UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-QSB

(Mark One)

[X]

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

For the quarterly period ended March 31, 2006

[ ]

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

For the transition period from ___________________ to ____________________

Commission file number 0-19724

PROTEIN POLYMER TECHNOLOGIES, INC.

(Exact name of small business issuer as specified in its charter)

		Delaware		33-0311631
	(State or other jurisdiction of		(IRS Employer Identification No.)
incorporation or organization)

10655 Sorrento Valley Road, San Diego, CA 92121

(Address of principal executive offices)

(858) 558-6064

(Issuer's telephone number)

(former name, former address and former fiscal lyear, if changed since last report)

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No X

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: As of May 16, 2006, 67,329,204 shares of common stock were outstanding.

Transitional Small Business Disclosure Format (check one):

Yes No X

Protein Polymer Technologies, Inc.

FORM 10-QSB

INDEX

Page No.

PART I.

FINANCIAL INFORMATION

Item 1.

Financial Statements

Balance Sheets

March 31, 2006 and December 31, 2005 (unaudited)

Statements of Operations

For the three months ended March 31, 2006 and 2005 (unaudited)

Statements of Cash Flows

For the three months ended March 31, 2006 and 2005 (unaudited)

Notes to Financial Statements

Item 2.

Management's Discussion and Analysis or Plan of Operation

Item 3.

Controls and Procedures

PART II.

OTHER INFORMATION

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

Item 6.

Exhibits

Signatures

PART I. FINANCIAL INFORMATION

Item 1.

Financial Statements

Protein Polymer Technologies, Inc.

Balance Sheets

(unaudited)

		March 31,			December 31,
		2006			2005
Assets
Current assets:
Cash and cash equivalents	$	48,786		$	1,211,748
Contract receivable		220,919			113,792
Current portion of rent receivable		79,527			88,477
Prepaid expenses and other assets		30,388			32,440
Total current assets		379,620			1,446,457

Deposits		30,479			29,679
Notes receivable		246,402			242,884
Rent receivable, net of current portion and reserve of $128,273 at March 31, 2006 and December 31, 2005		–			26,050
Technology license agreement		1,092,604			1,106,435
Equipment and leasehold improvements, net		301,905			292,778
Total assets	$	2,051,010		$	3,144,283

Liabilities and stockholders' equity
Current liabilities:
Accounts payable	$	981,781			420,672
Accrued expenses		375,332			381,139
Current maturities of notes payable		82,100			195,565
Total current liabilities		1,439,213			997,376

Notes payable, net of current maturities		436,971			323,506
Deferred rent		12,126			8,820
Total liabilities		1,888,310			1,329,702

Stockholders' equity:
Convertible preferred stock, $.01 par value; 5,000,000 shares authorized; 66,045 shares issued and outstanding at March 31, 2006 and December 31, 2005, respectively - liquidation preference of $6,604,500 at March 31, 2006 and December 31, 2005, respectively		6,059,917			6,059,917
Common stock, $.01 par value; 120,000,000 shares authorized; 67,311,408 shares issued and outstanding at December 31, 2005 and 225,000,000 shares authorized, 67,329,204 shares issued and outstanding at March 31, 2006		673,304			673,125
Additional paid-in capital		55,252,343			54,122,000
Accumulated deficit		(61,822,864	)		(59,040,461	)
Total stockholders' equity		162,700			1,814,581
Total liabilities and equity	$	2,051,010		$	3,144,283

See accompanying notes.

Protein Polymer Technologies, Inc.

Statements of Operations

(unaudited)

		Three months ended March 31,
		2006			2005
Revenues:
Contract revenue	$	220,919		$	512,771
Product and other income		18,558			670
Total revenues		239,477			513,441


Cost of sales		803			–
Gross profit		238,674			–

Operating expenses:
Research and development		1,036,440			555,967
Selling, general and administrative		1,887,311			393,293
Total expenses		2,923,751			949,260

Net loss from operations		(2,685,077	)		(435,819	)

Other income (expense):
Interest income		2,524			79
Interest expense		(10,900	)		(86,625	)
Total other expense		(8,376	)		(86,546	)

Net loss		(2,693,453	)		(522,365	)

Undeclared, imputed and/or paid dividends on preferred stock		157,409			550,041

Net loss applicable to common shareholders	$	(2,850,862	)	$	(1,072,406	)

Basic and diluted net loss per common share	$	(0.04	)	$	(0.03	)

Shares used in computing basic and diluted net loss per common share		67,311,606			40,294,220

See accompanying notes.

		Three months ended March 31,
		2006			2005
Operating activities
Net loss	$	(2,693,453	)	$	(522,365	)
Adjustments to reconcile net loss to net cash used for operating activities:
Depreciation and amortization		40,344