10QSB/A 1 v086032_10qsba.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-QSB/A No. 2

(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, 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 May 4, 2007, 67,809,204 shares of common stock were outstanding.

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

EXPLANATORY NOTE
This Amendment No. 2 on Form 10-QSB/A amends our quarterly report on Form 10-QSB/A for the quarter ended March 31, 2007 as filed with the Securities and Exchange Commission on August 20, 2007, and is  being filed to correct typographical errors in the amount reported as research and development expense and total other income (expense) on the Statements of Operations for the three-months ended March 31, 2007, and to correct the accumulated deficit through March 31, 2007 noted in the General Overview section of Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations as shown below:

   
As
Reported
  
As
Amended
  
Research and development expense  for the three months ended March 31, 2007
  
 
$628,131
  
 
$645,021
  
               
Total other income (expense) for the three months ended March 31, 2007
  
 
$(110,033)
 
 
$110,033
  
               
Accumulated deficit through March 31, 2007
  
 
$68.1 million
  
 
$67.7 million
  

Except as otherwise expressly stated for the items amended in this amendment, Form 10-QSB, as filed on May 15, 2007, and Form 10-QSB/A No. 1, as filed on August 20, 2007, continue to speak as of the date of the filing of the Quarterly Report on Form 10-QSB for the quarter ended March 31, 2007, and we have not updated the disclosure contained herein to reflect events that have occurred since the date of that filing. This is necessary to preserve the nature and character of the information set forth in the items of the Quarterly Report as originally filed. Accordingly, this Amendment should be read in conjunction with the Quarterly Reports on Form 10-QSB and Form 10-QSB/A No. 1 for the quarterly period ended March 31, 2007.
 

Protein Polymer Technologies, Inc.
Statements of Operations
(unaudited)
 
   
Three months ended  
  
   
March 31,  
  
   
2007
  
 2006
  
Revenues:
  
(Restated)
       
Contract and licensing revenue
  
$
136,088
  
$
220,919
  
Product and other income
    
—
    
18,558
  
Total revenues
    
136,088
    
239,477
  
               
Operating expenses:
              
Cost of sales
    
—
    
803
  
Research and development
    
645,021
    
1,036,440
  
Selling, general and administrative
    
319,703
    
1,887,311
  
Total expenses
    
964,724
    
2,924,554
  
               
Net loss from operations
    
(828,636
)
  
(2,685,077
)
               
Other income (expense):
              
Interest income
    
—
    
2,524
  
Interest expense
    
(94,292
)
  
(10,900
)
Gain on derivative liability
    
10,408
   
—
  
Gain on settlement
    
193,917
   
—
  
Total other income (expense)
    
110,033
 
  
(8,376
)
               
Net loss
    
(718,603
)
  
(2,693,453
)
               
Undeclared, imputed and/or paid dividends on preferred stock
    
76,784
    
157,409
  
               
Net loss applicable to common shareholders
  
$
(795,387
)
$
(2,850,862
)
               
Basic and diluted net loss per common share
  
$
(0.01
)
$
(0.04
)
               
Shares used in computing basic and diluted net loss per common share
    
67,520,315
    
67,311,606
  

See accompanying notes.
 
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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Forward Looking Statements

Certain statements contained or incorporated by reference in this Quarterly Report on Form 10-QSB constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of the company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by forward-looking statements. Such risks and uncertainties include, among others, history of operating losses, raising adequate capital for continuing operations, early stage of product development, scientific and technical uncertainties, competitive products and approaches, reliance upon collaborative partnership agreements and funding, regulatory testing and approvals, patent protection uncertainties and manufacturing scale-up and required qualifications. While these statements represent management's current judgment and expectations for the company, such risks and uncertainties could cause actual results to differ materially from any future results suggested herein. We undertake no obligation to release publicly the results of any revisions to these forward-looking statements to reflect events or circumstances arising after the date hereof.

General Overview

Protein Polymer Technologies, Inc. is a biotechnology company engaged in the research, development, production and clinical testing of medical products based on materials created from our patented technology to produce proteins of unique design. Additionally, we are committed to the acquisition of faster-to-market medical products in certain complementary growth markets. Since 1992, we have focused primarily on developing technology and products to be used for soft tissue augmentation, tissue adhesives and sealants; wound healing support; and drug delivery devices. We have been unprofitable to date, and as of March 31, 2007 had an accumulated deficit of approximately $67.7 million.

Results of Operations

Operating Results for the Quarter Ended March 31, 2007 as compared to Quarter Ended March 31, 2006

Contract and Licensing Revenue. We earned $136,000 in contract and licensing revenue for the quarter ended March 31, 2007 as compared to $221,000 for the quarter ended March 31, 2006. The revenue in the 2007 quarter resulted primarily from $100,000 in licensing fess from our contractual relationship with Genencor International. We do not anticipate any additional payments to be earned from Genencor in 2007. Contract revenue in 2006 was earned by primarily from providing for materials and services in the development of an adhesive product for the repair of spinal discs laboratory services for Spine Wave, Inc.

Research and Development Expenses. Research and development expenses for the three months ended March 31, 2007 were $645,000, compared to $1,036,000 for the comparable period in 2006. The decline from 2006 resulted from significantly reduced activity levels in 2007 of clinical testing and regulatory consulting costs. Additionally, we only funded one month’s operating expenses for Surgica Corporation in 2007 as the result of our determination in March 2007 to discontinue our efforts to develop and commercialize the Surgica products. We expect our research and development expenses will increase in the future, to the extent additional capital is obtained, due to the expansion of product-directed development efforts including preclinical development of our surgical sealants. We do not anticipate that any additional operating expenses with respect to Surgica will be incurred in 2007.

Selling, General and Administrative Expenses. Selling, general and administrative expenses for the quarter ended March 31, 2007 were $320,000, as compared to $1,887.000 for 2006. We made significant reductions in administration expenses in the second half of 2006. Several highly compensated positions were eliminated and all non-mission sensitive expenses were reviewed and either eliminated or reduced. Additionally, during the first quarter of 2006 we recognized non-cash charges aggregating $1,038,000 as the result of adopting SFAS No. 123 (revised 2004) “Share Based Payment” for stock options.

To the extent possible, we continue to concentrate on controlling costs reflected in reduced travel, office supplies, and non-regulatory consulting costs. We expect our selling, general and administrative expenses will increase in the future, to the extent additional capital is obtained, consistent with supporting our research and development efforts and as business development, patent, legal and investor relations activities require.
 
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SIGNATURES

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.
 
 		  
 		  
 
Date: August 24, 2007 By:   /s/ William N. Plamondon, III
 
William N. Plamondon, III
  Chief Executive Officer
     
     
Date: August 24, 2007 By:   /s/ William N. Plamondon, III
 
William N. Plamondon, III
  Principal Financial Officer
 
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EXHIBIT INDEX
  
31.1
Certification of Chief Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2
Certification of Principal Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2
Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 960 of the Sarbanes-Oxley Act of 2002.

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