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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549
 Form 10-QSB þ
    
    QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
 For the quarterly period ended September 30, 2004 o
    
    TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
 Commission File Number 0-50520 (BP Technology)


Biomass Processing Technology, Inc.


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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

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Securities registered under Section 12 (b) of the Exchange Act: None

Securities registered under Section 12(g) of the Exchange Act: Common Stock,
$.02 par value per share

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 x No o

As of November 14, 2004, there were 69,912,413 shares of Common Stock issued
and outstanding.

Transitional Small Business Disclosure Format: Yes x No o



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BIOMASS PROCESSING TECHNOLOGY, INC. and SUBSIDIARIES   TABLE OF CONTENTS PART I FINANCIAL INFORMATION
    
    
    4Item 1. Financial Statements
    
    
    4Item 2. Plan of Operation
    
    
    12Item 3. Controls and Procedures
    
    
    15PART II OTHER INFORMATIONItem 2.
Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    16Item 6. Exhibits
    
    
    17SIGNATURES
    
    
    18EXHIBITS
    
    
    19Certification of CEO pursuant to Section 302Certification of CFO pursuant to Section 302Certification of CEO pursuant to Section 906Certification of CFO pursuant to Section 906
 2




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Caution Regarding Forward-Looking Information This quarterly report contains both historical and forward-looking
statements. 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.
Such 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, 2003. Consequently, all of the forward-looking statements made in this Form
10-QSB 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. 3




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PART I. FINANCIAL INFORMATION 
 ITEM 1. FINANCIAL STATEMENTS BIOMASS PROCESSING TECHNOLOGY, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2004 (UNAUDITED) AND DECEMBER 31, 2003  (Unaudited)September 30,
    
    December 31,2004
    
    2003ASSETSCurrent assetsCash and cash equivalents
    
    $
    94,510
    
    
    $
    394,816Accounts receivable
    
    
    55,989
    
    
    
    101,503Prepaid expenses and other current assets
    
    
    264,674
    
    
    
    273,224Equipment in process, held for sale
    
    
    2,137,783
    
    
    
    1,647,321Total Current Assets
    
    
    2,552,956
    
    
    
    2,416,864Property and equipment, net
    
    
    24,912,483
    
    
    
    22,803,456Other assetsPatent application costs
    
    
    239,833
    
    
    
    98,160Deposits and other assets
    
    
    101,775
    
    
    
    101,275Total Other Assets
    
    
    341,608
    
    
    
    199,435Total Assets
    
    $
    27,807,047
    
    
    $
    25,419,755LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilitiesAccounts payable
    
    $
    1,067,749
    
    
    $
    622,571Accrued expenses
    
    
    804,862
    
    
    
    138,467Current portion- long term debt and capital
leases
    
    
    160,701
    
    
    
    297,488Total Current Liabilities
    
    
    2,033,312
    
    
    
    1,058,526Long-term LiabilitiesLong-term capital leases, less current portion
    
    
    39,561
    
    
    
    101,185Note Payable  Officer
    
    
    112,700
    
    
    
    Total Long-term Liabilities
    
    
    152,261
    
    
    
    101,185Commitments and ContingenciesStockholders equityCommon stock, $.02 par value; 100,000,000 shares
authorized; issued and outstanding, 69,904,913 at
Sept. 30, 2004 and 69,431,788 at December 31, 2003
    
    
    1,398,098
    
    
    
    1,388,636Additional paid in capital
    
    
    40,695,529
    
    
    
    37,106,241Deficit accumulated during the development stage
    
    
    (16,472,153
    )
    
    
    (14,234,833
    )Total Stockholders Equity
    
    
    25,621,474
    
    
    
    24,260,044Total Liabilities and Stockholders Equity
    
    $
    27,807,047
    
    
    $
    25,419,755
 See accompanying notes to the consolidated financial statements 4




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BIOMASS PROCESSING TECHNOLOGY, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)  Cumulative
    
