008, subject
      to
      raising the additional capital the Company requires in order to commence
      operations, through a combination of additional capital investment and cash
      flows from operations, the Company plans to begin operating the CAV1 facility
      with lines 1 and 2, add production lines 3 and 4, complete construction of
      its
      hydrolysis system (a pre-processing of biomass that reduces the cost of raw
      materials and fuel costs), and construct two additional permitted fermentation
      lines (5 and 6).




The
      Company believes that its current capital resources will be insufficient to
      fund
      the Company's intended operations and expansion beyond the fourth quarter of
      2007 and that it will be required to raise additional capital through the
      offering of equity securities, the incurrence of indebtedness or a combination
      of both. There is no assurance that the Company will be able to raise any
      additional funds which may be necessary to enable it to continue its planned
      business operations. Should any of management’s planned events not occur, the
      accompanying consolidated financial statements may be materially
      affected.





Basis
      of Presentation :
      The
      accompanying unaudited consolidated financial statements of the Company have
      been prepared in accordance with GAAP for interim financial information and
      with
      the instructions to Form 10-QSB and Article 10 of Regulation S-B. Accordingly,
      they do not include all of the information and disclosures required for annual
      financial statements and related footnotes as of and for the year ended December
      31, 2006, included in the Company's Annual Report on Form 10-KSB. In the opinion
      of management, all the adjustments, consisting of normal recurring adjustments,
      necessary for a fair presentation of the Company's financial position as of
      September 30, 2007 and the results of operations and cash flows for the nine
      month period ended September 30, 2007 have been included. The results of
      operations for the nine months ended September 30, 2007 are not necessarily
      indicative of the results to be expected for the full year. There are no
      additional material subsequent events or material contingencies that require
      disclosure. The information included in these unaudited financial statements
      should be read in conjunction with Plan of Operation contained in this report
      and with the consolidated financial statements and accompanying notes included
      in the Company’s Annual Report on Form 10-KSB as filed with the Securities and
      Exchange Commission ("SEC") for the year ended December 31, 2006.




10




**BIOMASS
        PROCESSING TECHNOLOGY, INC. AND SUBSIDIARIES**
 **(A
        DEVELOPMENT STAGE COMPANY)**
 **NOTES
        TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS**
 **SEPTEMBER
        30, 2007**





**NOTE
      2 - CRITICAL ACCOUNTING POLICIES**





A
      summary
      of significant accounting policies is included in Note 2 to the audited
      consolidated financial statements included in the Company’s Form 10-KSB for the
      year ended December 31, 2006. There have been no significant changes in
      accounting policies since that report. We believe that the application of these
      policies on a consistent basis enables our Company to provide useful and
      reliable financial information about the Company's operating results and
      financial condition. The preparation of financial statements in conformity
      with
      GAAP requires management to make estimates and assumptions that affect the
      reported amounts of assets and liabilities and disclosure of contingent assets
      and liabilities at the date of the financial statements and the reported amounts
      of revenues and expenses during the reporting period. Actual results may differ
      from those estimates.





**NOTE
      3 - RELATED PARTY TRANSACTIONS**





Contributed
      Shares - 2007 :
      On
      April 18, 2007, Larry W. Denney, Chairman of the Board, President, and Chief
      Executive Officer, committed to a contribution of 10,000 shares of his personal
      common stock to be distributed to a new shareholder as a price adjustment. These
      contributed shares were accounted for as a capital contribution to the Company,
      recorded as a decrease to common stock at $.02 per share par value and an
      increase to additional paid in capital in the same amount. Mr. Denney, as the
      largest stockholder, stood to benefit from an increase in the Company’s value
      resulting from raising additional capital. After the transaction is completed,
      Mr. Denney will own 31,542,045.5 shares. There
      were no other related party transactions during the nine months ended September
      30, 2007.





Contributed
      Shares and Stock Purchases by Directors - 2006 :
      On
      various dates between January 25, 2006, and June 30, 2006, in private placement
      offerings limited to existing shareholders, the Company sold an aggregate of
      1,536,236 shares of common stock at prices between $1.00 and $1.50 per share
      to
      30 investors, all of whom the Company believes to be accredited investors,
      for
      aggregate proceeds of $1,643,854. All of the shares sold were contributed to
      the
      Company without consideration by Larry W. Denney, Chairman of the Board,
      President, and Chief Executive Officer, and Jack B. Simpson, a co-founder of
      the
      Company, a principal stockholder,
      and former director; Mr. Denney and Mr. Simpson each contributed half of the
      shares. These
      contributed shares were accounted for as a capital contribution to the Company,
      recorded as a decrease to common stock at $.02 per share par value and an
      increase to additional paid in capital in the same amount. The shares were
      contributed to reduce the dilutive effect on existing stockholders that would
      have resulted had the Company sold newly issued shares at lower prices than
      those paid by previous investors.




11


**BIOMASS
        PROCESSING TECHNOLOGY, INC. AND SUBSIDIARIES**
 **(A
        DEVELOPMENT STAGE COMPANY)**
 **NOTES
        TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS**
 **SEPTEMBER
        30, 2007**





**NOTE
      3 - RELATED PARTY TRANSACTIONS (continued)**





Mr.
      Denney and Mr. Simpson, as the largest stockholders, stood to benefit from
      an
      increase in the Company’s value resulting from raising the additional capital.
      On June 30, 2006, the offering in which Mr. Denney and Mr. Simpson contributed
      their personal shares was closed; after the transactions, Mr. Denney owned
      31,552,045.5 shares and Mr. Simpson owned 14,165,813.5 shares.





