<PAGE>

================================================================================

                                  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, 2002

 [ ]     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)

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 March 10, 2002, 27,421,963
shares of common stock were outstanding.

Transitional Small Business Disclosure Format (check one):   Yes        No  X
                                                                -----     -----

================================================================================

<PAGE>




                       PROTEIN POLYMER TECHNOLOGIES, INC.

                                   FORM 10-QSB

                                      INDEX
<TABLE>
<CAPTION>

                                                                        Page No.
                                                                        --------
<S>      <C>                                                            <C>
PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements (unaudited)

         Condensed Balance Sheets-
             March 31, 2002 and December 31, 2001...........................   3

         Condensed Statements of Operations-
             For the Three Months ended March 31, 2002 and 2001
             and the period July 6, 1988 (inception) to March 31, 2002......   4

         Condensed Statements of Cash Flows-
             For the Three Months ended March 31, 2002 and 2001
             and the period July 6, 1988 (inception) to March 31, 2002......   5

         Notes to Condensed Financial Statements............................   7

Item 2.  Management's Discussion and Analysis of
             Financial Condition and Results of Operations..................   9


PART II. OTHER INFORMATION

Item 6.  Exhibits and Reports on Form 8-K...................................  13

         Signature..........................................................  14
</TABLE>

                                       2

<PAGE>


                       PROTEIN POLYMER TECHNOLOGIES, INC.
                          (A Development Stage Company)

                            Condensed Balance Sheets
<TABLE>
<CAPTION>

                                                                    March 31,        December 31,
                                                                      2002               2001
                                                              -------------------------------------
<S>                                                           <C>                  <C>
Assets                                                             (unaudited)
Current assets:
Cash and cash equivalents                                     $      458,549       $     234,271
Other current assets                                                 214,620              57,520
                                                              -------------------------------------
Total current assets                                                 673,169             291,791
Deposits                                                              30,479              29,679
Equipment and leasehold improvements, net                            161,537             205,247
                                                              -------------------------------------
                                                              $      865,185       $     526,717
                                                              =====================================
Liabilities and stockholders' equity
   Current liabilities:
   Accounts payable                                           $      260,313       $     356,942
   Accrued employee benefits                                         121,415             118,987
   Other accrued expenses                                             62,870              43,398
   Deferred revenue                                                  250,000             333,333
   Deferred rent                                                      24,111              24,111
                                                              -------------------------------------
Total current liabilities                                            718,709             876,771

   Long-term portion deferred rent                                    42,194              48,222

Stockholders' equity:
Convertible Preferred Stock, $.01 par value,
5,000,000 shares authorized, 84,758 and 88,258
shares issued and outstanding at March 31, 2002
and December 31, 2001, respectively;
liquidation preference of $8,475,800 and
$8,825,800 at March 31, 2002 and December 31,
2001, respectively                                                 8,130,530           8,480,530
Common stock, $.01 par value, 60,000,000 shares
authorized, 26,023,463 and 21,740,650 shares
issued and outstanding at March 31, 2002 and
December 31, 2001, respectively                                      260,246             217,418
Additional paid-in capital                                        35,071,094          33,794,177
Deficit accumulated during development stage                    (43,357,588)         (42,890,401)
                                                              -------------------------------------
Total stockholders' equity                                           104,282            (398,276)
                                                              -------------------------------------
                                                              $      865,185       $     526,717
                                                              =====================================
</TABLE>

See accompanying notes.

                                       3

<PAGE>


                       PROTEIN POLYMER TECHNOLOGIES, INC.
                          (A Development Stage Company)

                       Condensed Statements of Operations
                                   (unaudited)
<TABLE>
<CAPTION>

                                                                                           For the period
                                                                                            July 6, 1988
                                                            Three months ended             (inception) to
                                                                 March 31,                    March 31,
                                                           2002              2001               2002
                                                     ------------------------------------------------------
<S>                                                  <C>                 <C>               <C>
Revenues:
   Contract revenue                                  $    469,577        $    83,333       $   6,717,592
   Interest Income                                          1,620              8,230           1,241,757
   Product and other income                                 1,500                 38             694,779
                                                     ------------------------------------------------------
Total revenues                                            472,697             91,601           8,654,128

