**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D. C. 20549**




**Form
      10-QSB**




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




For
      the
      quarterly period ended March 31, 2006




oTRANSITION
      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




BP Technology Logo


**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 Rule
      12b-2 of the Exchange Act)  Yes
oNo
x




As
      of
      September 20, 2007, there were 79,372,489 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 MARCH 31, 2006**




**TABLE
      OF CONTENTS**




PART
                I FINANCIAL INFORMATIONItem
                1. Financial Statements (Unaudited)
            4Item
                2. Plan of Operation
            21Item
                3. Controls and Procedures
            26PART
                II OTHER INFORMATIONItem
                1. Legal Proceedings
            28Item
                2. Unregistered Sales of Equity Securities and Use of Proceeds
            28Item
                6. Exhibits
            28SIGNATURES
            30Certifications:
                Exhibits 31.1 and 31.2Certifications:
                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, 2005.




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)**


**MARCH
      31, 2006**







**ASSETS**Current assetsCash and cash equivalents
            
            $
            77,492Prepaid expenses and other current assets
            
            
            175,151Total Current Assets
            
            
            252,643Property and equipment, net
            
            
            23,082,267Other assetsEquipment system
            
            
            327,298Spare parts
            
            
            1,059,588Patent application costs
            
            
            341,675Deposits and other assets
            
            
            101,780Total Other Assets
            
            
            1,830,341Total Assets
            
            $
            25,165,251**LIABILITIES AND STOCKHOLDERS' EQUITY**Current liabilitiesAccounts payable
            
            $
            1,072,378Accrued liabilities
            
            
            829,903Stockholder advance
            
            
            375,000Liability of discontinued operations – casualty loss reserve
            
            
            162,302Capital leases
            
            
            29,580Total Current Liabilities
            
            
            2,469,163Note payable - officer
            
            
            39,325Total Long-Term Liabilities
            
            
            39,325Commitments and Contingencies
            
            
            -Stockholders' equityCommon stock, $.02 par value; 100,000,000 shares
                authorized; issued and outstanding, 71,145,657
            
            
            1,422,913Additional paid in capital
            
            
            49,302,649Deficit accumulated during the development stage
            
            
            (28,068,799
            )Total Stockholders' Equity
            
            
            22,656,763Total Liabilities and Stockholders' Equity
            
            $
            25,165,251





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


4


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


**(A
      DEVELOPMENT STAGE COMPANY)**


**CONSOLIDATED
      STATEMENTS OF OPERATIONS (UNAUDITED)**








Cumulative
              DuringDevelopment
            
            Three Months Ended March 31,Stage (Unaudited)
            
            2006
            
            2005Revenues (See Note 8)
            
            $
            -
            
            $
            -
            
            $
            -Operating expenses:Research and development
            
            
            20,825,369
            
            
            1,105,847
            
            
            862,075Depreciation
            
            
            3,924,099
            
            
            278,334
            
            
            1,201,413Valuation adjustment –
                      Equipment system
            
            
            1,793,681Loss on disposal of assets
            
            
            785,656
            
            
            -
            
            
            -Total operating expenses
            
            
            27,328,805
            
            
            1,384,181
            
            
            2,063,488Interest expense
            
            
            (406,107
            )
            
            (2,488
            )
            
            (
                7,976
            )Loss from continuing operations
            
            
            (27,734,912
            )
            
            (1,386,669
            )
            
            (2,071,464
            )Discontinued Operations (Note 8):Net income (loss) from discontinued
                landfill contract activities
            
            
            (333,887
            )
            
            -
            
            
            107,754**Net loss**
            
            $
            (28,068,799
            )
            $
            (1,386,669
            )
            $
            (1,963,710
            )**Loss per Common Share, Basic and Diluted:**
            
            
            
            
            $
            (0.02
            )
            $
            (0.03
            )From Continuing Operations
            
            
            
            
            $
            0.00
            
            $
            0.00From Discontinued Operations
            
            
            
            
            $
            (0.02
            )
            $
            (0.03
            )Net loss per shareWeighted average number of common shares outstanding
            
            
            
            
            