Stock
      Purchases by Directors: Included
      in the above noted sales of common stock were the following: on January 25,
      2006, the Company sold 250,000 shares of common stock for $250,000 and on May
      2,
      2006, the Company sold 200,000 shares of common stock for $200,000 to P. E.
      MacAllister, a director. On June
      30,
      2006, the Company sold 750,000 shares of common stock for $750,000 to Philip
      H.
      Good, a director at the time. Mr. MacAllister purchased 100,000 shares for
      $100,000 on August 31, 2006, and 200,000 shares for $100,000 on September 27,
      2006. Mr. Good purchased 600,000 shares for $300,000 on September 27, 2006.





On
      September 12, 2006 the Company’s Board of Directors approved a new offering
      limited to existing shareholders at $0.52 per share or $0.50 per share for
      purchases of $50,000 or more. The $0.50 per share offering price has been used
      as the “fair value” of a share of common stock since September 12, 2006 for
      purposes of potential non-cash related party calculations (see below).





Stock
      Distribution :
      In
      conjunction with this offering, the Company distributed 2,621,236 “matching”
shares of common stock to stockholders who had purchased shares between October
      19, 2005 (the date Hurricane Wilma crossed Florida with an impact causing an
      adjustment to the Company’s business plan as detailed in Note 10 - Subsequent
      Events) and the commencement of the new offering. For each share purchased
      by
      any shareholder during the period October 19, 2005 through September 12, 2006,
      that shareholder was issued another share for no additional consideration.
      Included in this issuance were 550,000 shares issued to Mr. MacAllister and
      1,715,000 shares issued to Mr. Good. The Company’s Board of Directors approved
      the distribution of the additional shares as an adjustment of the purchase
      price
      paid by such stockholders, in light of the unanticipated effects of the Florida
      hurricanes, which significantly delayed the Company’s timeline for becoming
      operational and the fact that the Company was offering shares at a lower price
      in the September 12, 2006 offering than the price previously paid by such
      stockholders.




12




**BIOMASS
        PROCESSING TECHNOLOGY, INC. AND SUBSIDIARIES**
 **(A
        DEVELOPMENT STAGE COMPANY)**
 **NOTES
        TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS**
 **SEPTEMBER
        30, 2007**




**NOTE
      3 - RELATED PARTY TRANSACTIONS (continued)**





Non-cash
      Related Party Stock Purchase Transaction Expenses - 2006 :
      In
      conjunction with the stock purchases by Mr. Good and Mr. MacAllister, pursuant
      to accounting rules and principles applicable to stock sales in related party
      transactions, the Company recorded non-cash increases in its “additional paid in
      capital” account and recorded non-cash transaction expenses for the same amounts
      in total amounts of $-0- and $2,232,500 for the nine months ended September
      30,
      2007 and 2006, respectively. The accounting rules require that in related party
      transactions, a non-cash expense be recorded for the difference between “fair
      value” (as defined in the rules) and the selling price. Further, the transaction
      with the related party cannot be considered to represent “fair value” and cannot
      be viewed as an “arms-length transaction” for purposes of the application of the
      rule and for the related computation.





There
      is
      no established trading market for the Company’s common stock. Relative to
      companies with publicly-traded stock, the Company has few sales that can be
      used
      as a method for the determination of “fair value” under the related party stock
      transaction rules. The most recent sales to existing stockholders by the Company
      prior to the two related party transactions in 2005 occurred during an offering
      at $2.50 per share which was limited to existing stockholders; this offering
      commenced June 15, 2005 and closed on August 15, 2005.





There
      were no sales of stock by the Company to existing stockholders other than the
      two related party transactions from the closing of the offering on August 15,
      2005 through December 31, 2005. Therefore, in 2005 the Company used the $2.50
      per share sales price from the most recent previous offering in the computation
      required under these rules as shown in the following table.





***Purchases
                in the Year Ended December 31, 2005***
            
            ***Purchase
                of***
              ***Sept.
                27, 2005***
            
            ***Purchase
                of***
              ***Nov.
                14, 2005***
            
            ***Total***Most
                Recent Offering Price
            
            $
            2.50
            
            $
            2.50Related
                Party Price
            
            
            (1.50
            )
            
            (1.00
            )Difference
                per Share
            
            $
            1.00
            
            $
            1.50Number
                of Shares Purchased
            
            
            290,000
            
            
            965,000Non-Cash
                Transaction Expense
            
            $
            290,000
            
            $
            1,447,500
            
            $
            1,737,500




13


**BIOMASS
        PROCESSING TECHNOLOGY, INC. AND SUBSIDIARIES**
 **(A
        DEVELOPMENT STAGE COMPANY)**
 **NOTES
        TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS**
 **SEPTEMBER
        30, 2007**





**NOTE
      3 - RELATED PARTY TRANSACTIONS (continued)**





In
      May
      and June 2006 there were purchases of approximately 215,000 shares by existing
      shareholders at $1.50 per share; this amount was used to represent “fair value”
for computations of transactions immediately after that period. Non-cash related
      party stock purchase transaction expenses related to purchases in 2006 discussed
      above were computed as follows:





*MacAllister*
            
            *MacAllister*
            
            *Good*
            
            *MacAllister****Purchases***
            
            *Jan.
                25, 2006*
            
            *May
                2, 2006*
            
            *June
                30, 2006*
            
            *Aug.
                31, 2006*Most
                Recent Offering Price
            
            $
            2.50
            
            $
            2.50
            
            $
            1.50
            
            $
            1.50Related
                Party Price Paid
            
            
            (1.00
            )
            
            (1.00
            )
            
            (1.00
            )
            
