10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

For the quarterly period ended: March 31, 2013

OR

[_] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

For the transition period from: ___ to ___.

Commission File Number: 001-336180

ULURU Inc.

(Exact Name of Registrant as Specified in its Charter)

Nevada	41-2118656
(State or Other Jurisdiction of	(I.R.S. Employer Identification No.)
Incorporation or Organization)

4452 Beltway Drive Addison, Texas	75001
(Address of Principal Executive Offices)	(Zip Code)

(214) 905-5145

Registrant's Telephone Number, including Area Code

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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  þ    No  o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

    Yes  þ    No  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerate filer”, “accelerated filer”, and “smaller reporting company” in Rule 12b-2 of the Exchange Act.  (Check one):

Large accelerated filer o Accelerated filer o Non-accelerated filer o Smaller reporting company þ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  o    No  þ

As of May 15, 2013, there were 14,199,190 shares of the registrant’s Common Stock, $0.001 par value per share, and 65 shares of Series A Preferred Stock, $0.001 par value per share, issued and outstanding.

ULURU Inc.

INDEX TO FORM 10-Q

For the Three Months Ended MARCH 31, 2013

		Page
PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements.	3
	Condensed Consolidated Balance Sheets as of March 31, 2013 (unaudited) and December 31, 2012 (audited)	3
	Condensed Consolidated Statements of Operations (unaudited) for the three months ended March 31, 2013 and 2012	4
	Condensed Consolidated Statements of Cash Flows (unaudited) for the three months ended March 31, 2013 and 2012	5
	Notes to Condensed Consolidated Financial Statements (unaudited)	6
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations.	26
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	35
Item 4.	Controls and Procedures.	36
PART II	OTHER INFORMATION
Item 1.	Legal Proceedings.	36
Item 1A.	Risk Factors.	36
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	37
Item 3.	Defaults Upon Senior Securities.	37
Item 4.	Mine Safety Disclosures.	37
Item 5.	Other Information.	37
Item 6.	Exhibits.	38
	Signatures.	39

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PART I – FINANCIAL INFORMATION

ITEM 1. Financial Statements.

ULURU Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS

	March 31, 2013			December 31, 2012
	(Unaudited)			(Audited)
ASSETS
Current Assets
Cash and cash equivalents	$	5,913		$	21,549
Accounts receivable, net		84,541			111,898
Notes receivable and accrued interest, current portion		265,444			260,444
Inventory		506,205			527,643
Prepaid expenses and deferred charges		135,972			194,448
Total Current Assets		998,075			1,115,982
Property, Equipment and Leasehold Improvements, net		780,147			845,535
Other Assets
Intangible assets, net		4,028,824			4,145,985
Notes receivable and accrued interest, net of current portion		796,332			1,041,776
Investment in unconsolidated subsidiary		---			---
Deferred financing costs, net		141,926			160,770
Deposits		18,069			18,069
Total Other Assets		4,985,151			5,366,600
TOTAL ASSETS	$	6,763,373		$	7,328,117
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable	$	1,903,862		$	2,340,782
Accrued liabilities		380,236			372,965
Accrued interest		48,451			41,141
Convertible notes payable, net of unamortized debt discount, current portion		1,127,537			1,089,619
Deferred revenue, current portion		45,227			45,227
Total Current Liabilities		3,505,313			3,889,734
Long Term Liabilities
Convertible notes payable, net of unamortized debt discount and current portion		546,322			751,543
Deferred revenue, net of current portion		824,400			835,553
Total Long Term Liabilities		1,370,722			1,587,096
TOTAL LIABILITIES		4,876,035			5,476,830
COMMITMENTS AND CONTINGENCIES		---			---
STOCKHOLDERS' EQUITY
Preferred stock - $0.001 par value; 20,000 shares authorized;
Preferred Stock Series A, 1,000 shares designated; 65 and 25 shares issued and outstanding, aggregate liquidation value of $713,864 and $701,843, at March 31, 2013 and December 31, 2012, respectively		---			---
Common Stock - $0.001 par value; 200,000,000 shares authorized;
12,218,322 and 10,074,448 shares issued and outstanding at March 31, 2013 and December 31, 2012, respectively		12,218			10,075
Additional paid-in capital		52,043,033			51,336,931
Promissory notes receivable and accrued interest for common stock issuance		(988,871	)		(985,287	)
Accumulated  (deficit)		(49,179,042	)		(48,510,432	)
TOTAL STOCKHOLDERS’ EQUITY		1,887,338			1,851,287
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	6,763,373		$	7,328,117
The accompanying notes are an integral part of these condensed consolidated financial statements.

