**UNITED
STATES**
 **SECURITIES
AND EXCHANGE COMMISSION**
 Washington,
DC 20549
  FORM
10-QSB
  (X)
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES AND
 EXCHANGE
ACT OF 1934
 
 FOR THE
QUARTER ENDED February 28, 2005
 
 Commission
File No. 000-26189
  **BP
INTERNATIONAL, INC.**
 (Exact
name of registrant as specified in its charter)
  **Delaware**
    **95-3937129**(State
      or other jurisdiction of incorporation or organization)
    (I.R.S.
      employer identification number)
  **510
West Arizona Ave, DeLand, FL 32720**
 (Address
of principal executive offices, including zip code)
   **386.943.6222**
 (Registrant's
telephone number, including area code)
   Copies
to: Michael D. Spadaccini, Esq.
 12531 El
Camino Real, Unit A
 San Diego
CA 92130
 Tel:
(858) 350-5183; Fax: (619) 374-2027
   **Securities
registered pursuant to Section 12(b) of the Act:**
 
 None
  **Securities
registered pursuant to Section 12(g) of the Act:**
 
 Common
Stock, par value $0.001 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
  Number of
shares of the issuer's common stock, par value $.001, outstanding as of April
14, 2005: 48,634,144 shares.
  
 **Item
1. FINANCIAL STATEMENTS**
  BP
      INTERNATIONAL, INC.**Consolidated
      Balance Sheets****Assets****February
      28, 2005****May
      31, 2004**
    
    **(Unaudited)**Current
      assets:Cash
      and cash equivalents
    
    $
    43,995
    
    
    230,443Accounts
      receivable - trade, less allowance for doubtfulaccounts
      of $274,000 and $272,059
    
    
    900,820
    
    
    744,921Inventories
    
    
    556,498
    
    
    913,394Prepaid
      expenses and other current assets
    
    
    33,001
    
    
    565,002Due
      from related parties
    
    
    219,517
    
    
    250,198Total
      current assets
    
    
    1,753,831
    
    
    2,703,958Property
      and equipment, at cost, net of accumulateddepreciation
      and amortization
    
    
    1,522,163
    
    
    1,504,842Other
      assets:Deposits
    
    
    2,071
    
    
    -Goodwill
    
    
    659,080
    
    
    659,080Total
      other assets
    
    
    661,151
    
    
    659,080Total
      assets
    
    $
    3,937,145
    
    
    4,867,880**Liabilities
      and Stockholders' Deficit**Current
      liabilities:Accounts
      payable
    
    $
    1,206,152
    
    
    754,780Accrued
      expenses
    
    
    204,201
    
    
    192,645Stock
      purchase agreements
    
    
    -
    
    
    516,586Current
      maturities of long-term debt
    
    
    887,001
    
    
    52,617Total
      current liabilities
    
    
    2,297,354
    
    
    1,516,628Long-term
      debt, less current maturities
    
    
    2,877,041
    
    
    3,980,731Total
      liabilities
    
    
    5,174,395
    
    
    5,497,359Minority
      Interest
    
    
    260,388
    
    
    231,572Stockholders'
      deficit:Common
      stock - $.001 par value, authorized 100,100,000shares;
      issued 38,604,179 and 48,634,144 shares
    
    
    38,604
    
    
    48,634Additional
      paid-in capital
    
    
    2,220,546
    
    
    4,566,796Accumulated
      deficit
    
    
    (3,756,788
    )
    
    (5,476,481
    )Total
      stockholders' deficit
    
    
    (1,497,638
    )
    
    (861,051
    )$
    3,937,145
    
    
    4,867,880See
      accompanying notes to consolidated financial statements.
  