            (1.00
            )Difference
                Per Share
            
            $
            1.50
            
            $
            1.50
            
            $
            0.50
            
            $
            0.50Number
                of Shares Purchased
            
            
            *250,000*
            
            
            *200,000*
            
            
            *750,000*
            
            
            *100,000*Non-Cash
                Transaction Expense
            
            $
            375,000
            
            $
            300,000
            
            $
            375,000
            
            $
            50,000





Non-cash
      related party stock purchase transaction expenses related to the stock
      distribution of September 12, 2006 were computed as follows:





***Price
                Adjustment Distribution***
            
            *Good*
            
            *MacAllister*
            
            *MacAllister*
            
            *Good*
            
            *MacAllister****Declared
                Sept. 12, 2006***
            
            *Nov.
                14, 2005*
            
            *Jan.
                25, 2006*
            
            *May
                2, 2006*
            
            *June
                30,2006*
            
            *Aug.
                31, 2006*Most
                Recent Offering Price
            
            $
            0.50
            
            $
            0.50
            
            $
            0.50
            
            $
            0.50
            
            $
            0.50Less:
                Related Party Price Paid
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -Difference
                Per Share
            
            $
            0.50
            
            $
            0.50
            
            $
            0.50
            
            $
            0.50
            
            $
            0.50Number
                of Shares Issued
            
            
            965,000
            
            
            250,000
            
            
            200,000
            
            
            750,000
            
            
            100,000Non-Cash
                Related Party
              Transaction
                Expense
            
            $
            482,500
            
            $
            125,000
            
            $
            100,000
            
            $
            375,000
            
            $
            50,000





The
      2006
      non-cash charges in the two tables above total $2,232,500. Related party
      purchases since September 12, 2006 were at prices equal to prior and subsequent
      sales prices to existing shareholders so no additional non-cash charges were
      recorded for such transactions.





Because
      the non-cash related party stock purchase transaction expense accounting entries
      result in an increase to accumulated deficit and an offsetting increase to
      additional paid in capital, recording of the non-cash transaction has no effect
      on total stockholders’ equity.




14




**BIOMASS
        PROCESSING TECHNOLOGY, INC. AND SUBSIDIARIES**
 **(A
        DEVELOPMENT STAGE COMPANY)**
 **NOTES
        TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS**
 **SEPTEMBER
        30, 2007**





**NOTE
      4 - ACCRUED LIABILITIES**





Accrued
      liabilities represent estimated liabilities that apply to the reported period
      and have not been billed by the provider or paid by the Company. At September
      30, 2007, accrued liabilities consisted of the following:





Accrued
                Property Taxes
            
            $
            1,190,320Accrued
                Vacation
            
            
            27,643Accrued
                Payroll and Payroll Taxes
            
            
            11,106Accrued
                Professional Fees
            
            
            47,500Total
                Accrued Liabilities
            
            $
            1,276,569





The
      tax
      authorities of Okeechobee County, Florida have assessed the Company for personal
      property taxes on the manufacturing and production equipment included in the
      Company’s CAV1 facility. The amount of these taxes for the 2004 calendar year
      was $179,355. The Company did not pay this amount when it was asserted to be
      due, and in June 2006, the County filed a lien on the Company's equipment in
      the
      amount of the back taxes. In May 2007 the County filed an additional lien in
      the
      amount of $328,259 for 2005 personal property taxes. The Company has been billed
      for an additional $328,574 for 2006 personal property taxes. The amounts the
      Company has accrued include estimated penalties and interest.





The
      County may enforce the lien by seizing the Company's equipment and offering
      it
      for sale to third parties. The Company has been in discussions with County
      officials regarding the tax liability, has indicated its intention to satisfy
      the liability after the Company becomes operational and has the financial
      capacity to do so, and has made good faith payments to the County of
      approximately $82,200 towards the Company's tax liability.





**NOTE
      5 - EQUITY CAPITAL**





Authorized
      Capital :
      The
      total number of shares of capital stock which the Company has the authority
      to
      issue is 100,000,000 shares of common stock having a par value of $0.02 per
      share. All shares of common stock are identical, and the holders thereof are
      entitled to one vote for each share upon all matters upon which the stockholders
      have the right to vote.





Splits
      of Common Stock :
      The
      Company completed six 2 for 1 splits of its common shares prior to the start
      of
      fiscal year 2002. In accordance with applicable accounting rules, these splits
      have been retroactively applied to all periods presented.




15




**BIOMASS
      PROCESSING TECHNOLOGY, INC. AND SUBSIDIARIES**


**(A
      DEVELOPMENT STAGE COMPANY)**


**NOTES
      TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS**


**SEPTEMBER
      30, 2007**





**NOTE
      5 - EQUITY CAPITAL (continued)**





Private
      Placements of Common Stock :
      During
      the nine month period ended September 30, 2007, the Company directly sold
      1,677,535 shares of common stock in private offerings that resulted in net
      proceeds to the Company of $944,211.





Contributed
      Shares - 2007 :
      As
      further detailed in Note 3 - Related Party Transactions, on April 18, 2007,
      Larry W. Denney, Chairman of the Board, President, and Chief Executive Officer,
      committed to a contribution of 10,000 shares of his personal common stock to
      be
      distributed to a new shareholder as a price adjustment. These
      contributed shares were accounted for as a capital contribution to the Company,
      recorded as a decrease to common stock at $.02 per share par value and an
      increase to additional paid in capital in the same amount.





Shares
      Issued for Consulting Services :
      On
      August 16, 2007 the Company issued 75,000 shares of common stock as a part
      of an
      agreement executed with Jesteda Partners, LLC, an investment banking group
      that
      was engaged to assist the Company in raising new capital.