            71,145,657
            
            
            70,144,312





**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, 2005**
              
              
              71,145,657
              
              $
              1,422,913
              
              $
              48,677,649
              
              $
              (26,682,130
              )
              $
              23,418,432Issuance
                      of common shares to related party
              
              
              250,000
              
              
              5,000
              
              
              620,000
              
              
              -
              
              
              625,000Contribution
                  of common shares
              
              
              (250,000
              )
              
              (5,000
              )
              
              5,000
              
              
              -
              
              
              -Net
                      loss for the three month period ended March 31,
                      2006
              
              
              -
              
              
              -
              
              
              -
              
              
              (1,386,669
              )
              
              (1,386,669
              )**Balances
                  as of March 31, 2006**
              
              
              71,145,657
              
              $
              1,422,913
              
              $
              49,302,649
              
              $
              (28,068,799
              )
              $
              22,656,763





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


6


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


**(A
      DEVELOPMENT STAGE COMPANY)**


**CONSOLIDATED
      STATEMENTS OF CASH FLOWS (UNAUDITED)**





Cumulative During
            
            For the Three Months EndedDevelopment
            
            March 31,Stage (Unaudited)
            
            2006
            
            2005**Operating
                Activities**Net
                Loss from continuing operations
            
            $
            (27,734,912
            )
            $
            (1,386,669
            )
            $
            (2,071,464
            )Adjustments
                to reconcile net loss to net cash used in continuing
                operations:Depreciation
            
            
            3,924,099
            
            
            278,334
            
            
            1,201,413Valuation
                adjustment - equipment system
            
            
            1,793,681
            
            
            -
            
            
            -Loss
                on disposal of assets
            
            
            785,656
            
            
            -
            
            
            -Stock-based
                compensation
            
            
            163,700
            
            
            -
            
            
            -Non-cash
                expense - common stock transaction
            
            
            2,112,500
            
            
            375,000
            
            
            -Changes
                in certain assets and liabilities:Prepaid
                expenses and other current assets
            
            
            (224,117
            )
            
            7,374
            
            
            (12,578
            )Deposits,
                spare parts and other assets
            
            
            (422,057
            )
            
            17,030
            
            
            -Accounts
                payable and accrued liabilities
            
            
            1,958,430
            
            
            193,231
            
            
            (1,158,798
            )Net
                Cash Used in Continuing Operations
            
            
            (17,643,020
            )
            
            (515,700
            )
            
            (2,041,427
            )Net
                income (loss) from discontinued operations
            
            
            (333,887
            )
            
            -
            
            
            107,754Adjustments
                to reconcile net cash used in discontinued operations:Reserve
                (adjustment) for casualty loss
            
            
            375,282
            
            
            -
            
            
            (109,718
            )Changes
                in certain assets and liabilities:Assets
                    of discontinued operations - Accounts
                    Receivable
            
            
            -
            
            
            -
            
            
            (102,800
            )****Liabilities
                of discontinued operations
            
            
            (261,457
            )
            
            (30,647
            )
            
            87,311Net
                Cash Used in Discontinued Operations
            
            
            (220,062
            )
            
            (30,647
            )
            
            (17,453
            )Net
                Cash Used in Operating Activities
            
            
            (17,863,082
            )
            
            (546,347
            )
            
            (2,058,880
            )**Investing
                Activities**Proceeds
                from sale of assets
            
            
            137,230
            
            
            -
            
            
            -Patent
                application costs
            
            
            (341,675
            )
            
            (4,086
            )
            
            (2,739
            )Construction
                of equipment system
            
            
            (2,331,504
            )
            
            -
            
            
            -Purchases
                of property and equipment
            
            
            (27,222,016
            )
            
            (120,539
            )
            
            (71,471
            )Net
                Cash Used in Investing Activities
            
            
            (29,757,965
            )
            
            (124,625
            )
            
            (74,210
            )




*(Continued)*





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


7


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


**(A
      DEVELOPMENT STAGE COMPANY)**


**CONSOLIDATED
      STATEMENTS OF CASH FLOWS (UNAUDITED)**





*(Continued)*
            
            Cumulative During
            
            For the Three Months EndedDevelopment
            
            March 31,Stage (Unaudited)
            