Expenses:
   Research and development                               651,037            604,902          30,338,409
   Selling, general and administrative                    288,847            357,813          17,724,922
                                                     ------------------------------------------------------
Total expenses                                            939,884            962,715          48,063,331
                                                     ------------------------------------------------------

Net loss                                                 (467,187)          (871,114)        (39,409,203)

Undeclared, imputed and/or paid dividends on
preferred stock                                           68,459             68,459            5,863,391
                                                     ------------------------------------------------------


Net loss applicable to common shareholders           $   (535,646)      $   (939,573)       $ (45,272,594)
                                                     ======================================================

Basic and diluted net loss per common share          $      (0.02)      $      (0.05)
                                                     =================================

Shares used in computing basic and diluted
net loss per common share                              24,116,726         18,914,202
                                                     =================================
</TABLE>

See accompanying notes.

                                       4

<PAGE>


                       PROTEIN POLYMER TECHNOLOGIES, INC.
                          (A Development Stage Company)

                       Condensed Statements of Cash Flows
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                                           For the period
                                                                                            July 6, 1988
                                                            Three months ended             (inception) to
                                                                 March 31,                    March 31,
                                                           2002              2001               2002
                                                      -----------------------------------------------------
<S>                                                   <C>               <C>               <C>
Operating activities

Net loss                                              $ (467,187)       $ (871,114)       $(39,409,203)
Adjustments to reconcile net loss to net cash
used for operating activities:
Stock issued for compensation and interest                     -                 -             472,676
Depreciation and amortization                             45,003            34,467           2,247,502
Write-off of purchased technology                              -                 -             503,500
Changes in assets and liabilities:
Deposits                                                    (800)           (2,800)            (30,479)
Other current assets                                    (157,100)            1,158            (214,620)
Accounts payable                                         (96,629)           37,899             260,313
Accrued employee benefits                                  2,428            17,190             121,415
Other accrued expenses                                    19,472            (9,685)             62,870
Deferred revenue                                         (83,333)          (83,334)            250,000
Deferred rent                                             (6,028)            2,249              66,305
                                                      -----------------------------------------------------
Net cash used for operating activities                  (744,174)         (873,970)        (35,669,721)

Investing activities

Purchase of technology                                         -                 -            (570,000)
Purchase of equipment and improvements                    (1,293)                -          (1,967,013)
Purchases of short-term investments                            -                 -         (16,161,667)
Sales of short-term investments                                -                 -          16,161,667
                                                      -----------------------------------------------------
Net cash provided by (used for) investing
activities                                            $   (1,293)       $        -        $ (2,537,013)
</TABLE>

See accompanying notes.

                                       5

<PAGE>


                       PROTEIN POLYMER TECHNOLOGIES, INC.
                          (A Development Stage Company)

                  Condensed Statements of Cash Flows, continued
                                   (unaudited)
<TABLE>
<CAPTION>

                                                                                           For the period
                                                                                            July 6, 1988
                                                            Three months ended             (inception) to
                                                                 March 31,                    March 31,
                                                           2002              2001               2002
                                                      -----------------------------------------------------
<S>                                                   <C>                <C>               <C>
Financing activities
Net proceeds from exercise of options and
warrants, and sale of common stock                    $ 969,745          $ 1,250,620        $ 22,135,605
Net proceeds from issuance and conversion of
preferred stock                                               -                    -          15,508,418
Net proceeds from convertible notes and
detachable warrants                                           -                    -           1,068,457
Payment on capital lease obligations                          -              (20,971)           (288,770)
Payment on note payable                                       -                    -            (242,750)
Proceeds from note payable                                    -              800,000             484,323
                                                      -----------------------------------------------------
Net cash provided by financing activities               969,745            2,029,649          38,665,283
                                                      -----------------------------------------------------
Net increase (decrease) in cash and cash
equivalents                                             224,278            1,155,679             458,549

Cash and cash equivalents at beginning of
period                                                  234,271              866,220                   -
                                                      -----------------------------------------------------
Cash and cash equivalents at end of period            $ 458,549          $ 2,021,899        $    459,549
                                                      =====================================================
Supplemental disclosures of cash flow
information
Equipment purchased by capital leases                 $       -          $         -        $    288,772
Interest paid                                             3,924                  449             148,529
Imputed dividend on Series E stock                            -                    -           3,266,250
Conversion of Series D preferred stock to
common stock                                                  -                    -           2,142,332
Conversion of Series E preferred stock to
common stock                                            400,000                    -           3,112,550
Series D stock issued for Series C stock                                                       2,073,925
Series C dividends paid with Series D stock                   -                    -             253,875
Series D dividends paid with common stock             $       -          $         -        $    422,341
</TABLE>

See accompanying notes.