**NOTE
      6 - NET LOSS PER COMMON SHARE**





Statement
      of Financial Accounting Standards (“SFAS”) No. 128, “Earnings Per Share”
requires companies with complex capital structures or common stock equivalents
      to present both basic and diluted earnings per share ("EPS"). The Company’s only
      authorized capital stock is 100,000,000 shares of common stock, $0.02 par value
      per share. There were no common share equivalents as of September 30, 2007
      and
      2006. Basic EPS is calculated by dividing net income (loss) by the weighted
      average number of common shares outstanding during the period. Diluted EPS
      is
      calculated by dividing net income (loss) available to common stockholders by
      the
      weighted average number of common shares and common stock equivalents. Common
      equivalent shares are excluded from the computation in periods in which they
      have an anti-dilutive effect.





16


**BIOMASS
        PROCESSING TECHNOLOGY, INC. AND SUBSIDIARIES**
 **(A
        DEVELOPMENT STAGE COMPANY)**
 **NOTES
        TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS**
 **SEPTEMBER
        30, 2007**





**NOTE
      6 - NET LOSS PER COMMON SHARE (continued)**





A
      reconciliation of the number of common shares shown as outstanding in the
      consolidated financial statements with the number of shares used in the
      computation of weighted average common shares outstanding is shown
      below:




For
                the Three
            
            For
                the NineMonths
                Ended September 30,
            
            Months
                Ended September 30,2007
            
            2006
            
            2007
            
            2006Outstanding
                shares
            
            
            79,392,489
            
            
            74,697,802
            
            
            79,392,489
            
            
            74,697,802Effect
                of Weighting
            
            
            (117,328
            )
            
            (2,978,122
            )
            
            (4,207,600
            )
            
            (3,356,870
            )Weighted
                AverageCommon
                Shares Outstanding
            
            
            79,275,161
            
            
            71,719,680
            
            
            75,184,889
            
            
            71,340,932




**NOTE
      7 - INCOME TAXES**





All
      deferred tax assets created by the Company’s net operating losses are offset in
      their entirety by a deferred tax asset valuation allowance, therefore there
      are
      no net deferred tax assets or liabilities at September 30, 2007 and no provision
      or benefit recorded in the statements of operations for the periods
      presented.




**NOTE
      8 - DISCONTINUED OPERATIONS**





The
      Company exercised its right to terminate its contract with St. Lucie County
      for
      services in disposal of vegetative waste at the St. Lucie County landfill
      through a 60-day written notice consistent with the agreement. The termination
      became effective on January 13, 2005. At the request of St. Lucie County, the
      Company continued to perform the services through April 5, 2005 in order to
      maintain service until a new contractor commenced work.





These
      activities were never intended to be a primary business of the Company, but
      rather a means for the Company to obtain vegetative biomass to be used in
      production of the Company’s primary products. The Company now expects to use
      animal based biomass which is less expensive than the vegetative waste from
      the
      municipal landfill.





17


**BIOMASS
          PROCESSING TECHNOLOGY, INC. AND SUBSIDIARIES**
 **(A
          DEVELOPMENT STAGE COMPANY)**
 **NOTES
          TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS**
 **SEPTEMBER
          30, 2007**


**NOTE
      8 - DISCONTINUED OPERATIONS (continued)**





Consistent
      with the requirements of SFAS No. 144, the above noted activities are being
      reported as discontinued operations. There are no income tax liabilities or
      benefits associated with the discontinued operations.





The
      revenue and the operating results of the discontinued activities for the nine
      month periods ended September 30, 2007 and September 30, 2006 and for the
      cumulative during development stage were as follows:




CumulativeDuring
            
            For
                the Three Months
            
            For
                the Nine MonthsDevelopment
            
            Ended
                September 30,
            
            Ended
                September 30,Stage
                (Unaudited)
            
            2007
            
            2006
            
            2007
            
            2006Revenues
            
            $
            8,448,276
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            -Cost
                of Services Provided
            
            
            8,773,504
            
            
            -
            
            
            -
            
            
            -
            
            
            (
                8,659
            )Net
                Income (Loss)
            
            $
            (325,228
            )
            $
            -
            
            $
            -
            
            $
            -
            
            $
            8,659





Effective
      May 2004, the Company recorded a $485,000 loss accrual related to equipment
      damaged in a fire at the St. Lucie County landfill site. “Cost of Services
      Provided” in the discontinued operations shown above includes an adjustment of
      $109,718 for revisions reducing the accrual. During the nine months ended
      September 30, 2006 upon settlement in full of the remaining liability consisting
      of lease payments on equipment damaged in a casualty loss, an adjustment of
      $8,659 was recorded to write off the balance of the accrual. There were no
      assets or liabilities related to discontinued operations as of June 30, 2006
      or
      thereafter.




**NOTE
      9 - COMMITMENTS AND CONTINGENCIES**





A
      summary
      of commitments and contingencies is included in Note 11 to the audited
      consolidated financial statements included in the Company’s Form 10-KSB for the
      year ended December 31, 2006. There have been no significant changes in
      commitments and contingencies since that report.





18


**BIOMASS
        PROCESSING TECHNOLOGY, INC. AND SUBSIDIARIES**
 **(A
        DEVELOPMENT STAGE COMPANY)**
 **NOTES
        TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS**
 **SEPTEMBER
        30, 2007**





**NOTE
      10 - SUBSEQUENT EVENTS**





Securities
      Transactions :
      On
      various dates subsequent to September 30, 2007, the Company directly sold
      151,385 shares of common stock in a private offering limited to existing
      stockholders that resulted in net proceeds to the Company of $76,580.





