-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LePEQkzM3VUrPPjWXSnKVKHkX++5rpdUbIrN5uLbN5DQABTh5xTJkmEdvWYsrJ7y JAyqVmJRJbrPGJT0850rYw== 0000898430-96-001882.txt : 19960515 0000898430-96-001882.hdr.sgml : 19960515 ACCESSION NUMBER: 0000898430-96-001882 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960514 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: PROTEIN POLYMER TECHNOLOGIES INC CENTRAL INDEX KEY: 0000858155 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMMERCIAL PHYSICAL & BIOLOGICAL RESEARCH [8731] IRS NUMBER: 330311631 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-19724 FILM NUMBER: 96564268 BUSINESS ADDRESS: STREET 1: 10655 SORRENTO VALLEY RD CITY: SAN DIEGO STATE: CA ZIP: 92121 BUSINESS PHONE: 6195586064 10QSB 1 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, 1996 [ ] 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) (619) 558-6064 (Issuer's telephone number) 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 ___ State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: As of April 30, 1996, 6,466,905 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 (Unaudited) Condensed Balance Sheets - March 31, 1996 and December 31, 1995 1 Condensed Statements of Operations - For the Three Months ended March 31, 1996 and 1995 2 Condensed Statements of Cash Flows - For the Three Months ended March 31, 1996 and 1995 3 Notes to Condensed Financial Statements 4 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 5-7 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 8 Signature 9 Exhibit Index 10 i PROTEIN POLYMER TECHNOLOGIES, INC. Condensed Balance Sheets March 31, December 31, 1996 1995 (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 634,988 $ 471,296 Short-term investments 890,000 1,540,000 Accounts receivable 28,545 28,099 Inventory 52,599 54,534 Other current assets 43,549 20,178 _____________ _____________ Total current assets 1,649,681 2,114,107 Deposits 23,407 22,257 Equipment and leasehold improvements, net 337,851 302,795 _____________ _____________ $ 2,010,939 $ 2,439,159 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 204,808 $ 157,971 Accrued employee benefits 108,351 101,284 Other accrued expenses 31,820 51,598 _____________ _____________ Total current liabilities 344,979 310,853 Stockholders' equity: Series D convertible preferred stock, $.01 par value, 71,600 shares authorized, 49,187 shares issued and outstanding at March 31, 1996 4,764,745 4,764,745 Common stock, $.01 par value, 25,000,000 shares authorized, 6,062,425 and 5,832,925 shares issued and outstanding at March 31, 1996 and December 31, 1995, respectively 60,625 58,330 Additional paid-in capital 13,926,901 13,648,036 Accumulated deficit (17,086,311) (16,342,805) _____________ _____________ Total stockholders' equity 1,665,960 2,128,306 _____________ _____________ $ 2,010,939 $ 2,439,159 See accompanying notes. 1 PROTEIN POLYMER TECHNOLOGIES, INC. Condensed Statements of Operations Three Months Ended March 31, 1996 1995 (unaudited) Revenues: Product sales $ 15,514 $ 34,583 Contract revenue - 10,000 Interest income 20,955 15,518 _____________ _____________ Total revenues 36,469 60,101 Expenses: Cost of goods sold 6,214 23,933 Research and development 447,162 470,925 Selling, general and administrative 310,349 385,683 Royalties 16,250 16,250 _____________ _____________ Total expenses 779,975 896,791 _____________ _____________ Net loss $ (743,506) $ (836,690) Undeclared cumulative dividends on preferred stock 122,295 54,000 _____________ _____________ Net loss applicable to common shareholders $ (865,801) $ (890,690) Net loss per common share $ (0.15) $ (0.15) Shares used in computing net loss per common share 5,866,898 5,830,925 See accompanying notes. 2 PROTEIN POLYMER TECHNOLOGIES, INC. Condensed Statements of Cash Flows Three Months Ended March 31, 1996 1995 (unaudited) OPERATING ACTIVITIES Net loss $ (743,506) $ (836,690) Adjustments to reconcile net loss to net cash used for operating activities: Depreciation and amortization 28,101 38,975 Changes in assets and liabilities: Accounts receivable (446) (24,074) Inventory 1,935 (69,089) Deposits (1,150) 1,300 Other current assets (23,371) (12,969) Accounts payable 46,837 18,199 Accrued employee benefits 7,067 5,072 Other accrued expenses (19,778) (56,375) Deferred revenue - 3,750 _____________ _____________ Net cash used for operating activities (704,311) (931,901) INVESTING ACTIVITIES Purchase of equipment and improvements (63,157) (22,738) Short-term investments 650,000 - _____________ _____________ Net cash provided by (used for) investing activities 586,843 (22,738) FINANCING ACTIVITIES Net proceeds from issuance of warrants and sale of common stock 281,160 - _____________ _____________ Net cash provided by financing activities 281,160 - _____________ _____________ Net increase (decrease) in cash and cash equivalents 163,692 (954,639) Cash and cash equivalents at beginning of the period 471,296 1,848,391 _____________ _____________ Cash and cash equivalents at end of the period $ 634,988 $ 893,752 See accompanying notes. 