                                       6

<PAGE>


                       PROTEIN POLYMER TECHNOLOGIES, INC.
                          (A Development Stage Company)

                     Notes to Condensed Financial Statements
                                   (unaudited)

                                 March 31, 2002

1.   Basis of Presentation

The condensed financial statements of Protein Polymer Technologies, Inc. (the
"Company") for the three months ended March 31, 2002 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, 2002 and the results of
operations for the three months ended March 31, 2002 and 2001. The results of
operations for the three months ended March 31, 2002 are not necessarily
indicative of the results to be expected for the year ended December 31, 2002.
For more complete financial information, these financial statements and the
notes thereto should be read in conjunction with the audited financial
statements included in our Annual Report on Form 10-KSB for the year ended
December 31, 2001, 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. The loss figures used for this calculation
recognize accumulated dividends on the Company's Series D and Series F Preferred
Stock. Such dividends are payable when declared by the Board of Directors in
cash or common stock.

3.   Basic and Diluted Loss Per Share

In accordance with FAS No. 128, we are required to present basic and diluted
earnings per share if applicable. Basic and diluted earnings per share are
determined based on the weighted average number of shares outstanding during the
period. Diluted earnings per share also include potentially dilutive securities
such as options and warrants outstanding and securities convertible into common
stock.

Both the basic and diluted loss per share for the three months ended March 31,
2002 and 2001 are based on the weighted average number of shares of common stock
outstanding during the periods. Since potentially dilutive securities have not
been included in the calculation of the diluted loss per share for both periods
as their effect is anti-dilutive, there is no difference between the basic and
diluted loss per share calculations.

4.   Revenue and Expense Recognition

License fees and research and development contract revenues are recorded as
earned based on the performance requirements of the contracts. If the research
and development activities are not successful, we are not obligated to refund
payments previously received. Milestone payments are recorded as revenue when
received as they are not refundable and we have no future performance
obligations. Payments received in advance of amounts earned are recorded as
deferred revenue. Research and development costs are expensed as incurred.

5.   Exercise and Exchange of Series G Warrants

During January 2002, certain holders of warrants issued in connection with the
sale of Series G Preferred Stock exercised their warrants to purchase common
stock, which were due to expire in February 2002. The original exercise price
was $0.50 per share. As an inducement to exercise the warrant early, we offered
to reduce the exercise price to $0.25 and offer each holder a new eighteen month
warrant for a similar number of shares at an exercise

                                       7

<PAGE>

price of $0.40 per share. As a result we raised $990,000 (less
expenses). The newly issued warrants will expire on the last day of August 2003.

6.   Expanded Spine Wave, Inc. Relationship

On March 17, 2002, we executed additional agreements with Spine Wave, Inc. that
expanded our contractual research and development relationship, and that
provided us with additional equity incentives in the form of Spine Wave common
stock and warrants. In a related transaction, Spine Wave announced that it had
raised approximately $15 million through the sale of Series A Preferred Stock.
Under the amended Supply and Services Agreement between the Company and Spine
Wave, PPTI, on behalf of Spine Wave, is proceeding with preclinical safety and
performance studies of the device to support Spine Wave's filing of an
Investigational Device Exemption with the FDA to obtain approval to initiate
human clinical testing. We estimate we will receive from Spine Wave
approximately $1.5 million in R&D payments over the next year, exclusive of the
preclinical study costs. During the subsequent period leading to regulatory
marketing approvals, our contractual responsibilities include the supply of
product to be used in clinical testing and preparation for commercial
manufacturing operations. Spine Wave is responsible for clinical testing,
regulatory approvals, and commercialization.