Notice
      of Intent to File Tax Lien :
      On an
      annual basis the tax authorities of Okeechobee County, Florida assess the
      Company for personal property taxes on the manufacturing and production
      equipment included in the Company’s CAV1 facility (see Note 4 - Accrued
      Liabilities). In October, 2007 the County notified the Company of its intention
      to file a lien on the Company's equipment in the amount of the back taxes for
      2006 of $295,403. The amounts the Company has accrued include estimated
      penalties and interest.   19


**ITEM
      2.  PLAN OF OPERATION**





**Overview**





As
      of
      September 30, 2007, the Company was a development stage company, as its planned
      principal operations had not commenced and it had not conducted significant
      operations or generated significant operating revenues since its inception.
      The
      principal business of the Company is intended to be the development and
      commercialization of its proprietary biomass processing technology, through
      the
      application of which biomass material may be converted into its constituent
      components using hydrolysis and fermentation-based processing.





During
      the next twelve months, the Company plans to allocate its capital resources
      to
      the completion of its production facilities and its efforts to secure
      significant additional funding sufficient to support commencing operations.
      During the second half of 2007 and first half of 2008, subject to raising the
      additional capital the Company requires in order to commence operations, through
      a combination of additional capital investment and operating and cash flows,
      the
      Company plans to begin operating its Combined Animal/Vegetative Waste One
      facility in Okeechobee, Florida (the "CAV1 facility") with lines 1 and 2, add
      production lines 3 and 4, complete construction of its hydrolysis system (a
      pre-processing of biomass that reduces the cost of raw materials and fuel
      costs), and construct two additional permitted fermentation lines (5 and 6)
      at
      the CAV1 facility.





**Liquidity
      and Capital Resources**





As
      of
      September 30, 2007, the Company’s working capital deficit was $2,100,946
      compared to a working capital deficit of $1,530,598 as of December 31, 2006.
      During the nine months ended September 30, 2007 the Company received $944,211
      in
      proceeds from private placements of the Company’s common stock during the
      period.





The
      Company is substantially dependent upon the proceeds from sales of its common
      stock for working capital. The Company's principal uses of its working capital
      are to pay operating expenses and to fund expansion costs, including capital
      expenditures and the cost of additional personnel. Should the funds available
      to
      the Company be insufficient to fulfill all of these needs, the Company manages
      its available funds according to the following priorities (from highest to
      lowest): (1) payment of operating expenses, (2) creation or maintenance of
      a
      sufficient working capital reserve, and (3) expansion of personnel and equipment
      to implement the Company's business plan.





The
      Company believes that its current capital resources are insufficient to fund
      both its intended operations and expansion at its planned expansion rate. The
      Company will need to raise additional capital to enable it to commence
      production activities at its CAV1 facility, to fund the construction costs
      required to bring lines three and four of the CAV1 facility operational and
      to
      complete implementation of the hydrolysis process at the CAV1 facility. Further,
      the Company will need to raise additional capital to fund the cost of
      constructing lines five and six at the CAV1 facility.




20





Adjustment
      to Business Plan Due to Contamination of Raw Material :
      During
      production testing occurring over the course of several years, the Company
      used
      molasses as a primary raw material and intended to enter the lower quality/lower
      valued yeast market utilizing molasses. In early 2006, as the Company sought
      to
      become operational, it determined that the molasses crop of 2005/2006 from
      local
      sugar cane farming operations was unusable as the Company’s raw material due to
      harvesting techniques used on sugar cane affected by the hurricanes that passed
      over Florida in mid-2005. Harvesting methods pulled up significant amounts
      of
      dirt that was incorporated into the molasses and could not be removed
      effectively.





After
      learning about the contamination of the molasses supply, the Company determined
      its processing plant could use a higher cost raw material and produce and sell
      a
      higher quality/higher value yeast product to offset the additional costs
      associated with the higher cost raw material. In order to produce the higher
      quality product, management decided to accelerate the implementation of plans
      to
      construct special processing equipment. Construction of the equipment occurred
      throughout most of 2006. In early 2007 the Company completed construction and
      testing of the equipment.





Efforts
      to Raise New Capital :
      In
      February 2007 management determined that in order to become operational, the
      Company would need to raise a significant amount of working capital and
      commenced seeking an investment banking group that could assist in finding
      sources of funding.





On
      August
      16, 2007, the Company executed an agreement with Jesteda Partners, LLC
      (“Jesteda”), an investment banking group with offices in Irvine, California and
      New York City. Under the ninety-day exclusive agreement Jesteda will act as
      a
      finder to seek for the Company financing up to $10 million. Jesteda received
      75,000 shares of common stock of the Company upon execution of the agreement.
      The agreement provides for Jesteda to receive fees of 8% of the gross proceeds
      received by the Company and warrants to purchase the Company’s common stock
      valued at 4% of gross proceeds with a strike price of $1.00 per share
      exercisable within two years of closing. There is no assurance that Jesteda
      and
      the Company will be successful in raising the additional capital that the
      Company requires to become operational.





The
      Company is continuing efforts to raise additional capital through private
      placements of common stock. There is no assurance that the Company will be
      able
      to raise additional funds that may be necessary to enable it to continue its
      planned business operations including expansion at the planned rate. Should
      any
      of management’s planned events not occur, the Company's financial condition and
      results of operations may be materially affected.





The
      Company has incurred staffing limitations due to its lack of cash to pay the
      costs of employee compensation and benefits. These limitations have restricted
      the Company's ability to obtain and train the experienced personnel that the
      Company requires to reach its goals. After identifying, attracting and hiring
      qualified personnel, a period of time is required to acquaint new employees
      with
      Company policies and goals and to train them in the Company's technology.