3 PROTEIN POLYMER TECHNOLOGIES, INC. Notes to Condensed Financial Statements (Unaudited) March 31, 1996 1. Basis of Presentation The condensed financial statements of Protein Polymer Technologies, Inc. (the "Company") for the three months ended March 31, 1996 and 1995 are unaudited. These financial statements reflect all adjustments, consisting of only normal recurring adjustments which, in the opinion of management, are necessary to state fairly the financial position at March 31, 1996 and the results of operations for the three months ended March 31, 1996 and 1995. The results of operations for the three months ended March 31, 1996 are not necessarily indicative of the results to be expected for the year ended December 31, 1996. For more complete financial information, these financial statements and the notes thereto should be read in conjunction with the audited financial statements included in the Company's Annual Report and Form 10-KSB for the year ended December 31, 1995, filed with the Securities and Exchange Commission. 2. Net Loss Per Share Net loss per share is computed using the weighted average number of common shares outstanding during the period. 3. Liquidity The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company believes its existing available cash and short-term investments as of March 31, 1996, along with capital received during April 1996 from the exercise of outstanding warrants, will be sufficient to meet its anticipated capital requirements through 1996. Substantial additional capital resources will be required to fund continuing expenditures related to the Company's research, development and product marketing activities. 4 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL OVERVIEW Protein Polymer Technologies, Inc. (the "Company") is a development stage biotechnology company that has concentrated its research efforts on establishing a scientific and technical leadership position in the design and manufacture of unique protein-based materials. The Company has identified biomedical market and product opportunities that it believes will exploit the unique properties of the technology to competitive advantage. The Company has been unprofitable to date, and has an accumulated deficit of $17,086,000. In 1995 the Company entered into collaborative agreements with Ethicon, Inc., a subsidiary of the Johnson & Johnson Company, related to the Company's tissue adhesives and sealants program. The Company's strategy with most of its other programs is to enter into similar agreements with major medical product marketing and distribution companies. Although these relationships may provide significant near-term revenues in the form of up-front license fees, research and development revenues and milestone payments, the Company expects to incur continuing operating losses for the next several years. RESULTS OF OPERATIONS Sales and license fees from the Company's ProNectin(R) F product line for the three months ended March 31, 1996 and 1995 were $16,000 and $35,000, respectively. This decrease was due to the launch in 1995 of the Company's SmartPlastic(tm) Activated Plasticware(tm) product line which included sales into the distributor pipeline. There was no contract research revenue for the three months ended March 31, 1996, versus $10,000 for the same period in 1995. The revenue in 1995 was derived from a materials evaluation agreement with Ethicon. Interest income was $21,000 for the three months ended March 31, 1996, compared to $16,000 for the same period in 1995. The increase resulted primarily from an increase in cash available for investing from the sale of preferred stock in September and October 1995. Cost of goods sold was $6,000 for the three months ended March 31, 1996, compared to $24,000 for the same period last year. The decrease in costs related primarily to the 1995 launching and start-up costs of the Company's SmartPlastic product line. Separately, royalty expenses paid to Stanford University and Telios Pharmaceuticals, Inc. aggregated $16,000 for each of the three month periods ended March 31, 1996 and 1995. 