7.   Liquidity

We believe our existing available cash and cash equivalents as of March 31,
2002, plus contractual amounts receivable, is sufficient to meet our anticipated
capital requirements until July 2002. Substantial additional capital resources
will be required to fund continuing expenditures related to our research,
development, clinical trials, and product marketing activities. If adequate
funds are not available, we will be required to significantly curtail our
operating plans and may have to sell or license out significant portions of our
technology or potential products.

                                       8

<PAGE>


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
which 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. The company undertakes 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

Incorporated in 1988, Protein Polymer Technologies, Inc., a Delaware corporation
with corporate offices and laboratories located in San Diego, California, is a
development-stage biotechnology company engaged in the research, development,
production and clinical testing of medical products based on its proprietary
protein-based biomaterials technology. Since 1992, we have focused primarily on
developing materials technology and products to be used in the surgical repair,
augmentation, and regeneration of tissue: surgical adhesives and sealants; soft
tissue augmentation products; matrices for wound healing and tissue engineering;
drug delivery formulations; and surgical adhesion barriers. We have been
unprofitable to date, and as of March 31, 2002 had an accumulated deficit of $
43,357,588.

Protein polymers are synthetic proteins created "from scratch" through chemical
DNA (gene) synthesis, and produced in quantity by traditional large-scale
microbial fermentation methods. As a result, protein polymers contain no human
or animal components that could potentially transmit or cause disease. Due to
their synthetic design, protein polymers are capable of combining the biological
functionality of natural proteins with the chemical functionality and
exceptional physical properties of synthetic polymers. A common goal is to
develop materials that beneficially interact with human cells, enabling cell
growth and the regeneration of tissues with improved outcomes as compared to
current products and practices.

Our product candidates for surgical repair, augmentation and regeneration of
human tissues are in various stages of research and development. The more
advanced programs are bulking agents for soft tissue augmentation, particularly
for use in urethral tissue for the treatment of female stress incontinence and
in dermal tissue for cosmetic and reconstructive procedures. We currently are
devoting the majority of our resources to the development and registration of
these products.

Because of our technology's breadth of commercial opportunity, we are pursuing
multiple routes for commercial development. Currently, we independently are
developing the incontinence and the dermal augmentation products, which share
similar technology and product characteristics. We have established a
comprehensive license and development agreement with Genencor International for
the use of our biomaterials and technology to develop, manufacture and
commercialize products for industrial markets. Genencor International is one of
the world's largest manufacturers of industrial enzymes and other biologically
derived products. Through this arrangement, we will receive development
payments, and eventually royalties on the sale of products. For development and
commercialization of our spinal disc repair product, we joined with Windamere
Venture Partners to establish a new company, Spine Wave, Inc., that will provide
us with both near term research and development support and

                                       9

<PAGE>

eventually potential royalties on the sale of licensed products. Except for the
industrial products, we have retained manufacturing rights.

To the extent sufficient resources are available, we continue to research the
use of our protein polymers for other tissue repair and medical device
applications, principally for use in tissue engineering matrices and drug
delivery devices.

Our strategy with most of our programs is to enter into collaborative
development agreements with product marketing and distribution companies.
Although these relationships, to the extent any are consummated, may provide
significant near-term revenues through up-front licensing fees, research and
development reimbursements and milestone payments, the Company expects to
continue incurring operating losses for the next several years.

We are aggressively pursuing domestic and international patent protection for
our technology, making claim to an extensive range of recombinantly prepared
structural and functional proteins, methods for preparing synthetic repetitive
DNA, methods for the production and purification of protein polymers, end-use
products incorporating such materials and methods for their use. To date, the
United States Patent and Trademark Office ("USPTO") has issued 21 patents to us.
In addition, we have filed corresponding patent applications in other relevant
commercial jurisdictions.

During January 2002, certain holders of warrants, issued in connection with the
sale of Series G Preferred Stock, exercised their warrants to purchase common
stock which were due to expire in February, 2002 The original exercise price was
$0.50 per share. As an inducement to exercise the warrant early, we offered to
reduce the exercise price to $0.25 and offered each holder a new eighteen month
warrant for a similar number of shares at an exercise price of $0.40 per share.
As a result we raised $990,000 (less expenses). The newly issued warrants will
expire on the last day of August 2003.