    For the Three
    
    For the NineDuring
    
    Months Ended September 30,
    
    Months Ended September 30,DevelopmentStage
    
    2004
    
    2003
    
    2004
    
    2003REVENUES
    
    $
    7,766,518
    
    
    $
    267,302
    
    
    $
    643,817
    
    
    $
    939,655
    
    
    $
    1,831,630COST OF SALESCost of Services Provided
    
    
    7,710,279
    
    
    
    297,172
    
    
    
    556,618
    
    
    
    962,495
    
    
    
    1,694,840GROSS PROFIT (LOSS)
    
    
    56,239
    
    
    
    (29,870
    )
    
    
    87,199
    
    
    
    (22,840
    )
    
    
    136,790OPERATING EXPENSESResearch and development
    
    
    15,963,961
    
    
    
    460,641
    
    
    
    732,646
    
    
    
    2,090,921
    
    
    
    1,889,780(Gain) loss on disposal of assets
    
    
    195,306
    
    
    
    118,549
    
    
    
    (1,430
    )
    
    
    96,357
    
    
    
    (2,441
    )Total Operating Expenses
    
    
    16,159,267
    
    
    
    579,190
    
    
    
    731,216
    
    
    
    2,187,278
    
    
    
    1,887,339INTEREST EXPENSE
    
    
    (369,125
    )
    
    
    (10,857
    )
    
    
    (6,061
    )
    
    
    (27,202
    )
    
    
    (15,741
    )LOSS BEFORE INCOME TAX BENEFIT
    
    
    (16,472,153
    )
    
    
    (619,917
    )
    
    
    (650,078
    )
    
    
    (2,237,320
    )
    
    
    (1,766,290
    )PROVISION FOR INCOME TAXES
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    NET LOSS
    
    $
    (16,472,153
    )
    
    $
    (619,917
    )
    
    $
    (650,078
    )
    
    $
    (2,237,320
    )
    
    $
    (1,766,290
    )LOSS PER SHARE:Basic and diluted loss per share
    
    
    
    
    
    $
    (0.01
    )
    
    $
    (0.01
    )
    
    $
    (0.03
    )
    
    $
    (0.03
    )Weighted average common shares outstanding,
basic and diluted
    
    
    
    
    
    
    69,836,020
    
    
    
    68,748,198
    
    
    
    69,644,527
    
    
    
    68,653,011
 See accompanying notes to the consolidated financial statements 5




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BIOMASS PROCESSING TECHNOLOGY, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY  Deficit AccumulatedNumber of
    
    Common
    
    
    
    
    
    During theCommon
    
    Stock,
    
    Paid in
    
    DevelopmentShares
    
    at Par Value
    
    Capital
    
    Stage
    
    TotalBalances as of December 31, 2003
    
    
    69,431,788
    
    
    $
    1,388,636
    
    
    $
    37,106,241
    
    
    $
    (14,234,833
    )
    
    $
    24,260,044Contribution of common shares
    
    
    (239,325
    )
    
    
    (4,787
    )
    
    
    4,787
    
    
    
    
    
    
    
    Issuance of common shares  sales
    
    
    709,950
    
    
    
    14,199
    
    
    
    3,574,551
    
    
    
    
    
    
    
    3,588,750Issuance of common shares  conversion
of convertible promissory note
    
    
    2,500
    
    
    
    50
    
    
    
    9,950
    
    
    
    
    
    
    
    10,000Net loss for the nine month
period ended September 30, 2004
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,237,320
    )
    
    
    (2,237,320
    )Balances as of September 30, 2004
    
    
    69,904,913
    
    
    $
    1,398,098
    
    
    $
    40,695,529
    
    
    $
    (16,472,153
    )
    
    $
    25,621,474
 See accompanying notes to the consolidated financial statements 6




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BIOMASS PROCESSING TECHNOLOGY, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)  For the Nine Months EndedCumulative During
    
    September 30,DevelopmentStage (see Note 1)
    
    2004
    
    2003Operating ActivitiesNet Loss
    
    $
    (16,472,153
    )
    
    $
    (2,237,320
    )
    