 BP
      INTERNATIONAL, INC.**Consolidated
      Statements of Operations****Nine
      Months Ended**
    
    **Three
      Months Ended****February
      28,**
    
    **February
      29,**
    
    **February
      28,**
    
    **February
      29,****2005**
    
    **2004**
    
    **2005**
    
    **2004****(Unaudited)**
    
    **(Unaudited)**
    
    **(Unaudited)**
    
    **(Unaudited)**Revenues:Net
      sales
    
    $
    4,287,907
    
    
    3,692,135
    
    
    1,768,957
    
    
    1,165,668Cost
      and expenses:Cost
      of goods sold
    
    
    2,981,290
    
    
    3,440,291
    
    
    1,102,715
    
    
    1,152,681Selling,
      general and administrative
    
    
    2,690,207
    
    
    1,543,796
    
    
    1,064,259
    
    
    516,0745,671,497
    
    
    4,984,087
    
    
    2,166,974
    
    
    1,668,755Operating
      loss
    
    
    (1,383,590
    )
    
    (1,291,952
    )
    
    (398,017
    )
    
    (503,087
    )Other
      expense:Interest
    
    
    336,103
    
    
    913,403
    
    
    79,594
    
    
    818,823Other
    
    
    -
    
    
    155
    
    
    -
    
    
    1,138336,103
    
    
    913,558
    
    
    79,594
    
    
    819,961
 
 
 
 Loss
      before income taxes
    
    
    (1,719,693
    )
    
    (2,205,510
    )
    
    (477,611
    )
    
    (1,323,048
    )Provision
      for income taxes
    
    
    -
    
    
    -
    
    
    -
    
    
    -Net
      loss
    
    $
    (1,719,693
    )
    
    (2,205,510
    )
    
    (477,611
    )
    
    (1,323,048
    )Basic
      loss per share
    
    $
    (0.04
    )
    
    (0.06
    )
    
    (0.01
    )
    
    (0.03
    )Diluted
      loss per share
    
    $
    (0.04
    )
    
    (0.06
    )
    
    (0.01
    )
    
    (0.03
    )Weighted
      average number of sharesoutstanding
      - basic
    
    
    43,244,041
    
    
    38,379,957
    
    
    47,525,202
    
    
    38,492,179Weighted
      average number of sharesoutstanding
      - diluted
    
    
    43,244,041
    
    
    38,379,957
    
    
    47,525,202
    
    
    38,492,179See
      accompanying notes to consolidated financial statements.
  
 BP
      INTERNATIONAL, INC.**Consolidated
      Statements of Cash Flows********Nine
      Months Ended****February
      28,**
    
    **February
      29,****2005**
    
    **2004****(Unaudited)**
    
    **(Unaudited)**Cash
      flows from operating activities:Net
      loss
    
    $
    (1,719,693
    )
    
    (2,205,510
    )Adjustments
      to reconcile net loss to net cashused
      in operating activities:Depreciation
      and amortization
    
    
    51,286
    
    
    56,244Amortization
      of discount on convertible debt
    
    
    -
    
    
    681,333Stock
      purchase agreement for services
    
    
    69,300
    
    
    120,502Issues
      of common stock for services and expenses
    
    
    305,888
    
    
    -Minority
      interest in loss of subsidiary
    
    
    (28,816
    )
    
    -Changes
      in operating assets and liabilities:Accounts
      receivable
    
    
    155,899
    
    
    (4,639
    )Inventories
    
    
    (356,896
    )
    
    (47,234
    )Prepaid
      expenses
    
    
    129,751
    
    
    60,149Due
      from related parties and affiliate
    
    
    (66,216
    )
    
    (254,164
    )Deposits
    
    
    2,071
    
    
    -Accounts
      payable and accrued expenses
    
    
    (168,467
    )
    
    585,970Net
      cash used in operating activities
    
    
    (1,625,893
    )
    
    (1,007,349
    )Cash
      flows from investing activities:Purchases
      of property and equipment
    
    
    (33,965
    )
    
    (52,342
    )Net
      cash used in investing activities
    
    
    (33,965
    )
    
    (52,342
    )Cash
      flows from financing activities:Proceeds
      from issuance of convertible debt
    
    
    -
    
    
    1,130,000Proceeds
      from stock purchase agreements
    
    
    452,000
    
    
    -Proceeds
      from long-term debt
    
    
    2,312,652
    
    
    112,309Payments
      on long-term debt
    
    
    (918,346
    )
    
    (234,269
    )Net
      cash provided by financing activities
    
    
    1,846,306
    
    
    1,008,040Increase
      (decrease) in cash and cash equivalents
    
    
    186,448
    
    
    (51,651
    )Cash
      and cash equivalents - beginning of period
    
    
    43,995
    
    
    51,754Cash
      and cash equivalents - end of period
    
    $
    230,443
    
    
    103Noncash
      operating and financing activities:Common
      stock issued for prepaid expenses
    
    $
    626,217
    
    
    -Common
      stock issued for accounts payable and accrued expenses
    
    $
    294,461
    
    
    -Common
      stock issued for stock purchase agreements
    
    $
    4,714
    
    
    -Common
      stock issued for long-term debt
    
    $
    1,125,000
    
    
    -See
      accompanying notes to consolidated financial statements..
  