21





The
      execution by Okeechobee, Florida county tax authorities on liens placed on
      equipment included in the Company's CAV1 facility relating to significant
      amounts of past due personal property taxes could have a material adverse effect
      on the Company's ability to retain control of and operate its CAV1
      facility.





**The
      CAV1 Facility**





When
      the
      Company attempted to commence production operations in January 2006 using the
      two existing production lines of its CAV1 facility, it discovered two related
      problems:





·
            Hurricane
                Wilma's effects on the Florida sugar cane crop had rendered the molasses
                produced from that crop unsuitable for use by the Company as its
                initial
                feedstock for the CAV1 facility's fermentation process;
                and





·
            The
                energy efficient “multi-effect” dryers employed by the Company, while
                capable of substantially drying the yeast to produce a relatively
                low
                quality, commodity value product, were not capable of processing
                the yeast
                to the higher quality standards desired by the
                Company.





Analysis
      of the situation led the Company to take the following actions:





·
            Until
                cellulosistic-hydrolysis derived sugar is available, the Company
                would use
                higher cost corn derived carbohydrate as its initial feedstock for
                fermentation, as not only the quality but the price of molasses was
                affected by the hurricane; and





·
            To
                offset the higher raw material cost, the Company would accelerate
                implementation of centrifugal spray drying technology that it previously
                planned for later implementation, to work in conjunction with its
                “multi-effect” driers.





The
      Company believes that it can achieve a significant increase in product quality
      through this change that will enable it to increase the average selling price
      of
      its yeast product by more than enough to offset the higher raw material and
      energy costs to be incurred.





The
      CAV1
      facility as currently constructed has four fermenter lines, each of which
      includes a 200,000-gallon fermentation reactor. Two lines are fully constructed
      to production capability and ready to commence production operations, and have
      undergone extensive production level testing. Subject to raising the necessary
      additional capital, the Company plans to complete the work necessary to expand
      its production capacity to utilize all four fermentation lines. The production
      capacity of the CAV1 facility utilizing all four fermentation lines is
      approximately 300% of the production capacity of the facility utilizing only
      lines one and two.




22





The
      CAV1
      facility is permitted for up to six production lines. Although the Company
      plans
      to construct the fifth and sixth production lines as soon as feasible, the
      Company has not entered into any construction contracts and will require
      additional capital to fund the cost of constructing these additional lines.
      The
      Company expects its commercial processing operations at the CAV1 facility to
      initially consist of processing yeast in a sterile environment utilizing
      phosphorus, nitrogen, carbohydrate and other nutrients contained in barn waste
      from adjacent farming operations. The primary product to be produced by the
      CAV1
      facility is yeast to be marketed to animal feed manufacturers for use as a
      protein and probiotic supplement to animal feed. The secondary product presently
      planned to be produced at the CAV1 facility is lignin, a natural polymer.





The
      Company’s investment in its CAV1 facility is $26.0 million as of September 30,
      2007. This amount includes construction and installation of all reactors and
      major equipment for four lines of fermentation, with piping and control for
      two
      production lines to operational status. This amount also includes the cost
      of
      construction of redundant infrastructure, such as boilers, hydrolysis reactors,
      compressed air, freon chillers, evaporative water cooling, reverse osmosis,
      process control and ancillary buildings, all to support up to six production
      lines. Of the total construction costs of the facility, $17.6 million represents
      lines one and two and related equipment already operational, $6.0 million
      represents construction in process in lines three and four and the hydrolysis
      system, and $2.4 million represents buildings, leasehold improvements and back
      up spare parts.





The
      Company has in place the major processing equipment for four production lines
      and is in the process of contracting for the construction work necessary to
      bring lines three and four operational by adding piping, sensor and control
      elements. The Company is seeking to raise additional capital to fund the cost
      of
      the additional work necessary to complete lines three and four, as it does
      not
      currently have sufficient funds on hand for this purpose.





The
      Company estimates that the construction costs remaining to bring line three
      operational are $57,500 in parts and $325,000 in vendor labor. The estimated
      construction costs remaining to complete line four are $765,500.




In
      addition, most of the major components required for the hydrolysis-based
      processing of cellulosistic material to sugar for fermentation are in place.
      Implementation of the hydrolysis process requires the in-place components plus
      the addition of material handling equipment, piping and control. The Company
      estimates that the cost to complete construction of the hydrolysis process
      is
      $315,000. The hydrolysis process is expected to be implemented in three phases.
      Unlike the fermentation aspect of the process at the CAV1 facility, no
      production-scale testing of the hydrolysis process has been performed.




23





The
      fifth
      and sixth production lines will require construction and installation of
      foundations and all major process equipment, as well as piping and control.
      The
      Company estimates the cost of constructing these two additional lines of
      production to be $4,000,000 and projects the addition of these two lines will
      increase the production capacity of the CAV1 facility by two thirds (167%)
      of
      the estimated production capacity of the first four lines, and 450% of the
      production capacity of lines one and two combined. The Company will need to
      raise additional capital to fund this expansion through additional private
      offerings of its securities.





**Patent
      Applications**





On
      May
      16, 2005, the Company filed seven Patent Cooperation Treaty (“PCT”)
      applications, claiming priority to seven provisional patent applications the
      Company previously filed with the United States Patent and Trademark Office
      with
      respect to its proprietary technology for the processing of biomass materials.
      The filing of the PCT applications extended the time allowed to the Company
      to
      complete filing formal U.S. applications, and gave the Company the ability
      to
      extend the time for filing applications with foreign governments that are PCT
      participants. In November 2006, the Company filed final patent applications
      in
      the United States and 18 other countries based on the seven PCT applications
      previously filed. Upon the granting of any patents, the associated costs will
      be
      amortized over the life of the patents.