    $
    (1,766,290
    )Adjustments to reconcile net loss to net
cash used in operations:Depreciation
    
    
    1,184,731
    
    
    
    158,971
    
    
    
    176,559Loss (gain) on disposal of assets
    
    
    195,306
    
    
    
    96,357
    
    
    
    (2,441
    )Stock-based compensation
    
    
    163,700
    
    
    
    
    
    
    
    Changes in certain assets and liabilities:Equipment in process, held for sale
    
    
    (2,137,783
    )
    
    
    (490,462
    )
    
    
    (909,407
    )Accounts receivable
    
    
    (55,989
    )
    
    
    45,514
    
    
    
    (170,696
    )Prepaid expenses & other current assets
    
    
    (264,674
    )
    
    
    8,550
    
    
    
    (3,698
    )Deposits and other assets
    
    
    (101,775
    )
    
    
    (500
    )
    
    
    18,801Accounts payable and accrued expenses
    
    
    1,880,283
    
    
    
    1,119,245
    
    
    
    (277,072
    )Net Cash Used in Operations
    
    
    (15,608,354
    )
    
    
    (1,299,645
    )
    
    
    (2,934,244
    )Investing ActivitiesProceeds from sale of assets
    
    
    137,230
    
    
    
    41,300
    
    
    
    95,930Patent application costs
    
    
    (239,833
    )
    
    
    (141,673
    )
    
    
    (3,301
    )Purchases of property and equipment
    
    
    (25,242,694
    )
    
    
    (2,392,901
    )
    
    
    (736,927
    )Net Cash Used in Investing Activities
    
    
    (25,345,297
    )
    
    
    (2,493,274
    )
    
    
    (644,298
    )Financing ActivitiesProceeds from long-term debt issuances
    
    
    219,596
    
    
    
    10,000
    
    
    
    Repayment of debt and capital leases
    
    
    (1,204,062
    )
    
    
    (218,837
    )
    
    
    (224,740
    )Proceeds from note payable  officer, net
    
    
    112,700
    
    
    
    112,700
    
    
    
    12,700Proceeds from common stock issuances
    
    
    41,919,927
    
    
    
    3,588,750
    
    
    
    4,811,400Net Cash Provided by Financing Activities
    
    
    41,048,161
    
    
    
    3,492,613
    
    
    
    4,599,360Net increase (decrease) in cash and cash
equivalents
    
    
    94,510
    
    
    
    (300,306
    )
    
    
    1,020,818Cash and cash equivalents at beginning of
the period
    
    
    
    
    
    
    394,816
    
    
    
    188,434Cash and cash equivalents at the end of the
period
    
    $
    94,510
    
    
    $
    94,510
    
    
    $
    1,209,252Supplemental Disclosure of Cash Flow
InformationCASH PAID DURING THE PERIOD FOR:Interest (net of amounts capitalized)
    
    $
    365,909
    
    
    $
    23,986
    
    
    $
    15,741Income taxes
    
    $
    
    
    
    $
    
    
    
    $
    
 Supplemental Disclosure of Noncash Investing and Financing Activities: Equipment Financing.During the nine months ended September 30, 2004, the
Company acquired equipment and vehicles by entering into capital leases
totaling $155,975. Since inception, the Company acquired equipment and
vehicles by entering into capital leases and debt agreements totaling
$1,330,277. During the three months ended September 30, 2004, the Company assigned a
capital lease with respect to certain equipment subject to that lease. On the
date of assignment, the equipment had a book value of $134,103 and the capital
lease balance assumed by the buyer was $135,549. Debt to Equity Conversion.During the three months ended September 30, 2004,
the holder of a convertible promissory note in the amount of $10,000 elected,
in accordance with provisions of the note, to convert the note to 2,500 shares
of common stock valued at $4.00 per share. See accompanying notes to the consolidated financial statements 7




