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 June 30, 2007

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

For the transition period from ___________________ to ____________________

Commission file number 0-19724

PROTEIN POLYMER TECHNOLOGIES, INC.
(Exact name of small business issuer as specified in its charter)

 
33-0311631
 
(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 year, 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 o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes o 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 July 27, 2007, 67,809,204 shares of common stock were outstanding.

Transitional Small Business Disclosure Format (check one): Yes o No x


PROTEIN POLYMER TECHNOLOGIES, INC.

FORM 10-QSB

INDEX
 
 
 
Page
No.
 
 
 
PART I. FINANCIAL INFORMATION
 
 
 
 
 
Item 1. Financial Statements (Unaudited)
 
 
 
 
 
Balance Sheets
 
 
June 30, 2007 and December 31, 2006
 
3
 
 
 
Statements of Operations
 
 
For three and six months ended June 30, 2007 and 2006
 
4
 
 
 
Statements of Cash Flows
 
 
For the six months ended June 30, 2007 and 2006.
 
5
 
 
 
Notes to Financial Statements
 
6
 
 
 
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
 
11
 
 
 
Item 3. Controls and Procedures
 
17
 
 
 
PART II. OTHER INFORMATION
 
 
 
 
 
Item 6. Exhibits
 
18
 
 
 
Signatures
 
18
 
2
 
PART I. FINANCIAL INFORMATION
 
Item 1. Financial Statements

Balance Sheets
(unaudited)
 
   
June 30,
  
 December 31,
  
   
2007
  
 2006
  
Assets
           
Current assets:
           
Cash and cash equivalents
  
$
105,483
  
$
73,495
  
Contract receivable
    
95,547
    
21,068
  
Current portion of rent receivable
    
9,527
    
39,527
  
Prepaid expenses and other current assets
    
42,729
    
49,940
  
Total current assets
    
253,286
    
184,030
  
               
Deposits
    
31,279
    
29,679
  
Equipment and leasehold improvements, net
    
177,866
    
228,475
  
Investment, at cost
    
520,000
    
520,000
  
Total assets
  
$
982,431
  
$
962,184
  
               
Liabilities and stockholders' deficit equity
              
Current liabilities:
              
Accounts payable
  
$
787,332
  
$
1,098,820
  
Accrued liabilities
    
567,020
    
422,730
  
Secured note payable - related party
    
5,157,416
    
3,461,516
  
Current maturities of notes payable
    
161,667
    
146,697
  
Total current liabilities
    
6,673,435
    
5,129,763
  
               
Notes payable, net of current maturities
    
357,404
    
372,374
  
Deferred rent
    
13,269
    
13,269
  
Total liabilities
    
7,044,108
    
5,515,406
  
               
Commitments and contingencies
              
               
Stockholders' deficit:
              
Convertible preferred stock, $.01 par value; 5,000,000 shares authorized; 65,645 shares issued and outstanding at June 30, 2007 and December 31, 2006 - liquidation preference of $6,564,500 at June 30, 2007 and December 31, 2006
    
6,019,917
    
6,019,917
  
     
 
    
 
  
Common stock, $.01 par value; 120,000,000 shares authorized; 67,809,204 and 67,409,204 shares issued and outstanding at June 30, 2007 and December 31, 2006, respectively
    
678,092
    
674,092
  
Additional paid-in capital
    
55,934,985
    
55,760,511
  
Accumulated deficit
    
(68,694,671
)
  
(67,007,742
)
Total stockholders' deficit
    
(6,061,677
)
  
(4,553,222
)
Total liabilities and stockholders' deficit
  
$
982,431
  
$
962,184
 
 
See accompanying notes.
 
3
 
Protein Polymer Technologies, Inc.
Statements of Operations
(unaudited)
 
   
Three months ended
  
Six months ended
  
   
June 30,
  
June 30,
  
   
2007
  
2006
  
2007
  
2006
  
Revenues:
                     
Contract revenue
  
$
131,530
  
$
189,613
  
$
267,618
  
$
410,532
  
Product and other income
    
--
    
18,616
    
--
    
37,174
  
Total revenues
    
131,530
    
208,229
    
267,618
    
447,706
  
                           
Operating expenses:
                          
Cost of sales
    
--
    
838
    
--
    
1,640
 
Research and development
    
628,131
    
1,148,418
    
1,273,152
    
2,184,858
  
Selling, general and administrative
    
351,596
    
729,902
    
671,299
    
2,617,214
  
Total expenses
    
979,727
    
1,879,158
    
1,944,451
    
4,803,712
  
                           
Net loss from operations
    
(848,197
)
  
(1,670,929
)
  
(1,676,833
)
  
(4,356,006
)
                           
Other income (expense):
                          
Interest income
    
145