5 Research and development expenses for the three months ended March 31, 1996 were $447,000, compared to $471,000 for the same period in 1995, a 5% decrease. The Company expects that its research and development expenses will again increase over time to the extent its projects are successfully developed and additional capital is obtained. Selling, general and administrative expenses for the three months ended March 31, 1996 were $310,000, as compared to $386,000 the same period in 1995, a 20% decrease. This decrease was primarily due to additional product marketing and business development expenses incurred in 1995 related to the launch of the SmartPlastic product line. The Company expects that its selling, general and administrative expenses will again increase as support for its research, development and product marketing efforts require and to the extent additional capital is raised. During the three months ended March 31, 1996, the Company recorded a net loss applicable to common shareholders of $866,000, $.15 per share compared to $891,000, or $.15 per share for the same period in 1995, a 3% decrease. Included in the three month periods of 1996 and 1995 were $122,000 and $54,000 for undeclared cumulative dividends on the Company's outstanding preferred stock. The Company expects to incur similar or increasing operating losses for the immediate future (to the extent additional capital is obtained), due primarily to increases in the Company's product development, manufacturing and business development activities. The Company's results depend on its ability to generate product revenues and establish strategic alliances, increased research, development and manufacturing efforts, preclinical and clinical product testing and commercialization expenditures, expenses incurred for regulatory compliance and patent prosecution, and other factors. The Company's results will also fluctuate from period to period due to timing differences. To date the Company believes that inflation and changing prices have not had a material effect on its continuing operations. 6 LIQUIDITY AND CAPITAL RESOURCES As of March 31, 1996, the Company had cash, cash equivalents and short-term investments of $1,525,000 as compared to $2,011,000 at December 31, 1995. As of March 31, 1996, the Company had working capital of $1,305,000, compared to $1,803,000 at December 31, 1995. These decreases resulted from the funding of losses from operations and additional capital expenditures. The Company had no long-term debt obligations as of March 31, 1996 and December 31, 1995. For the three months ending March 31, 1996, the Company's expenditures for capital equipment and leasehold improvements totaled $63,000, compared with $23,000 for the same period last year. The Company is expecting to increase its capital expenditures in the next few quarters (to the extent additional capital is obtained), as the Company moves into its expanded facilities and retrofits existing space to achieve "good laboratory practices" compliance as certified by the Food and Drug Administration. The Company believes its existing available cash and short- term investments as of March 31, 1996, along with capital received during April 1996 from the exercise of outstanding warrants, will be sufficient to meet its anticipated capital requirements through 1996. In addition, if payments from the Company's agreements with Ethicon are received on a timely basis, there would be sufficient funding for continuing operations until the fourth quarter of 1997. Nevertheless, substantial additional capital resources will be required to fund continuing expenditures related to the Company's research, development and product marketing activities. The Company believes there may be additional alternatives to meet its continuing capital needs of its operations, such as collaborative agreements and public or private financings, and is actively pursuing all of these approaches. However, there can be no assurance that the requisite fundings will be consummated in the necessary time frame or on terms favorable to the Company. If adequate funds are not available, the Company may be required to significantly curtail its operating plans and relinquish rights to significant portions of the Company's technology or products. 7 PART II. OTHER INFORMATION Item 6. EXHIBITS AND REPORTS ON FORM 8-K a. Exhibits: Exhibit Number Description _______ ___________________________________________ 27 Financial Data Schedule b. Reports on Form 8-K None. 8 SIGNATURE In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. PROTEIN POLYMER TECHNOLOGIES, INC. (Registrant) Date: May 9, 1996 By: J. Thomas Parmeter (Signature) Chairman of the Board, Chief Executive Officer, President Date: May 9, 1996 By: Aron P. Stern (Signature) Vice President, Finance and Administration, and Chief Financial Officer 9 EXHIBIT INDEX Exhibit Sequentially Number Description Numbered Page _______ ________________________________ _____________ 27 Financial Data Schedule 11 10 EX-27 2
5 0000858155 PROTEIN POLYMER TECHNOLOGIES, INC. 3-MOS DEC-31-1996 MAR-31-1996 634988 890000 28545 0 52599 1649681 1170911 (833060) 2010939 344979 0 0 4764745 13987526 (17086311) 2010939 15514 36469 6214 6214 773761 0 0 (743506) 0 (743506) 0 (122295) 0 (865801) (.15) 0
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