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BIOMASS PROCESSING TECHNOLOGY, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  NOTE 1  BASIS OF PRESENTATION Organization and Basis of Consolidation: Biomass Processing Technology, Inc.
began its activities on January 30, 1996. Its principal offices and laboratory
are located in West Palm Beach, Florida with construction in progress on a
facility in Okeechobee, Florida. The Company is constructing a combined animal
and vegetative (CAV) biomass conversion and fermentation facility and
equipment which the Company intends to use to process biomass residue to basic
feed stocks for the chemical and energy markets. The Company is also engaged
in research and development activities, which include the development of
products produced from biomass materials and production equipment that performs
the Companys processes. On May 18, 2004, the Company filed seven provisional
patent applications with the United States Patent and Trademark Office with
respect to its proprietary technology for the processing of biomass materials. The accompanying consolidated financial statements include the accounts of
Biomass Processing Technology, Inc. and its wholly-owned subsidiaries, Omni
Environmental Corporation (formerly known as Omni Technologie International,
Ltd. and incorporated in Delaware on June 23, 1989), BPT CAV1 Corporation
(CAV1), and BPT Intellectual Property Corporation (IP) (collectively, the
Company). All significant inter-company transactions have been eliminated.
CAV1 was incorporated in the State of Florida on October 24, 2003, to operate
the CAV1 facility when operational. IP was incorporated in the State of
Delaware on October 24, 2003, to manage certain intellectual property assets.
These two companies were inactive in 2003. Certain assets were transferred to
CAV1 and IP by the parent as of January 1, 2004, and the accounts of these
subsidiaries are included in the consolidated group as of January 1, 2004. The
transfer of assets to the subsidiaries was done to address future
organizational needs and does not represent any change in current operations. Development Stage and Going Concern Considerations: The Company is a
development stage enterprise as planned principal operations have not
commenced, and the Company has not generated significant revenues since its
inception. Historically, the Company has relied upon outside investor funds to
maintain its operations and develop its business. Since the Company expects to
continue to experience operating losses during the remainder of 2004, it will
be necessary to raise additional funds from outside investors and/or lenders in
order to continue as a going concern. The Company cannot provide assurances
that if additional investor funding were needed, the necessary funds would be
available on terms acceptable to the Company. The accompanying 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. During the third quarter of 2004, the Company began final testing with respect
to its CAV biomass processing facility. To cause the facility to become
operational, the Company must complete testing activities with respect to the
operation of the facility, and must then begin processing operations. 8




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BIOMASS PROCESSING TECHNOLOGY, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  NOTE 1  BASIS OF PRESENTATION (Continued) Following the commencement of processing operations, the Company expects to
commence marketing and selling the products of the CAV facilitys processing
operation. The Company does not expect to make any significant purchases of
plant or equipment during the initial stages of becoming operational. When the CAV facility becomes operational, the Company will no longer be a
development stage company. The facility is designed to process biomass through
six fermentor lines, of which four have been constructed. During the early
stages of operations, the facility will begin with operation of two lines.
When the engineering department has completed testing of the production process
of the initial two lines and made any necessary modifications, the third
existing line will be added to the production process, followed by the fourth.
In the three calendar quarters following commencement of operations, management
will concentrate on increasing production by bringing up the fifth and sixth
processing lines. The Company believes that its current capital resources and revenues from
operations are insufficient to fund the Companys intended operations and
expansion. The Company commenced efforts to raise additional capital through
the offering of equity securities during the second quarter of 2004 and such
efforts continued during the third quarter of 2004. There is no assurance that
the Company will be able to raise 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 financial statements
may be materially affected. Interim Reporting: The accompanying unaudited financial statements of the
Company have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to Item
310(b) of Regulation S-B. Accordingly, they do not include all of the
information and footnotes required by accounting principles generally accepted
in the United States of America for complete financial statements. The
consolidated balance sheets, statements of operations, statements of
stockholders equity, and statements of cash flows include, in the opinion of
management, all the adjustments, consisting only of normal recurring
adjustments, necessary for a fair presentation of the results of the periods
presented and the financial condition as of the end of those periods. 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 the text presented under
Plan of Operation contained in this report and with the financial statements
and accompanying notes included in the Companys Annual Report on Form 10-KSB
for the fiscal year ended December 31, 2003. Historical interim results are
not necessarily indicative of results that may be expected for any future
period. 9