            2006
            
            2005**Financing
                Activities**Proceeds
                from long-term debt issuances
            
            
            219,596
            
            
            -
            
            
            -Repayment
                of debt and capital leases
            
            
            (1,374,744
            )
            
            (15,207
            )
            
            (75,676
            )Proceeds
                from Note payable - officer
            
            
            169,700
            
            
            -
            
            
            -Repayment
                of Note payable - officer
            
            
            (130,375
            )
            
            -
            
            
            (63,444
            )Stockholder
                advance
            
            
            375,000
            
            
            375,000
            
            
            -Re-acquisition
                of common stock
            
            
            (43,500
            )
            
            -
            
            
            -Proceeds
                from common stock issuance
            
            
            48,482,862
            
            
            250,000
            
            
            2,491,150Net
                Cash Provided by Financing Activities
            
            
            47,698,539
            
            
            609,793
            
            
            2,352,030Net
                increase (decrease) in cash and cash equivalents
            
            
            77,492
            
            
            (61,179
            )
            
            218,940Cash
                and cash equivalents at the beginning of the period
            
            
            -
            
            
            138,671
            
            
            44,559Cash
                and cash equivalents at the end of the period
            
            $
            77,492
            
            $
            77,492
            
            $
            263,499CASH
                PAID DURING THE PERIOD FOR:Interest
            
            $
            407,751
            
            $
            5,272
            
            $
            12,294Income
                taxes
            
            $
            -
            
            $
            -
            
            $
            -





**Supplemental
      Disclosure of Noncash Investing and Financing Activities:**





**Equipment
      Financing.** Since
      inception, the Company acquired equipment and vehicles by entering into capital
      leases totaling $1,330,277 (Unaudited).





**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**


**MARCH
      31, 2006**





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





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 $2,216,520, 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 $1,386,669 and net cash used in
      operations of $546,347 for the three months ended March 31, 2006. 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, 2005 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**


**MARCH
      31, 2006**





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





As
      further detailed in Note 10 - Subsequent Events, during the period since April
      1, 2006 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 third 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, 2005, 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
      March 31, 2006 and the results of operations and cash flows for the three month
      period ended March 31, 2006 have been included. The results of operations for
      the three months ended March 31, 2006 are not necessarily indicative of the
      results to be expected for the full year. 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, 2005.


10


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


**(A
      DEVELOPMENT STAGE COMPANY)**


**NOTES
      TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS**


**MARCH
      31, 2006**





**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, 2005. 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**





Note
      Payable - Officer .
      From
      2004 through March 31, 2006, Larry W. Denney, the Company’s
      principal stockholder, Chairman of the Board, President and Chief Executive
      Officer, loaned
      the Company $169,700 for working capital under a note in a principal amount
      not
      to exceed $200,000 and bearing simple interest at 4%. The note, as amended,
      is
      payable on or before April 1, 2007 and may be prepaid without penalty. Accrued
      interest, which is presented as a component of accrued liabilities, totaled
      $1,534 as of March 31, 2006. During the three months ended March 31, 2006,
      the
      Company accrued $394 in interest expense. The balance of the loan as of March
      31, 2006 was $39,325. During the fourth quarter of 2006,
      the
      Company repaid the note in its entirety, with all accrued interest.





Contributed
      Shares and Stock Purchases by Directors .
      On
      January 25, 2006, the Company sold 250,000 shares of common stock for $250,000
      to P. E. MacAllister, a director. Of the shares sold, 125,000 shares were
      contributed to the Company without consideration by Mr. Denney and 125,000
      shares were contributed to the Company without consideration by Mr. Jack B.
      Simpson, cofounder of the Company, principal stockholder and former director.
      These contributed shares were accounted for as a capital contribution to the
      Company, recorded as a decrease to common stock at $0.02 per share par value
      and
      an increase to additional paid in capital in the same amount. The
      shares were contributed to avoid the dilutive effect on existing stockholders
      of
      sales of stock at lower prices than what previous investors had paid. 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. At March
      31, 2006, after the transaction, Mr. Denney owned 32,195,163.5 shares and Mr.
      Simpson owned 15,208,931.5 shares.