In April 2001, we joined with Windamere Venture Partners and affiliates to form
a new orthopedic company, Spine Wave, Inc., to develop and commercialize an
injectable protein-based formulation for the repair of spinal discs damaged
either by injury or aging. Based on Protein Polymer's proprietary tissue
adhesive technology, the product under development has potential to be an
effective outpatient surgical treatment for chronic low back pain.

Back pain is the leading cause for healthcare expenditures in the United States.
According to a 2000 Viscogliosi Bros., LLC, Spine Industry report, back pain
results in more than $50 billion in direct and indirect medical expense. Despite
the invasive surgery associated with many spinal procedures, such as spinal
fusion, the worldwide spinal market represents more than $2 billion in revenues,
growing at a rate of over 25% annually. It is the fastest growing major segment
of the orthopedic industry.

In many instances, spinal fusion is a procedure of last resort, since it
destroys the natural function and mobility of the spine by replacing the shock
absorbing intervertebral disc with metal and/or bone. Currently, there are no
approved products to replace or restore the function of the invertebral disc
that has degenerated, or to intervene in the degenerative process. Using our
patented technology, we are developing a product (the Injectable Disc Nucleus)
designed to restore natural disc function by replacing or augmenting the natural
disc nucleus that has degenerated or that has been surgically removed in a
discectomy procedure. The product has the potential to be used independently in
minimally invasive outpatient procedures as well as in combination with
traditional open procedures.

As a result of the agreements we executed, Spine Wave has acquired a license to
our technology for use in spinal and other defined orthopedic applications. We
received approximately 33% of the founding stock in Spine Wave and will receive
royalties on the sale or sublicensing of licensed products. In addition to the
License Agreement, we agreed in a separate Supply and Services Agreement to
provide Spine Wave with a variety of research and development services, and to
supply materials to Spine Wave for pre-clinical and clinical testing, and
ultimately for commercial sale. If we are unable to meet the requirements for
product delivery, we agreed to make the manufacturing methods and materials
available to Spine Wave as specified in a separate Escrow Agreement. Spine Wave
is responsible for clinical testing, regulatory approvals, and
commercialization.

                                       10

<PAGE>

On March 17, 2002, we executed additional agreements with Spine Wave that
expanded our contractual research and development relationship, and that
provided us with additional equity incentives in the form of Spine Wave common
stock and warrants. In a related transaction, Spine Wave announced that it had
raised approximately $15 million through the sale of Series A Preferred Stock.
Spine Wave also recently completed the acquisition of VERTx, Inc. Formed in
2001, VERTx is an orthopedic company developing products to improve the repair
of vertebral fractures due to injury and aging. This acquisition significantly
broadens Spine Wave's technology base and gives it a platform in two of the
fastest growing segments of the spine industry - disc repair and vertebral
compression fracture treatment.

Under the amended Supply and Services Agreement, the Company on behalf of Spine
Wave is proceeding with preclinical safety and performance studies of the device
to support Spine Wave's filing of an Investigational Device Exemption with the
FDA to obtain approval to initiate human clinical testing. We estimate we will
receive from Spine Wave approximately $1.5 million in R&D payments over the next
year, exclusive of the preclinical study costs. During the subsequent period
leading to regulatory marketing approvals, our contractual responsibilities
include the supply of product to be used in clinical testing and preparation for
commercial manufacturing operations. Spine Wave is responsible for clinical
testing, regulatory approvals, and commercialization.

As of March 31, 2002, we had cash and cash equivalents totaling $459,000. We
believe our available cash and cash equivalents, accounts receivable, and future
contractual research and development payments will be sufficient to meet our
anticipated capital requirements until July 2002. We will continue to attempt to
raise additional funds for continuing operations through private or public
offerings and collaborative agreements. See "Liquidity and Capital Resources"
below for additional information and a description of the associated risks.

Results of Operations

The Company received $470,000 in contract and licensing revenue for the three
months ended March 31, 2002 as compared to $83,000 in contract and licensing
revenue for the three months ended March 31, 2001. The contract and licensing
revenue primarily represents the amortized portion of an up-front license
payment of $1 million (being recognized ratably over a period of three years)
from Femcare Ltd. for the commercial rights to our potential incontinence
product in Europe and Australia, and payments from Spine Wave, Inc. for research
and development associated with the development of a product for the repair of
spinal disks for the treatment of lower back pain. The increase in contract and
licensing revenue over the three month period primarily reflects contractual
research and development revenue from Spine Wave which did not begin until the
second quarter of 2001.