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BIOMASS PROCESSING TECHNOLOGY, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  NOTE 2  CONVERTIBLE PROMISSORY NOTE On February 24, 2004, the Company issued a convertible promissory note in the
principal amount of $10,000 bearing interest at a rate of 10% and maturing
February 24, 2006. Interest on the note was payable quarterly. The holder of
the note was entitled to convert the note into 2,500 shares of common stock
during the 30 days prior to the maturity date or during the 30 days prior to an
accelerated maturity date which could be selected by the Company any time six
months after issuance. During the quarter ended September 30, 2004, the
Company selected August 24, 2004 as the accelerated maturity date and the
holder of the note elected to convert the note into 2,500 shares of common
stock. The Company paid $72 of interest accrued from July 1, 2004 through July
26, 2004, the date of conversion. NOTE 3  RELATED PARTY TRANSACTIONS During the first three months of 2004, the Companys principal stockholder, who
is also an officer and director, loaned the Company $110,000 for working
capital under a note in a principal amount not to exceed $200,000 and bearing
simple interest at 4%. During the three month period ended June 30, 2004, the
stockholder made additional advances of $59,700 to the Company under the note.
During the three month period ended September 30, 2004, the Company repaid
$57,000 under the note. The note, as amended, is payable on or before October
1, 2005 and may be prepaid without penalty. During the nine months ended September 30, 2004, two of the Companys principal
stockholders, who are also directors, directly transferred an aggregate of
239,325 of their own shares of Company common stock to the Company for no
consideration to them, in connection with the sale of those shares by the
Company in private placements of the Companys common stock. Each person
contributed half of the shares. The shares were accounted for as capital
contributions to the Company at par value of $.02 per share. Of the total,
25,000 shares were contributed in the first quarter of 2004. In conjunction
with a special private offering to existing stockholders only, the
aforementioned two principal stockholders contributed an aggregate of 200,000
shares during the second quarter and an aggregate of 14,325 shares in the
third quarter. NOTE 4  NET LOSS PER COMMON SHARE 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. In February
2004, the Company issued a convertible promissory note, which constituted a
common stock equivalent. The note was converted into shares of the Companys
common stock on July 26, 2004. Therefore, the Company does not have any common
stock equivalents as of September 30, 2004, and there is no diluted EPS. 10




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BIOMASS PROCESSING TECHNOLOGY, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  NOTE 4  NET LOSS PER COMMON SHARE (Continued) Basic EPS is calculated by dividing net income (loss) by the weighted average
number of common shares outstanding during the period. In accordance with SFAS
No. 128, the effect of weighting includes shares issued and shares reacquired
during the respective periods. 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 for the three month
and nine month periods ended September 30, 2004 and 2003 is shown below: For the Three
    
    For the NineMonths Ended September 30,
    
    Months Ended September 30,2004
    
    2003
    
    2004
    
    2003Outstanding shares
    
    
    69,904,913
    
    
    
    69,250,213
    
    
    
    69,904,913
    
    
    
    69,250,213Effect of Weighting
    
    
    (68,893
    )
    
    
    (502,015
    )
    
    
    (260,386
    )
    
    
    (597,202
    )Weighted Average
    
    
    69,836,020
    
    
    
    68,748,198
    
    
    
    69,644,527
    
    
    