11


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


**(A
      DEVELOPMENT STAGE COMPANY)**


**NOTES
      TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS**


**MARCH
      31, 2006**





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





Non-cash
      Related Party Stock Purchase Expenses :
      In
      conjunction with the stock purchase by Mr. MacAllister, pursuant to accounting
      rules and principles applicable to stock sales in related party transactions,
      the Company recorded a $375,000 non-cash increase in its “additional paid in
      capital” account and recorded a non-cash transaction expense for the same
      amount. 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, non-related party
      stockholders by the Company prior to the sale to Mr. MacAllister 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.





Between
      the closing of the offering on August 15, 2005 and March 31, 2006, there were
      no
      sales of stock by the Company to existing stockholders other than two sales
      to
      another director in 2005 and the sale to Mr. MacAllister. Therefore, the Company
      used the $2.50 per share sales price from the most recent previous offering
      in
      the computation required under these rules as follows:





*January 25, 2006*Most
                Recent Offering Price
            
            $
            2.50Related
                Party Price Paid
            
            
            (1.00
            )Difference
                Per Share
            
            $
            1.50Number
                of Shares Purchased
            
            
            250,000Non-cash
                transaction expense
            
            $
            375,000





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.




12


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


**(A
      DEVELOPMENT STAGE COMPANY)**


**NOTES
      TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS**


**MARCH
      31, 2006**





**NOTE
      4 – ACCRUED LIABILITIES**





Accrued
      liabilities represent estimated expenses that apply to the reported period
      and
      have not been billed by the provider or paid by the Company. At March 31, 2006,
      accrued liabilities consisted of the following:





Accrued
                Property Taxes
            
            $
            589,404Deferred
                Officers Salaries
            
            
            125,816Accrued
                Vacation
            
            
            43,313Accrued
                Payroll and Payroll Taxes
            
            
            37,836Accrued
                Professional Fees
            
            
            32,000Accrued
                Interest - Officer Loan
            
            
            1,534Total
                Accrued Liabilities
            
            $
            829,903





Accrued
      property taxes are primarily personal property taxes assessed by Okeechobee
      County, Florida on the manufacturing and production equipment within the
      Company’s CAV1 facility. The amount includes delinquent taxes assessed from 2004
      and 2005 as well as an estimated accrual for 2006.





**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.





Split
      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.





Private
      Placements of Common Stock :
      During
      the three month period ended March 31, 2006, the Company directly sold 250,000
      shares of common stock in a private placement that resulted in net proceeds
      to
      the Company of $250,000. Each of Mr. Denney, the Company's Chairman, President
      and Chief Executive Officer and a principal stockholder, and Mr. Simpson, a
      principal stockholder who was a director from inception through June 2005,
      contributed to the Company 125,000 shares of common stock they owned which
      the
      Company sold to investors in the private placement. The contributed shares
      were
      accounted for as capital contributions to the Company with a reduction in common
      stock equal to the par value of the shares and a corresponding increase to
      additional paid in capital and then recorded as shares issued to the investor
      in
      the private placement. (See Note 3 - Related Party
      Transactions.)


13


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


**(A
      DEVELOPMENT STAGE COMPANY)**


**NOTES
      TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS**


**MARCH
      31, 2006**





**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 March 31, 2006 and
      2005.
      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.





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 MonthsEnded
                March 31,2006
            
            2005Common
                shares outstanding
            
            
            71,145,657
            
            
            70,359,393Effect
                of weighting
            
            
            -
            
            
            (215,081
            )Weighted
                average common shares outstanding
            
            
            71,145,657
            
            
            70,144,312





**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 March 31, 2006 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.


14


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


**(A
      DEVELOPMENT STAGE COMPANY)**


**NOTES
      TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS**


**MARCH
      31, 2006**





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





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.