The
      technology covered by the Company’s patent applications involves pre-treatment,
      core fermentation, and post-treatment a spects.
      The Company believes each of these aspects has unique elements, and the patent
      applications seek coverage in each of these general areas. Both equipment and
      process innovations are covered for many diverse waste streams. Treatment of
      all
      the waste streams utilizes the central inventive aspects of the process (“core
      technology”).





The
      waste
      streams explored are:





·
            Ruminant
                cattle manure;




·
            Swine
                and other animal manure;




·
            Municipal
                cellulosistic solid waste;




·
            Other
                cellulosistic solid waste;




·
            Whey
                broth from cheese production;




·
            Fermentation
                broth remediation from alcohol and yeast production;
                and




·
            Other
                undefined dilute waste streams.





Ruminant
      cattle and swine manure treatment and remediation are dealt with more
      extensively in the presentation as specific instances of application of the
      core
      technology.





The
      Company believes that the discoveries presented in its patent applications
      constitute a novel means of fermentation. In general the core technology
      presented, taken as a whole, addresses the major problems of waste stream
      treatment—sub-optimal, very dilute, poor and variable concentration nutrient
      supply. The Company believes that its technology can address remediation of
      waste streams as dilute as certain river water, or as concentrated as manure,
      potentially with recovery of valuable product that may more than offset the
      cost
      of the processing.




24





Other
      innovations presented in the patent applications may be separated into (1)
      proper preparation of the waste stream and (2) the core technology—equipment
      design, fermentation organism selection, sensor and control selection and
      process definition.





The
      Company’s technology includes elements relating to the proper preparation of
      waste streams for fermentation that are both necessary to optimize utilization
      of waste streams for use in the core technology and are otherwise generally
      useful, innovative tools. These elements relate to:





·
            Recovery
                of organic material suitable for fermentation;
                and




·
            Limiting
                presence of substances that interfere with, or make less optimal,
                proper
                recovery.





The
      Company refers to these processes as its EcoGoldTM technology (discussed below).
      The processes involve the recovery of nutrient value from dilute, variable
      waste
      streams by fermentation processing. The technology encompasses several
      variations that include cheese whey, ethanol fermentation waste and recovery
      of
      nutrient specific to various manure waste animal species such as hogs, poultry
      and cattle.





The
      Company can give no assurance that its patent applications will result in the
      issuance of any specific patents, or that any patents that may be issued will
      withstand challenge, provide any specific protection or ultimately be of
      commercial value to the Company.





**EcoGoldTM
      - The Dilute Waste Stream Recovery Technology**





The
      Company’s patent applications discussed above are related to a unique biomass
      processing technology that the Company refers to as EcoGoldTM. EcoGoldTM is the
      name of the Company’s ecologically beneficial process and equipment as well as
      the name of the product produced through the process, which is a golden colored,
      high value nutrient. The EcoGoldTM process is designed to reduce phosphorus and
      nitrogen pollution from waste streams, by creating a valuable product (protein)
      at farms and industrial sites.





The
      Company plans to complete installation and testing of the first equipment
      developed using the EcoGoldTM process at a large dairy after commencing sales of
      the products of its CAV1 facility, and subject to the availability of sufficient
      working capital.





The
      Company expects to complete testing and any necessary modifications to this
      unit
      and to then offer the unit for rental with servicing and licensing included.
      The
      Company has determined that the commencement of full production operations
      at
      the CAV1 facility is its highest priority, and constraints on financial and
      personnel resources may delay the Company's ability to further develop its
      EcoGoldTM asset. The Company has had initial discussions with several vendors
      capable of fabricating the equipment system in mass production, but has not
      yet
      entered into any agreements with respect to the sale or production of these
      units.




25





**Other
      Products in Development**




The
      Company presently is concentrating its efforts on its CAV1 and EcoGoldTM
operations as discussed above. The Company has other potential products and
      applications of its technology which are in various stages of research and
      development.


26




**ITEM
        3.**  **CONTROLS
        AND PROCEDURES**
 
 As
        required by Rule 13a-15 under the Securities Exchange Act of 1934, as of
        September 30, 2007, the Company's management carried out an evaluation of
        the
        effectiveness of the design and operation of the Company's disclosure controls
        and procedures. This evaluation was carried out by Larry W. Denney, the
        Company's Chief Executive Officer, and Robert F. Kendall, the Company’s Chief
        Financial Officer. Based
        upon that evaluation, the Company's Chief Executive Officer and Chief Financial
        Officer concluded that as of September 30, 2007, the Company's disclosure
        controls and procedures were not effective in timely alerting them to material
        information required to be included in the Company's periodic SEC reports.
 
 The
        Company's disclosure controls and procedures are subject to a material weakness
        resulting from inadequate segregation of duties related to accounting controls
        caused by the limited number of personnel available for accounting duties.
        The
        accounting department consists of the Chief Financial Officer, who is a CPA,
        one
        accountant and the controller, who is married to the Chief Executive Officer
        of
        the Company. Additionally, the Chief Executive Officer of the Company is
        active
        in reviewing all aspects of financial reporting. As a mitigating control,
        the
        Chief Executive Officer, Chief Financial Officer, controller and the accountant
        do extensive review of all of the accounting records and financial reporting.
        The Company is a research and development company in the development stage.
        Since inception in 1996, the Company has been entirely funded by investment
        and
        has had no revenues to date in its intended business. Management believes
        that
        remediation of the cited lack of segregation of duties can be accomplished
        through the hiring of additional accounting personnel or by adding or modifying
        certain existing internal control procedures. As for hiring additional
        personnel, it has not been reasonable or cost beneficial for the Company
        to hire
        extra accounting personnel who would have no other purpose, duties or workload
        than to provide formal segregation of duties under internal control principles.
        In the future, the Company may hire additional accounting personnel as soon
        as
        it has sufficient financial resources and additional workload to justify
        such
        hiring.
  It
        should
        be noted that the design of any system of controls is based in part upon
        certain
        assumptions about the likelihood of future events and there can be no assurance
        that any design will succeed in achieving its stated goals under all potential
        future conditions, regardless of how remote. Disclosure
        controls and procedures are controls and other procedures that are designed
        to
        ensure that information required to be disclosed in the Company's reports
        filed
        or submitted under the Exchange Act is recorded, processed, summarized and
        reported within the time periods specified in the SEC’s rules and forms.
        Disclosure controls and procedures include, without limitation, controls
        and
        procedures designed to ensure that information required to be disclosed in
        the
        Company's reports filed under the Exchange Act is accumulated and communicated
        to management, including the Company's Chief Executive Officer and Chief
        Financial Officer, to allow timely decisions regarding required
        disclosure.