    68,653,011
 NOTE 5  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 is no provision or benefit recorded in the statements of operations for
the periods presented. NOTE 6  CASUALTY LOSS In May 2004, a fire caused extensive damage to a piece of the Companys
equipment at the St. Lucie County landfill site and minor damage to several
other pieces of ancillary machinery. The Companys insurance carrier has taken
the position that the Companys insurance coverage on the damaged equipment
limited the insurers liability to $15,000. The Company contends that the
equipment was fully insured, and alternatively that if the Companys coverage
was in fact so limited, this was attributable to the negligence and
misrepresentation of the insurance agent who placed the insurance policy, who
should be held liable for the difference. The Company has referred the matter
to legal counsel. The damaged equipment was pledged as security for the
Companys obligations under an equipment lease, for which the Company remains
liable to the equipment lessor. Pending resolution of the insurance coverage
dispute, the Company has accrued a $485,000 loss provision, net of $15,000
received from insurance proceeds, as an estimate of the loss incurred. NOTE 7  SUBSEQUENT EVENTS During the period from October 1, 2004 to November 14, 2004, the Company sold
7,500 shares of common stock in a private offering for total proceeds of
$75,000. 11




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ITEM 2. PLAN OF OPERATION As of September 30, 2004, 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 through the end of the third quarter of 2004. 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. The plan of the Company is to
produce basic feed protein and other products for the animal feed, food,
chemical, and energy markets. Patents On May 18, 2004, the Company filed seven provisional patent applications with
the United States Patent and Trademark Office with respect to its proprietary
technology for the processing of biomass materials. (See discussion of
EcoGold below.) A provisional application is a limited filing allowing the
Company one year to complete the final application. The Company is in the
process of completing the final applications, and filing additional provisional
applications, which process is expected to be completed during 2005. Based on
the claims made in the provisional applications, the Company expects the final
applications to seek issuance of 50 or more US and foreign patents and/or
claims. Effects of Hurricanes and Tropical Storm In the Companys quarterly report for the quarterly period ended June 30, 2004,
it announced a target date of September 7, 2004, to commence operations, but
the Company was unable to meet the target date due to delays resulting directly
from hurricanes Charley, Frances, Ivan, and Jeanne and tropical storm Bonnie.
Target dates for subsequent expansion are likewise amended. The Companys facilities are designed to withstand hurricane force winds up to
certain levels and suffered only minor structural damages from the storms.
However, the Companys offices and other facilities and the homes of employees
were without power for extended periods of time. Employees were unable to work
during power-outages at the offices or their homes and the Companys operations
were delayed by the resulting reduction in staffing. For several of the storms
the Company had to disassemble computers and other equipment and move equipment
to protected areas. Vendors were unable to perform needed services for the
Company with respect to completion of the construction necessary to commence
operations. Delays in vendor services have varied depending on the disruption
and damages to each vendor, but they have compounded the delay in completion of
construction. The Companys management currently anticipates that the Company
will commence operations before year end. 12




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The CAV Facility During the three months ended September 30, 2004, the Company continued
construction and testing of its combined animal and vegetative (CAV) biomass
conversion and fermentation facility. The primary product to be produced by
the CAV facility is yeast marketed to animal feed manufacturers for use as a
protein and pro-biotic supplement to animal feed. The secondary product
presently planned for the CAV facility is lignin, a natural polymer. The original design of the CAV facility anticipated four production lines,
although the site was permitted for operation of up to six lines. The Company
anticipates commencing production with two lines and beginning operations at
less than one third of original design capacity during the fourth quarter of
2004. The Company plans to add two additional production lines during the
first quarter of 2005 and to add another two additional production lines by the
second quarter of 2005. The present planned expansion of CAV production is summarized below. OriginalLines
    
    Schedule
    
    Capacity*
    
    Comment1 & 2
    
    During Qtr. 4
    
    
    33
    %
    
    To commence production in November 20043 & 4
    
    Qtr. 1 of 2005
    
    
    100
    %
    
    Complete except piping & control installationHydrolysis
    
    Qtr. 2 of 2005
    
    
    
    
    