 BP
INTERNATIONAL, INC.
 
 **Notes
to Consolidated Financial Statements**
 
 February
28, 2005 and May 31, 2004
 ****
 
 **(1)**
    **Basis
      of Presentation of Financial
Statements**
 
 The
consolidated financial statements include the financial statements of BP
International, Inc., its wholly owned subsidiary Ball Products, Inc. and the
accounts of its 80% interest in Telas Olefines, S.A. de C.V. All significant
intercompany balances and transactions have been eliminated in
consolidation.
 
 **(2)**
    **Presentation
      of Unaudited Financial
Statements**
 
 The
unaudited financial statements have been prepared in accordance with rules of
the Securities and Exchange Commission and, therefore, do not include all
information and footnotes necessary for a fair presentation of financial
position, results of operations and cash flows, in conformity with generally
accepted accounting principles. The information furnished, in the opinion of
management, reflects all adjustments (consisting only of normal recurring
accruals) necessary to present fairly the financial position as of February 28,
2005, and results of operations and cash flows for the three and nine month
periods ended February 28, 2005 and February 29, 2004. The results of operations
are not necessarily indicative of results which may be expected for any other
interim period, or for the year as a whole.
 
 **(3)**
    **Common
      Stock Transactions**
 
 During
the three months ended February 28, 2005, the Company issued 1,663,418 shares of
its common stock in satisfaction of convertible debt and related interest of
$315,111.
 
 Also in
the current period, the Company issued 250,000 shares of its common stock valued
at $125,000 as consideration for services performed by two unrelated
parties.
 
 **(4)**
    **Inventories**
 ****
 At
February 28, 2005 and May 31, 2004, inventories consist of the
following:
 
 **February
      28,**
    
    **May
      31,****2005**
    
    **2004**Raw
      materials
    
    $
    837,119
    
    
    530,188Finished
      goods
    
    
    136,275
    
    
    86,310Reserve
      for obsolescence
    
    
    (60,000
    )
    
    (60,000
    )$
    913,394
    
    
    556,498
 
 
 **ITEM
2. Management's Discussion and Analysis of Financial Condition and Results of
Operations.**
  The
following discussion of the financial condition and results of operations should
be read in conjunction with the consolidated financial statements and related
notes thereto. The following discussion contains certain forward-looking
statements that involve risk and uncertainties. Our actual results could differ
materially from those discussed herein. Factors that could cause or contribute
to such differences include, but are not limited to, risks and uncertainties
related to the need for additional funds, the rapid growth of the operations and
our ability to operate profitably after the initial growth period is completed.
We undertake no obligation to publicly release the results of any revisions to
those forward-looking statements that may be made to reflect any future events
or circumstances.
  **Business**
 ****
 **Our
Principal Products and Markets**
  BP
International, Inc. is a manufacturer of tennis court equipment, industrial
fabrics, athletic field and gymnasium equipment, privacy and construction fence
screening, fabric architecture shade structures and cabanas, sports lighting,
and custom netting.
  We
manufacture products in five categories:
  ·
    Tennis
      and Tennis Court Equipment, such as windscreens and accessories, tennis
      nets, net posts, benches, court cabanas, court accessories, divider
      netting, backdrop curtains, protective padding, customized logos,
      volleyball equipment, basketball equipment and tennis court
      lighting.
  ·
    Athletics
      Equipment, such as turf protectors, field covers, windscreens, artificial
      turf mats, safety rails and batting cages and
frames.
  ·
    Fencing
      Fabrics, such as privacy screens, decorative screens, kennel covers,
      horticultural fabrics, silt fencing, safety fencing and temporary
      fencing.
  ·
    Netting,
      made with knotted and knotless nylon, knotted and knotless polyethylene,
      for sports activities such as baseball, soccer, golf, volleyball, tennis,
      hockey, lacrosse, football and for bird and scaffold
    netting.
  ·
    Shade
      Structures, Canopies and Cabanas under the trade name
      'ShadeZone®'.
  Our
ShadeZone® shade structures are available as standard installations in common
shapes, or as fully customized products tailored to a customer's individual
needs. ShadeZone® products are manufactured of knitted high-density polyethylene
fabric and are UV stabilized and designed to provide maximum sun protection.
Knitted with a lock stitch construction and composed of monofilament and tape
yarns, the fabric is designed for strength and durability. With a weight of 14
oz. per square yard the ShadeZone® fabric is extremely durable.
  We sell
our products to sports facilities, support facilities, municipalities, parks,
playgrounds, schools and recreation centers. We distribute our products through
authorized dealers, contractors, or direct delivery. BP International has 58
employees and all are full-time employees.
  **Our
Competition**
  We face
significant competition in several markets in which we operate. Specifically, we
face significant competition in the tennis market, which is a more mature market
than any of our other divisions. There is moderate competition in the fencing
fabrics market, which is a market that is relatively untapped. We do enjoy the
advantage of being one of the largest manufacturers in both of those markets. In
the shade structure market, which is a quickly developing market, we are a
recent entrant and we are gaining market share. We are not, however, the largest
manufacturer.
  