27


There
        were no changes in the Company's internal control over financial reporting
        identified in connection with the evaluation required by paragraph (d) of
        Rule
        13a-15 under the Exchange Act with respect to the fiscal quarter ended September
        30, 2007 that have materially affected, or are reasonably likely to materially
        affect, the Company's internal control over financial reporting.


**PART
      II.**  **OTHER
      INFORMATION**





**ITEM
      1.**  **LEGAL
      PROCEEDINGS.**




The
      Company is not presently aware of any pending litigation and is not party to
      any
      legal proceedings except as described below.





On
      an
      annual basis the tax authorities of Okeechobee County, Florida assess the
      Company for personal property taxes on the manufacturing and production
      equipment included in the Company’s CAV1 facility. The amounts the Company has
      accrued include estimated penalties and interest. (See Note 4 - Accrued
      Liabilities and Note 10 - Subsequent Events.) The amount of these taxes for
      the
      2004 calendar year was $179,355. The Company did not pay this amount when it
      was
      asserted to be due, and in June 2006, the County filed a lien on the Company's
      equipment in the amount of the back taxes. In May 2007 the County filed an
      additional lien in the amount of $328,259 for 2005 personal property taxes.
      In
      October, 2007 the County notified the Company of its intention to file a lien
      on
      the Company's equipment in the amount of the back taxes for 2006 of $295,403.
      The County may enforce the lien by seizing the Company's equipment and offering
      it for sale to third parties. The Company has been in discussions with County
      officials regarding the tax liability, has indicated its intention to satisfy
      the liability after the Company becomes operational and has the financial
      capacity to do so, and has made good faith payments to the County of
      approximately $82,200 towards the Company's tax liability.




**ITEM
      2.**  **UNREGISTERED
      SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.**





On
      various dates from July 11, 2007 through September 28, 2007, the Company
      directly sold 198,616 shares of common stock to four existing stockholders,
      each
      of whom the Company believes to be an accredited investor, in private offerings
      limited to existing stockholders that resulted in net proceeds to the Company
      of
      $63,280. The
      shares were offered and sold without general solicitation or advertising and
      without registration in reliance on Section 4(2) of the Securities Act of 1933,
      as amended, and Rule 506 of Regulation D thereunder.




28




**ITEM
      6.**  **EXHIBITS**




**List
      of Exhibits:**




Document
            
            Exhibit
                No.Certificate
                of Incorporation filed with the Delaware Secretary of State on January
                30,
                1996 (incorporated herein by reference to Exhibit 2.1.1 of the
                registrant's Form 10-SB, filed with the SEC on December 19,
                2003)
            
            
            2.1.1Certificate
                of Amendment to Certificate of Incorporation filed with the Delaware
                Secretary of State on September 12, 1997 (incorporated herein by
                reference
                to Exhibit 2.1.2 of the registrant's Form 10-SB, filed with the SEC
                on
                December 19, 2003)
            
            
            2.1.2Certificate
                of Amendment to Certificate of Incorporation filed with the Delaware
                Secretary of State on May 23, 2001 (incorporated herein by reference
                to
                Exhibit 2.1.3 of the registrant's Form 10-SB, filed with the SEC
                on
                December 19, 2003)
            
            
            2.1.3By-Laws
                (incorporated herein by reference to Exhibit 2.2 of the registrant's
                Form
                10-SB, filed with the SEC on December 19, 2003)
            
            
            2.2Certification
                by the Chief Executive Officer of the Company pursuant to Rule 13a-14
                under the Securities Exchange Act of 1934, as amended *
            
            
            31.1Certification
                by the Chief Financial Officer of the Company pursuant to Rule 13a-14
                under the Securities Exchange Act of 1934, as amended *
            
            
            31.2Certification
                by the Chief Executive Officer of the Company pursuant to 18 U.S.C.
                Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley
                Act
                of 2002 *
            
            
            32.1Certification
                by the Chief Financial Officer of the Company pursuant to 18 U.S.C.
                Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley
                Act
                of 2002 *
            
            
            32.2


*
        Filed
        herewith
 
 29




**SIGNATURES**





In
      accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
      this report to be signed on its behalf by the undersigned, thereunto duly
      authorized.


Biomass
                Processing Technology, Inc.Dated:
                 October 31, 2007
            By:
            /s/
                Larry W. DenneyLarry
                W. Denney, Chairman of the Board,
              President
                and Chief Executive Officer
              (principal
                executive officer and duly authorized
                officer)




Biomass
              Processing
              Technology, Inc.Dated:
                 October 31, 2007
            By:
            /s/
              Robert F. KendallRobert
                F. Kendall, CPA, Chief Financial
              Officer
                (principal financial officer)




30