    Gives added byproduct:  lignin, lowers cost5 & 6
    
    Qtr. 2 of 2005
    
    
    167
    %
    
    Permitted, but not built
   *
    
    Original Capacity is based on the design of four fermentor lines, shown as 100% capacity. As production commences, the Company expects to simultaneously begin marketing
and selling the products of the CAV facilitys processing operation. The
Company does not expect to generate significant revenue from the CAV facilitys
processing operations during the fourth quarter of 2004, because necessary
inventory accumulation, which will not have occurred before the end of the
year, must be accomplished before sales may be made. Investment by the Company in the CAV facility is $24.6 million as of September
30, 2004. This amount includes construction and installation of all reactors
and major equipment for four lines of fermentation, as well as piping and
control for two lines. This amount also includes infrastructure costs, such as
boilers with redundant steam capacity and hydrolysis and compressed air with
back-up, process, control and support buildings, and cooling freon and cooling
water supply, all to support six lines. Major process equipment is already in
place for four lines. In addition, most major components required for
hydrolysis are already in place. The completion of the third and fourth lines
will require process piping and control installation. Hydrolysis will require
these components and material handling equipment. The fifth and sixth lines
will require construction and installation of foundations and all major process
equipment, as well as piping and control. 13




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The construction of two additional lines of production at an estimated cost of
$4,000,000 will provide an estimated increase in production capacity of two
thirds (167%) of the original estimated production capability. The Company
expects to fund the expansion through a combination of additional private
offerings of its securities and cash flows to be generated by operations. When the CAV facility becomes operational, the Company will no longer be a
development stage company. Following the commencement of operations, the
Company plans to refine its technology and processing methods to concentrate on
production of higher value yeast as well as lowering costs of production and
raw materials. Additionally, the Company plans to begin permitting and
construction of additional CAV facilities in other geographical locations. EcoGold  The Dilute Waste Stream Recovery Technology The seven provisional patent applications filed on May 18, 2004 discussed above
are related to a unique biomass processing technology that the Company calls
EcoGold. EcoGold is the name of our 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 EcoGold process is
designed to eliminate phosphorus and nitrogen pollution from waste streams, by
creating a valuable product (protein) at farms and industrial sites. Many industrial processes develop a watery waste stream similar to agriculture
waste. In agriculture, as in many other industries, cleaning this stream to
EPA standards is a very expensive process and a significant cost of the design,
construction, and operation of a farming facility. The EcoGold equipment and
integrated technology are designed to produce a valuable product from the waste
stream. The waste recovery value can be much higher than the cost of complying
with EPA standards and can even be a significant percentage of normal costs of
operations. The Company plans to complete installation of the first equipment developed
using the EcoGold process at a large dairy testing site in the fourth quarter
of 2004. The Company expects to complete testing and any necessary
modifications to this unit and then to offer the unit for sale in the final
quarter of 2004. This test site unit is shown on the Companys balance sheet
as of September 30, 2004 as Equipment in Process, held for sale reflected at
a cost of $2,137,783, although the cost of future smaller units may be
considerably less if the Company is able to successfully produce these units
through mass production. The Company has had initial discussions with several
vendors but has not yet entered into any agreements with respect to the sale or
mass production of these units. The equipment components are collectively called the Barn Waste Unit (BWU).
The BWU produces yeast, a high-protein animal feed, in a sterile environment by
using phosphorus, nitrates, and other components removed from barn waste and
recycling the remaining clean sand and water after pollutants have been
removed. A complete Barn 14