 **Our
Sources of Raw Materials**
  For the
years ended May 31, 2004 and 2003, we purchased approximately 20% of total raw
materials from a single supplier. In the event that certain raw material
supplies were delayed or curtailed, the Company's ability to ship the related
product in desired quantities and in a timely manner could be adversely
affected. The Company has attempted to mitigate this risk by maintaining a
long-term relationship with this supplier while developing new relationships
with additional raw material sources. Additionally, with the acquisition of
Telas Olefines, our Mexican manufacturing facility, we will be transferring a
large portion of our raw material purchases to further mitigate
risk.
  **Our
Dependence on Individual Customers**
  We do not
depend on any single customer or on any small number of customers. The loss of
any individual customer would not have a materially adverse impact on our
performance.
  **Trademarks**
  We have
secured US federal trademarks for the following trade names:
  ·
    ShadeZone®
  ·
    DuraScreen®
  ·
    DuraShade®
  ·
    PrivaScreen®
  We have
no patents, labor agreements, license arrangements, franchise arrangements,
royalty agreements or concession arrangements.
  **Hazardous
Materials, Government Regulation, and Environmental
Compliance**
  Our
research and development necessarily involves the controlled use of hazardous
materials and chemicals. Although we believe that safety procedures for handling
and disposing of such materials comply with the standards prescribed by state
and federal regulations, the risk of accidental contamination or injury from
these materials cannot be completely eliminated. In the event of such an
accident, we could be held liable for any damages that result and such liability
could exceed our resources. We may incur substantial costs to comply with
environmental regulations.
  **The
Historical Development of Our Business**
  Our
wholly owned subsidiary, Ball Products, Inc., conducts our manufacturing
operations. Ball Products, Inc. is a Florida corporation, founded in 1987 by
Larry Ball and Emmett Ball, who are our current directors and officers. Ball
Products, Inc. became part of BP International in April of 2003 when BP
International (then we were called Allergy Immuno Technologies, Inc.) acquired
Ball Products, Inc.
  BP
International, Inc. historically provided clinical testing services to
physicians, laboratories and pharmaceutical firms in specialized areas of
allergy and immunology under the name Allergy Immuno Technologies, Inc.
  In April
of 2003, we acquired 100% of the voting common stock of Ball Products, Inc. In
July of 2003, our shareholders voted to change our name from Allergy Immuno
Technologies, Inc. to BP International, Inc. ****
  **Results
of Operations**
  **For
the Nine Months Ended February 28, 2005**
  