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ULURU Inc.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended March 31,
	2013			2012
Revenues
License fees	$	11,153		$	7,959
Royalty income		---			16,185
Product sales, net		90,891			35,861
Total Revenues		102,044			60,005
Costs and Expenses
Cost of goods sold		40,889			16,734
Research and development		165,285			192,960
Selling, general and administrative		260,690			476,299
Amortization of intangible assets		117,161			118,463
Depreciation		65,388			75,261
Total Costs and Expenses		649,413			879,717
Operating (Loss)		(547,369	)		(819,712	)
Other Income (Expense)
Interest and miscellaneous income		22,465			1,654
Interest expense		(131,686	)		(25,351	)
Equity in earnings (loss) of unconsolidated subsidiary		---			---
(Loss) Before Income Taxes		(656,590	)		(843,409	)
Income taxes		---			---
Net (Loss)	$	(656,590	)	$	(843,409	)
Less preferred stock dividends		(12,021	)		(10,726	)
Net (Loss) Allocable to Common Stockholders	$	(668,611	)	$	(854,135	)
Basic and diluted net (loss) per common share	$	(0.06	)	$	(0.11	)
Weighted average number of common shares outstanding		11,657,123			7,962,421
The accompanying notes are an integral part of these condensed consolidated financial statements.

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ULURU Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Three Months Ended March 31,
	2013			2012
OPERATING ACTIVITIES :
Net loss	$	(656,590	)	$	(843,409	)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of intangible assets		117,161			118,463
Depreciation		65,388			75,261
Share-based compensation for stock and options issued to employees		1,554			12,551
Share-based compensation for options issued to non-employees		8,418			12,112
Equity in earnings (loss) of unconsolidated subsidiary		---			---
Amortization of debt discount on convertible note		44,778			3,151
Amortization of deferred financing costs		18,844			---
Cancellation of warrants issued for services		(48,776	)		---
Common stock issued for services		---			130,000
Common stock issued for interest due on convertible note		37,918			---
Change in operating assets and liabilities:
Accounts receivable		27,357			10,049
Other receivable		---			26,410
Inventory		21,438			22,748
Prepaid expenses and deferred charges		58,476			(30,843	)
Notes receivable and accrued interest		240,444			---
Accounts payable		(436,920	)		(12,498	)
Accrued liabilities		7,271			(60,614	)
Accrued interest		7,310			6,535
Deferred revenue		(11,153	)		217,041
Total		159,508			530,366
Net Cash Used in Operating Activities		(497,082	)		(313,043	)
INVESTING ACTIVITIES :
Proceeds from sale of intangible asset		---			220,000
Net Cash Provided by Investing Activities		---			220,000
FINANCING ACTIVITIES :
Proceeds from sale of common stock and warrants, net		481,446			---
Proceeds from sale of preferred stock, net		---			275,761
Offering cost adjustment – preferred stock sale in 2011		---			28,928
Net Cash Provided by Financing Activities		481,446			304,689
Net Increase (Decrease) in Cash		(15,636	)		211,646
Cash,  beginning of period		21,549			46,620
Cash,  end of period	$	5,913		$	258,266
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Cash paid for interest	$	1,264		$	1,095
Non-cash investing and financing activities:
Issuance of common stock for promissory note	$	---		$	245,818
Issuance of common stock for principle due on convertible note	$	212,081		$	---
The accompanying notes are an integral part of these condensed consolidated financial statements.

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ULURU Inc.

NOTES TO

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1. COMPANY OVERVIEW AND BASIS OF PRESENTATION

Company Overview

ULURU Inc. (hereinafter “we”, “our”, “us”, “ULURU”, or the “Company”) is a Nevada corporation.  We are a diversified specialty pharmaceutical company committed to developing and commercializing a broad range of innovative wound care and muco-adhesive film products based on our patented Nanoflex® and OraDiscTM drug delivery technologies, with the goal of improving outcomes for patients, health care professionals, and health care payers.

Basis of Presentation

In the opinion of management, the accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and include the accounts of ULURU Inc., a Nevada corporation, and its wholly-owned subsidiary, Uluru Delaware Inc., a Delaware corporation.  They do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the Company’s financial position as of March 31, 2013 and the results of its operations for the three months ended March 31, 2013 and 2012 and cash flows for the three months ended March 31, 2013 and 2012 have been made.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, as well as disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods.  Actual results may differ from those estimates and assumptions.  These differences are usually minor and are included in our consolidated financial statements as soon as they are known.  Our estimates, judgments, and assumptions are continually evaluated based on available information and experience. Because of the use of estimates inherent in the financial reporting process, actual results could differ from those estimates.