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##### Table of Contents



Waste Unit consists of three separate operating systems that work together: a
solid separation unit, a sand separating unit, and a fermentation unit. The
solid separation and sand separation devices are pre-processes that clean barn
waste. These two components may be sold separately and used as stand-alone
devices to resolve common problems of the farmer in cleaning and processing
barn waste and recycling sand, thereby eliminating costs of importing new sand
bedding and reducing sand processing costs. However, adding the fermentation
component to make a complete BWU allows the farmer to remove pollutants that
would otherwise go into the watershed and land and produce yeast for animal
feed, reducing costs of imported feed. Should the Companys plans for the test site EcoGold system during the final
quarter of 2004 materialize as expected, the Company plans to market the
EcoGold technology in 2005 to approximately 17,000 Concentrated Animal Feeding
Operators (CAFOs) in the United States. The CAFOs consist of dairy farms, beef
cattle operations, swine operations, and poultry farms. These CAFOs are
currently subject to EPA mandates to reduce pollution of land and watersheds.
Penalties for non-compliance with maintaining EPA standards range from severe
fines to reduction of production to closing of operations. No assurance can be
provided, however, that the Company will be successful in producing or selling
units implementing the EcoGold technology. Other Products in Development The Company is concentrating its initial operating efforts on its CAV and
EcoGold business segments as discussed above. The Company is continuing its
research and development on other products. Capital Resources The Company believes that its current capital resources and revenues from
operations are insufficient to fund the Companys intended operations and
expansion. The Company has commenced efforts to raise additional capital
through the private offering of equity securities during the second quarter of
2004 and such efforts continued during the third quarter of 2004. 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. Should any
of managements planned events not occur, the Companys financial condition and
results of operations may be materially affected. 
 ITEM 3. CONTROLS AND PROCEDURES As required by Rule 13a-15 under the Securities Exchange Act of 1934, as of
September 30, 2004, 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, CPA, Chief Financial
Officer. Based upon that evaluation, the Companys Chief Executive Officer and
Chief Financial Officer concluded that as of September 30, 2004, the Companys
disclosure controls and procedures were effective in
timely alerting them to material information required to be included in the
Companys periodic SEC reports. 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 September 30, 2004 that have materially affected, or are reasonably
likely to materially affect, the Companys internal control over financial
reporting. 15




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PART II. OTHER INFORMATION 
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS. On various dates between July 15, 2004 and September 28, 2004, the Company
issued and sold an aggregate of 56,800 shares of Common Stock at a price of $10
per share to sixteen investors, all of whom the Company believes to be
accredited investors, for aggregate proceeds of $568,000. The shares were
issued without registration in reliance on Section 4(2) of the Securities Act
of 1933, as amended, and Rule 506 of Regulation D thereunder. In a private offering to existing stockholders only which commenced on June 18,
2004 and closed on July 27, 2004, the Company received $2,143,250 in aggregate
proceeds from the sale of an aggregate of 428,650 shares. A portion of the
total sale was reported in the Companys Quarterly Report on Form 10-QSB for
the quarterly period ended June 30, 2004. The portion sold during the quarter
ended September 30, 2004 was as follows. On various dates between July 2, 2004
and July 27, 2004, the Company issued and sold an aggregate of 309,250 shares
of Common Stock at a price of $5 per share to 71 investors, all of whom where
existing stockholders of the Company and all of whom the Company believes to be
accredited investors, for aggregate proceeds of $1,546,250. The shares were
issued without registration in reliance on Section 4(2) of the Securities Act
of 1933, as amended, and Rule 506 of Regulation D thereunder. In connection
with the sales related to this offering, in the prior quarter on June 18, 2004,
each of Larry W.
Denney, the Companys principal stockholder and Chairman of the Board,
President, and Chief Executive Officer, and Jack B. Simpson, a director of the
Company, directly transferred 100,000 shares of Common Stock owned by them (a
total of 200,000 shares) to the Company for no consideration. Additionally,
during the quarter ended September 30, 2004, each of Mr. Denney and Mr. Simpson
transferred half of an additional aggregate of 14,325 shares to the Company for
no additional consideration to them. 16




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##### Table of Contents



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 Commission on December 19, 2003)
    
    
    3.1.1Certificate 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 Commission on December
19, 2003)
    
    
    3.1.2Certificate 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 Commission on December
19, 2003)
    
    
    3.1.3By-Laws (incorporated herein by reference to Exhibit 2.2 of
the registrants Form 10-SB, filed with the Commission on
December 19, 2003)
    
    
    3.2Certification 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
 17




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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.By:
    /s/ Larry W. DenneyLarry W. Denney, Chairman of the Board,Dated: November 14, 2004
    
    President and Chief Executive Officer (principal
executive officer and duly authorized officer) Biomass Processing Technology, Inc.By:
    /s/ Robert F. KendallDated: November 14, 2004
    
    Robert F. Kendall, CPA, Chief Financial Officer(principal financial officer) 18