Interest income was $2,000, for the three months ended March 31, 2002 versus
$8,000 for the same period in 2001.

Research and development expenses for the three months ended March 31, 2002 were
$651,000 compared to $605,000 for the same period in 2001. We expect, in
general, that our research and development, human clinical testing, and
manufacturing expenses will increase over time if our incontinence and dermal
products, and other products in development, successfully progress and
additional capital is obtained.

Selling, general and administrative expenses for the three months ended March
31, 2002 were $289,000 as compared to $358,000 for the same period in 2001. We
expect that our selling, general and administrative expenses will remain largely
unchanged in the near term, but may increase in the future as support for our
research and development, regulatory and manufacturing efforts require
additional resources and to the extent additional capital is obtained.

For the three months ended March 31, 2002, we recorded a net loss applicable to
common shareholders of $(535,646), or $0.02 per share as compared to a loss of
$(939,573), or $0.05 per share for the same period in 2000. Also included in
each of the three month periods of 2002 and 2001 were $68,000, for undeclared
dividends related to our preferred stock.

In general, there can be significant fluctuation in revenue from quarter to
quarter due to variability in outside contract and licensing payments. In
general, we expect to incur increasing operating losses in the future (to the
extent additional capital is obtained), due primarily to increases in our soft
tissue augmentation program's

                                       11

<PAGE>

development, manufacturing and business development activities. Our results
depend on our ability to establish strategic alliances and generate contract
revenues, increased research, development and manufacturing efforts,
pre-clinical and clinical product testing and commercialization expenditures,
expenses incurred for regulatory compliance and patent prosecution, and other
factors.

To date we believe that inflation and changing prices have not had a material
effect on our continuing operations. However, the sharp rise in utility costs
may have an impact in the future. In addition, following the tragic events of
September 11, we are being notified by our various insurance carriers to expect
both changes in coverage and/or increased rates.

Liquidity and Capital Resources

As of March 31, 2002, we had cash and cash equivalents of $459,000 as compared
to $234,000 at December 31, 2001. As of March 31, 2002, we had working capital
of $(46,000) as compared to $(585,000) at December 31, 2001.

We had no long-term debt obligations as of March 31, 2002 or as of December 31,
2001. We had $(1,293) in expenditures for capital equipment and leasehold
improvements for the three months ending March 31, 2002, compared to zero for
the same period last year. We are expecting to increase our capital expenditures
in the next few quarters (to the extent additional capital is obtained), as we
improve existing space to expand capacity to meet materials manufacturing
requirements for clinical testing. We may also enter into capital lease
arrangements if available at appropriate rates and terms.

We believe our existing available cash, cash equivalents and accounts
receivable, in combination with anticipated contract research payments and
revenues received from the transfer of clinical testing materials, will be
sufficient to meet our anticipated capital requirements until July 2002.
Substantial additional capital resources will be required to fund continuing
expenditures related to our research, development, manufacturing and business
development activities. We believe there may be a number of alternatives to
meeting the continuing capital requirements of our operations, including
additional collaborative agreements and public or private financings. However,
there can be no assurance that any of these fundings will be consummated in the
necessary time frames needed for continuing operations or on terms favorable to
us. If adequate funds are not available, we will be required to significantly
curtail or cease our operations, and may have to sell or license out significant
portions of our technology or potential products.

                                       12

<PAGE>

                           PART II. OTHER INFORMATION


Item 6.  EXHIBITS AND REPORTS ON FORM 8-K

a.   Exhibits:

         None

b.   Reports on Form 8-K

 The Current Report on Form 8-K filed with the Securities and Exchange
Commission on May 1, 2002.

                                       13

<PAGE>

                                    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.


Date:    May 15, 2002                      By  /s/  J. Thomas Parmeter
                                               -----------------------
                                              J. Thomas Parmeter
                                              Chairman of the Board, Chief
                                              Executive Officer, President


Date:    May 15, 2002                      By  /s/  Janis Y. Neves
                                                  -------------------
                                              Janis Y. Neves
                                              Director of Finance, Controller
                                              and Assistant Secretary

                                       14

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                                  EXHIBIT INDEX


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