 Sales. We
had total sales of $4,287,907  in the
nine months ended February 28, 2005 compared to $3,692,135 in the comparable
period in 2004, an increase of $595,772 or 16.1%. The increase is attributed to
our ability to purchase more materials from our suppliers which increased
production and sales while reducing our backlog of orders. This came as a result
of an influx of capital from a transaction closed in December 2004 with Laurus
Master Funds. We are also gaining ground in the fabric architecture shade market
and seeing a solid base forming in ShadeZone® sales.
  Cost of
Goods Sold. We had cost of goods sold of $2,981,290 in the nine months ended
February 28, 2005, representing approximately 69.5% of sales, compared to cost
of goods sold of $3,440,291 in the comparable period in 2004, which represented
93.2% of sales. The decrease of $459,001 or 13.3% in the cost of goods sold in
the present fiscal period occurred primarily because during the prior period we
incurred additional cost due to rectifying deficiencies in the Collier County
project. As we have reported in prior filings, we were contracted to construct
outdoor shade structures for the Collier County school playgrounds in South
Florida. We provided the manufacturing for the project and one of our large
clients contracted to perform the general contracting and installation. An
engineer we hired for the project developed an inadequate design for several
parts of the structure. Also, the bid documents upon which we based our design
contained directives with respect to wind load for the project that were vaguely
defined; as a result, the project did not meet adequate wind load requirements.
All parties involved, the County, us, the engineer and the general contractor,
participated in a workout. We have since completed the Collier County Project.
  Operating
Costs/Selling, General and Administrative. We had selling, general and
administrative costs of $2,690,207 in the nine months ended February 28, 2005,
approximately 62.7% of revenues, compared to $1,543,796 in the comparable period
in fiscal 2004, 41.8% of revenues. This represents an increase of $1,146,411 or
74.3% in selling, general and administrative expenses. The increase is due to a
concentrated effort to market our stock and build a foundation of good
communication with our investor group. Of this increase, $987,827 was related to
non-recurring expenses that are neither direct nor indirect costs associated
with the manufacturing operations. Also, $691,512 of that amount was non cash
related transactions.
  Operating
(Loss)/Profit. Operating loss for the nine months ended February 28, 2005 was
$(1,383,590) compared to operating loss of $(1,291,952) in the comparable period
in 2004, an increase of $91,638 or 7.1%. The increase in operating loss, though
mitigated by our decrease in cost of goods sold, is attributable
to the increase in our selling, general, and administrative costs as
outlined above.
  Other
(Income) Expense. Other (income) and expense for the nine months ended February
28, 2005 was $336,103 compared to $913,558 in the comparable period in 2004, a
decrease of $577,455 or 63.2%. The decrease is due to decreased interest
expense.
  Net
(Loss)/Earnings. We reported a net loss of $(1,719,693) for the nine months
ended February 28, 2005 compared to a net loss of $(2,205,510) for the
comparable period in 2004, a decrease of $485,817, or 22.0%. The decrease in
loss is attributable primarily to the decrease in cost of goods sold and
decreased interest expenses.
  **For
the Three Months Ended February 28, 2005**
  Sales. We
had total sales of $1,768,957  in the
three months ended February 28, 2005 compared to $1,165,668 in the comparable
period in 2004, an increase of $603,289 or 51.8%. The increase is attributed to
our ability to purchase more materials from our suppliers that increased
production and sales while reducing our backlog of orders.
  Cost of
Goods Sold. We had cost of goods sold of $1,102,715 in the three months ended
February 28, 2005, representing approximately 62.3% of sales, compared to cost
of goods sold of $1,152,681 in the comparable period in 2004, which represented
98.9% of sales. The decrease of $49,966 or 4.3% in the cost of goods sold in the
present fiscal period occurred primarily because during the prior period we
incurred additional cost due to rectifying deficiencies in the Collier County
project.
  Operating
Costs/Selling, General and Administrative. We had selling, general and
administrative costs of $1,064,259 in the three months ended February 28, 2005,
approximately 60.2% of revenues, compared to $516,074 in the comparable period
in fiscal 2004, 44.3% of revenues. This represents an increase of $548,185 or
106.2% in selling, general and administrative expenses. The increase is due to a
concentrated effort to market our stock and build a foundation of good
communication with our investor group.
  