All intercompany transactions and balances have been eliminated in consolidation.

Operating results for the three months ended March 31, 2013 are not necessarily indicative of the results that may be expected for the year ending December 31, 2013.

These condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012, as filed with the Securities and Exchange Commission on March 29, 2013, including the risk factors set forth therein.

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NOTE 2. SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies used in preparation of these condensed consolidated financial statements for the three ended March 31, 2013 are consistent with those discussed in Note 2 to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2012, as filed with the Securities and Exchange Commission on March 29, 2013.

NOTE 3. THE EFFECT OF RECENTLY ISSUED ACCOUNTING STANDARDS

In September 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2011-08, “Intangibles – Goodwill and Other (Topic 350): Testing Goodwill for Impairment” (“ASU 2011-08”). ASU 2011-08 updated guidance on the periodic testing of goodwill for impairment. This guidance will allow companies to assess qualitative factors to determine if it is more-likely-than-not that goodwill might be impaired and whether it is necessary to perform the two-step goodwill impairment test required under current accounting standards. This new guidance is effective for fiscal years beginning after December 15, 2011; however, early adoption is permitted in certain circumstances.  We adopted the provisions of ASU 2011-08 in the first quarter of 2012.  The adoption of this update does not materially impact our financial statements.

In June 2011, the FASB issued Accounting Standards Update No. 2011-05, “Comprehensive Income (Topic 220): Presentation of Comprehensive Income” (“ASU 2011-05”). ASU 2011-05 amended existing guidance by allowing only two options for presenting the components of net income and other comprehensive income: (1) in a single continuous financial statement of comprehensive income or (2) in two separate but consecutive financial statements, consisting of an income statement followed by a separate statement of other comprehensive income. Also, items that are reclassified from other comprehensive income to net income must be presented on the face of the financial statements. ASU No. 2011-05 requires retrospective application, and it is effective for fiscal years beginning after December 15, 2011.  We adopted the provisions of ASU 2011-05 in the first quarter of 2012.  The adoption of this update does not materially impact our financial statements.

In May 2011, the FASB issued Accounting Standards Update No. 2011-04, “Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs” (“ASU 2011-04”). ASU 2011-04 generally provides a uniform framework for fair value measurements and related disclosures between U.S. generally accepted accounting principles and International Financial Reporting Standards. Additional disclosure requirements in the update include: (1) for Level 3 fair value measurements, quantitative information about unobservable inputs used, a description of the valuation processes used by the entity, and a qualitative discussion about the sensitivity of the measurements to changes in the unobservable inputs; (2) for an entity’s use of a nonfinancial asset that is different from the asset’s highest and best use, the reason for the difference; (3) for financial instruments not measured at fair value but for which disclosure of fair value is required, the fair value hierarchy level in which the fair value measurements were determined; and (4) the disclosure of all transfers between Level 1 and Level 2 of the fair value hierarchy. ASU 2011-04 was effective for interim and annual periods beginning on or after December 15, 2011. We adopted the provisions of ASU 2011-04 in the first quarter of 2012.  The adoption of this update does not materially impact our financial statements.

There are no other new accounting pronouncements adopted or enacted during the three months ended March 31, 2013 that had, or are expected to have, a material impact on our financial statements.

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NOTE 4. SEGMENT INFORMATION

We operate in one business segment: the research, development and commercialization of pharmaceutical products.  Our corporate headquarters in the United States collects product sales, licensing fees, royalties, and sponsored research revenues from our arrangements with external customers and licensees.  Our entire business is managed by a single management team, which reports to the Chief Executive Officer.

Our revenues are currently derived primarily from five licensees for international activities and our domestic sales activities of Altrazeal®.

Revenues per geographic area for the three months ended March 31 are summarized as follows:

Revenues	2013		%			2012		%
Domestic	$	19,787		19	%	$	52,046		87	%
International		82,257		81	%		7,959		13	%
Total	$	102,044		100	%	$	60,005		100	%

A significant portion of our revenues are derived from a few major customers.  Customers with greater than 10% of total sales for the three months ended March 31 are represented on the following table:

Customers	Product	2013			2012
Customer A	Altrazeal®		75	%		*
Customer B	Aphthasol®		---			27	%
Customer C	Altrazeal®		*			16	%
Customer D	Altrazeal®		*			11	%
Total			75	%		54	%
* Sales from this customer were less than 10% of total sales for the period reported.