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 described
      above
      for the three month periods ended March 31, 2006 and March 31, 2005 and for
      the
      cumulative during development stage were as follows:





Cumulative DuringDevelopment
            
            Three Months Ended March 31,Stage (Unaudited)
            
            2006
            
            2005Revenues
            
            $
            8,448,276
            
            $
            -
            
            $
            449,941Cost
                of services provided
            
            
            8,782,163
            
            
            -
            
            
            342,187Net
                income (loss)
            
            $
            (333,887
            )
            $
            -
            
            $
            107,754





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 for the three months ended
      March 31, 2005 includes an adjustment of $109,718 for revisions in this accrual.
      There were no assets related to discontinued operations as of March 31, 2006.
      Liability related to discontinued operations as of March 31, 2006 is the reserve
      for casualty loss, the balance of which was $162,302.





**NOTE
      9 – COMMITMENTS AND CONTINGENCIES**





A
      summary
      of commitments and contingencies is included in Note 13 to the audited
      consolidated financial statements included in the Company’s Form 10-KSB for the
      year ended December 31, 2005. There have been no significant changes in
      commitments and contingencies since that report.





15


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


**(A
      DEVELOPMENT STAGE COMPANY)**


**NOTES
      TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS**


**MARCH
      31, 2006**





**NOTE
      10 – SUBSEQUENT EVENTS**





Sales
      of Securities - 2006 : From
      April 1, 2006 through December 31, 2006, the Company directly sold 5,138,843
      shares of common stock in private offerings limited to existing stockholders
      that resulted in net proceeds to the Company of $3,394,670. Of the shares sold, 1,286,236
      shares of common stock were
      contributed by the Company’s two founders (see below).





From
      April 1, 2006 through December 31, 2006, on various dates the Company directly
      sold 30,454 shares of common stock in private offerings to new accredited
      investors that resulted in net proceeds to the Company of $152,273.





Stock
      Distribution :
      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. This 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). 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 below) 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. (See also “Related Parties - Stock
      Distribution” below). 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.





Sales
      of Securities - 2007 : During
      2007 through the filing date of this report, on various dates the Company
      directly sold 1,625,134 shares of common stock in private offerings limited
      to
      existing stockholders that resulted in net proceeds to the Company of $821,812.





On
      various dates the Company directly sold 32,400 shares of common stock in private
      offerings to new accredited investors that resulted in net proceeds to the
      Company of $112,000.


16


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


**(A
      DEVELOPMENT STAGE COMPANY)**


**NOTES
      TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS**


**MARCH
      31, 2006**





**NOTE
      10 – SUBSEQUENT EVENTS (continued)**





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.





On
      August
      16, 2007 the Company issued 75,000 shares of common stock as part of the
      agreement executed with Jesteda Partners, LLC (see comments below under “Efforts
      to Raise New Capital.”)





Related
      Party Transactions - Stock Sales :
      The
      related party transactions described below are included in the 2006 common
      stock
      sales amounts described above. On various dates between May 2, 2006, and June
      30, 2006, in private offerings limited to existing stockholders, the Company
      sold an aggregate of 1,286,236 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 $1,393,854. All of the shares
      sold were contributed by Mr. Denney, the Company’s Chairman, President, and
      Chief Executive Officer and a principal stockholder, and Mr. Simpson, a
      co-founder, principal stockholder and former director, each of whom contributed
      half of the shares. The
      contributed shares were accounted for as capital contributions 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 avoid 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. Mr.
      Denney and Mr. Simpson, as the Company’s 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.





Included
      in the sales of the contributed common stock were the following: on May 2,
      2006,
      the Company sold 200,000 shares of common stock for $200,000 to P. E.
      MacAllister, a director, and
      on June
      30,
      2006, the Company sold 750,000 shares of common stock for $750,000 to Philip
      H.
      Good, a former director. Funds advanced as a deposit on this purchase in the
      total amount of $375,000 had been received as of March 31, 2006 and are shown
      on
      the balance sheet as Stockholder Advance.


17


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


**(A
      DEVELOPMENT STAGE COMPANY)**


**NOTES
      TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS**


**MARCH
      31, 2006**





**NOTE
      10 – SUBSEQUENT EVENTS (continued)**





Mr.
      MacAllister purchased 100,000 shares for $100,000 on August 31, 2006, 200,000
      shares for $100,000 on September 27, 2006, and 400,000 shares for $200,000
      on
      October 24, 2006. Mr. Good purchased 600,000 shares for $300,000 on September
      27, 2006.