 Operating
(Loss)/Profit. Operating loss for the three months ended February 28, 2005 was
$(398,017) compared to operating loss of $(503,087) in the comparable period in
2004, a decrease of $105,070 or 20.9%. The decrease in operating loss is
attributable to our increase in sales and our decrease in cost of goods sold as
outlined above.
  Other
(Income) Expense. Other (income) and expense for the three months ended February
28, 2005 was $79,594 compared to $819,961 in the comparable period in 2004, a
decrease of $740,367 or 90.3%. The decrease is due to decreased interest
expense.
  Net
(Loss)/Earnings. We reported a net loss of $(477,611) for the three months ended
February 28, 2005 compared to a net loss of $(1,323,048) for the comparable
period in 2004, a decrease of $845,437, or 63.9%. The decrease in loss is
attributable primarily to the decrease in cost of goods sold and decreased
interest expenses.
  **Liquidity
and Capital Resources**
  Our
principal source of working capital is income from operations, borrowings under
our revolving credit facilities, and capital investment. We have experienced
losses in the last two years and have relied upon borrowings under our revolving
credit facilities and capital investment to maintain liquidity and continue
operations.
  Cash flow
from Operating Activities for the nine months ended February 28, 2005 was
$(1,625,893), which was largely due to the net loss. Cash flow from Investing
Activities was $(33,965) which was the result of the purchase of property and
equipment. Cash flow from Financing Activities was $1,846,306 and was mainly the
result of the Laurus transaction as described below.
  On
December 2, 2004, BP International, Inc. (the “Company”) completed a financing
transaction with Laurus Master Fund, Ltd, a Cayman Islands corporation
(“Laurus”), pursuant to which the Company issued a Secured Convertible Minimum
Borrowing Note (the “Note”) in the aggregate principal amount of $1.0 million
and a Secured Revolving Note (the “Revolving Note”) in the amount of $3.0
million. The Company issued a warrant (the “Warrant”) to purchase an aggregate
of 2,000,000 shares of common stock of the Company. The transaction was
completed in a private offering pursuant to an exemption from registration under
Section 4(2) of the Securities Act of 1933, as amended. This revolving credit
line is secured by certain eligible receivables. We can borrow up to 90% of our
eligible receivables. The eligible receivables are recalculated monthly, and
audited quarterly. Presently, we have borrowed the maximum available under the
credit line.
 
 On
January 10, 2005, the Company filed a registration statement registering among
other shares, 2,000,000 shares under the Common Stock Purchase Warrant and 1,
136, 364 under the Secured Convertible Minimum Borrowing Note. The registration
statement was declared effective by the Securities and Exchange Commission,
however, Laurus has not yet converted the Secured Convertible Minimum Borrowing
Note into any shares of common stock and has not exercised any
warrants.
 
 We have
relied upon capital investment and loans from a principal shareholder, DM
Ventures, LLC, and its affiliate, LDM Holdings. We cannot guarantee that either
DM Ventures or LDM Holdings will continue to provide capital and loans to
maintain our liquidity. However, during the third quarter of fiscal year 2005,
we closed a financing transaction with Laurus Master Funds in order to
restructure our debt, credit line and further establish equity based borrowing
capabilities. This negotiation was completed on December 2, 2004.
  **Off-Balance
Sheet Arrangements**
  We have
no off-balance sheet arrangements to report.
  **Item
3.**  **CONTROLS
AND PROCEDURES**
  **(A)**  **Evaluation
Of Disclosure Controls And Procedures**
  As of the
end of the period covered by this report, the Company carried out an evaluation,
under the supervision and with the participation of the Company’s Principal
Executive Officer and Principal Financial Officer of the effectiveness of
the design and operation of the Company’s disclosure controls and procedures.
The Company’s disclosure controls and procedures are designed to provide a
reasonable level of assurance of achieving the Company’s disclosure control
objectives. The Company’s Principal Executive Officer and Principal Financial
Officer have concluded that the Company’s disclosure controls and procedures
are, in fact, effective at this reasonable assurance level as of the period
covered. In addition, the Company reviewed its internal controls, and there have
been no significant changes in its internal controls or in other factors that
could significantly affect those controls subsequent to the date of their last
evaluation or from the end of the reporting period to the date of this Form
10-QSB.
  
