**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 ACTOF
                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 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
                    AmendedResearch
                      and development expense  for the three months ended March 31,
                      2007
                  
                  
                  $628,131
                  
                  
                  $645,021Total
                      other income (expense) for the threemonths
                      ended March 31, 2007
                  
                  
                  $(110,033)
                  
                  
                  $110,033Accumulated
                      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 endedMarch
                  31,2007
              
              2006Revenues:
              
              (Restated)Contract
                  and licensing revenue
              
              $
              136,088
              
              $
              220,919Product
                  and other income
              
              
              —
              
              
              18,558Total
                  revenues
              
              
              136,088
              
              
              239,477Operating
                  expenses:Cost
                  of sales
              
              
              —
              
              
              803Research
                  and development
              
              
              645,021
              
              
              1,036,440Selling,
                  general and administrative
              
              
              319,703
              
              
              1,887,311Total
                  expenses
              
              
              964,724
              
              
              2,924,554Net
                  loss from operations
              
              
              (828,636
              )
              
              (2,685,077
              )Other
                  income (expense):Interest
                  income
              
              
              —
              
              
              2,524Interest
                  expense
              
              
              (94,292
              )
              
              (10,900
              )Gain
                  on derivative liability
              
              
              10,408
              
              
              —Gain
                  onsettlement
              
              
              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
              
              
              157,409Net
                  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.
  2


**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.




3




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, IIIWilliam
              N. Plamondon, IIIChief
              Executive Officer


Date: August
              24, 2007
            By:
            /s/
              William N. Plamondon, IIIWilliam
              N. Plamondon, IIIPrincipal
              Financial Officer




4




**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.





5