Related
      Parties - Stock Distribution :
      Included in the 2,621,236 “matching” shares issued to existing stockholders (as
      detailed above under “Stock Distribution,”) were 550,000 shares issued to Mr.
      McAllister and 1,715,000 shares issued to Mr. Good.





Non-cash
      Related Party Stock Purchase Transaction Expenses :
      As
      further detailed in Note 3 - Related Party Transactions, 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 2006 and
      2005. (See Note 3 for discussion of the accounting rules and assumptions used
      in
      computations for such transactions through March 31, 2006.)





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 the “fair
      value” for computations of the following transaction with Mr. MacAllister and
      Mr. Good.





***Purchases***
            
            *MacAllister*
            
            *Good*
            
            *MacAllister**May 2, 2006*
            
            *June 30, 2006*
            
            *Aug. 31, 2006*Most
                Recent Offering Price
            
            $
            2.50
            
            $
            1.50
            
            $
            1.50Related
                Party Price Paid
            
            
            (1.00
            )
            
            (1.00
            )
            
            (1.00
            )Difference
                Per Share
            
            $
            1.50
            
            $
            0.50
            
            $
            0.50Number
                of Shares Purchased
            
            
            *200,000*
            
            
            *750,000*
            
            
            *100,000*Non-cash
                transaction expense
            
            $
            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***
            
            *11/14/05*
            
            *1/25/06*
            
            *5/02/06*
            
            *6/30/06*
            
            *8/31/06*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


18


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


**(A
      DEVELOPMENT STAGE COMPANY)**


**NOTES
      TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS**


**MARCH
      31, 2006**





**NOTE
      10 – SUBSEQUENT EVENTS (continued)**





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.





Settlement :
      On
      August 2, 2006 the Company received $75,000 in cancellation of an order of
      a
      piece of equipment for which the Company had made a deposit of $123,966. The
      write-down of $48,966 was recorded as a loss on disposition of asset as of
      December 31, 2005.





Tax
      Lien on Equipment :
      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. 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. (See Note 4 - Accrued
      Liabilities.)





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.





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.


19


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


**(A
      DEVELOPMENT STAGE COMPANY)**


**NOTES
      TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS**


**MARCH
      31, 2006**





**NOTE
      10 – SUBSEQUENT EVENTS (continued)**





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.





Patent
      Applications: 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
      on a
      provisional basis.





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.


20


**ITEM
      2.**  **PLAN
      OF OPERATION**





**Overview**





As
      of
      March 31, 2006, 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
      March 31, 2006, the Company’s working capital deficit was $2,216,520 compared to
      a working capital deficit of $1,625,590 as of December 31, 2005. The $590,930
      increase in working capital deficit consisted of a decrease of $68,553 in cash
      and prepaid expenses and an increase in current liabilities of $522,377. The
      $522,377 change in current liabilities included payoff of capital leases of
      $15,207, an increase in Advance on Related Party Stock Purchase of $375,000
      (see
      Note 10 - Subsequent Events) and an increase in accounts payable and accrued
      liabilities of $162,584.





During
      the three months ended March 31, 2006 the Company received $250,000 in proceeds
      from a private placement 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.


21


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.





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.





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





22


·
            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.





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 $25.7 million as of March 31, 2006.
      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, $5.8 million
      represents construction in process in lines three and four and the hydrolysis
      system, and $2.3 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.


23





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.





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”).


24




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.





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.


25





**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.





**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.





**ITEM
      3.**  **CONTROLS
      AND PROCEDURES**





As
      required by Rule 13a-15 under the Securities Exchange Act of 1934, as of March
      31, 2006, 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 March 31, 2006, 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.


26


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.





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 March
      31,
      2006 that have materially affected, or are reasonably likely to materially
      affect, the Company's internal control over financial reporting.


27




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




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




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




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





On
      January 25, 2006, the Company sold 250,000 shares of common stock for $250,000
      to P. E. MacAllister, a director whom the Company believes to be accredited
      investor.  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 cofounder of the Company, principal stockholder and former
      director; Mr. Denney and Mr. Simpson each contributed half of the shares. 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.




**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)
            
            2.2


28





Certification
                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





*
      Included in this filing.


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