 **(B)**  **Changes
In Internal Controls Over Financial Reporting**
  In
connection with the evaluation of the Company’s internal controls during the
Company’s third fiscal quarter ended February 28, 2005, the Company’s Principal
Executive Officer and Principal Financial Officer have determined that there are
no changes to the Company’s internal controls over financial reporting that has
materially affected, or is reasonably likely to materially effect, the Company’s
internal controls over financial reporting.
  **Item
4. LEGAL PROCEEDINGS**
  We filed
a malpractice and negligence claim against American Civil Engineering Co. and
John Herbert, the original designing engineer of the Collier County shade
structure project.
  A brief
history of the Collier County shade structure project is as follows: We were
contracted to construct outdoor shade structures for the Collier County school
playgrounds in South Florida. We provided the manufacturing for the project, and
one of our large clients contracted to perform the general contracting and
installation. The engineer we hired for the project (American Civil Engineering
Co. and John Herbert) developed an inadequate design for several parts of the
structure. Also, the bid documents upon which we based our design contained
directives with respect to wind load for the project that were vaguely defined;
as a result, the project did not meet adequate wind load requirements. The shade
structure at Collier County eventually failed, requiring us to make substantial
expenditures to correct the project.
  This
proceeding was settled out of court for an amount of $70,000. American Civil
Engineering has paid a $35,000 initial payment to Ball Products, Inc. in the
third quarter and will pay the balance over the next twelve months.
 
 **Item
5. CHANGES IN SECURITIES AND USE OF PROCEEDS**
  During
the three months ended February 28, 2005, the Company issued 1,663,418 shares of
its common stock in satisfaction of convertible debt and related interest of
$315,111.
 
 Also in
the current period, the Company issued 250,000 shares of its common stock valued
at $125,000 as consideration for services performed by two unrelated
parties.
  **Item
6.** **** **CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE**
  On March
22, 2005, BP International, Inc. was verbally informed by Tschopp, Whitcomb
& Orr (the "Auditor") that such firm was resigning as the Company's Auditor.
The Company has retained an independent accounting consulting firm, James Moore
& Co., to assist in locating new auditors for the May 31, 2005 audit period.
This will not affect the current reporting period as the current Auditor will
not formally resign by written letter until after completing the review the
third quarter financials and filings.
  During
the reporting period, the Company did not have any disagreements with the
Auditor on any matter of accounting principles or practices, financial statement
disclosure or auditing scope or procedures that would require disclosure in this
filing.
  **Item
7. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS**
  
 During
this reporting period, our annual stockholder meeting was held. Notifications
and proxy votes were mailed according to guidelines. The meeting was held on
January 12, 2005. The following items were submitted for shareholder vote and
all items passed:
  **1a.**
    **PROPOSAL
      TO APPROVE THE ELECTION OF LARRY BALL AS DIRECTOR****1b.**
    **PROPOSAL
      TO APPROVE THE ELECTION OF EMMETT BALL AS DIRECTOR****2.**
    **PROPOSAL
      TO GRANT THE BOARD OF DIRECTORS THE AUTHORITY TO AMEND THE ARTICLES OF
      INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES TO 100,100,000
      SHARES OF STOCK.****3.**
    **PROPOSAL
      TO RATIFY THE COMPANY'S 2004 STOCK INCENTIVE PLAN.****4.**
    **PROPOSAL
      TO RATIFY THE APPOINTMENT OF TSCHOPP, WHITCOMB & ORR, P.A. AS THE
      INDEPENDENT ACCOUNTANTS OF THE COMPANY FOR THE UPCOMING YEAR.**
 **Item
8. EXHIBITS AND REPORTS ON FORM 8-K**
  a.
Reports on Form 8-K. We filed the following reports on Form 8-K during the
period of this report:
  i.
    On
      December 2, 2004, we reported on form 8-K the financial transaction
      entered into with Laurus Master Funds.
  b.
Exhibits:
 
 Exhibit
99.1. Certification of Chief Executive Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
  Exhibit
99.2. Certification of Chief Financial Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
   **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.
  Dated:
April 19, 2005
  **BP
International, Inc.**
  Registrant
  By*/s/
Larry Ball*
 Larry
Ball
 President
& CEO