NOTE 5. NOTES RECEIVABLE

On June 27, 2012, we entered into a Securities Purchase Agreement related to our issuance of a $2,210,000 Secured Convertible Note (the “June 2012 Note”), with Inter-Mountain Capital Corp., a Delaware corporation (“Inter-Mountain”).  As part of the June 2012 Note transaction, we received $1,500,000 in the form of six promissory notes in favor of the Company, each in the principal amount of $250,000 (the “Investor Notes”) and each of which becomes due as the outstanding balance under the June 2012 Note is reduced to certain levels.  On October 5, 2012, we and Inter-Mountain entered into a First Amendment to Buyer Trust Deed Note #1 (the “Trust Deed Note Amendment”) for the purpose of revising certain terms and conditions contained in the Buyer Trust Deed Note #1, to include receiving payments of $100,000, $100,000, and $50,000 on October 5, 2012, November 30, 2012, and December 31, 2012, respectively, and any interest thereon.

As of March 31, 2013, we had $1,061,776 in notes receivable which is comprised of $1,000,000 for four Investor Notes and $61,776 for accrued interest thereon.

Please refer to Note 11 for a more detailed description of the June 2012 Note transaction.

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NOTE 6. INVENTORY

As of March 31, 2013, our inventory was comprised of Altrazeal® finished goods, manufacturing costs incurred in the production of Altrazeal®, and raw materials.  Inventories are stated at the lower of cost (first in, first out method) or market.  We regularly review inventories on hand and write down the carrying value of our inventories for excess and potentially obsolete inventories based on historical usage and estimated future usage.  In assessing the ultimate realization of our inventories, we are required to make judgments as to future demand requirements.  As actual future demand or market conditions may vary from those projected by us, adjustment to inventories may be required.

The components of inventory, at the different stages of production, consisted of the following at March 31, 2013 and December 31, 2012:

Inventory	March 31, 2013		December 31, 2012
Finished goods	$	116,031	$	303,779
Work-in-progress		357,104		190,794
Raw materials		33,070		33,070
Total	$	506,205	$	527,643

NOTE 7. PROPERTY, EQUIPMENT and LEASEHOLD IMPROVEMENTS

Property, equipment and leasehold improvements, net, consisted of the following at March 31, 2013 and December 31, 2012:

Property, equipment and leasehold improvements	March 31, 2013			December 31, 2012
Laboratory equipment	$	424,888		$	424,888
Manufacturing equipment		1,547,572			1,547,572
Computers, office equipment, and furniture		140,360			140,360
Computer software		4,108			4,108
Leasehold improvements		95,841			95,841
		2,212,769			2,212,769
Less: accumulated depreciation and amortization		( 1,432,622	)		(1,367,234	)
Property, equipment and leasehold improvements, net	$	780,147		$	845,535

Depreciation expense on property, equipment and leasehold improvements was $65,388 and $75,261 for the three months ended March 31, 2013 and 2012, respectively.

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NOTE 8. INTANGIBLE ASSETS

Intangible assets are comprised of patents acquired in October, 2005.  Intangible assets, net consisted of the following at March 31, 2013 and December 31, 2012:

Intangible assets	March 31, 2013			December 31, 2012
Patent - Amlexanox (Aphthasol®)	$	2,090,000		$	2,090,000
Patent - Amlexanox (OraDisc™ A)		6,873,080			6,873,080
Patent - OraDisc™		73,000			73,000
Patent - Hydrogel nanoparticle aggregate		589,858			589,858
		9,625,938			9,625,938
Less: accumulated amortization		( 5,597,114	)		(5,479,953	)
Intangible assets, net	$	4,028,824		$	4,145,985

Amortization expense for intangible assets was $117,161 and $118,463 for the three months ended March 31, 2013 and 2012, respectively.

The future aggregate amortization expense for intangible assets, remaining as of March 31, 2013, is as follows:

Calendar Years	Future Amortization Expense
2013 (Nine months)	$	357,987
2014		475,148
2015		475,148
2016		476,450
2017		475,148
2018 & Beyond		1,768,943
Total	$	4,028,824

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NOTE 9. INVESTMENTS IN UNCONSOLIDATED ENTITIES

We use the equity method of accounting for investments in other companies that are not controlled by us and in which our interest is generally between 20% and 50% of the voting shares or we have significant influence over the entity, or both.

On January 11, 2012, we executed a shareholders’ agreement for the establishment of Altrazeal Trading Ltd., a single purpose entity to be used for the exclusive marketing of Altrazeal® throughout the European Union, Australia, New Zealand, North Africa, and the Middle East.  As a result of this transaction, we received a non-dilutable 25% ownership interest in Altrazeal Trading Ltd.

For the three months ended March 31, 2013, the financial statements of Altrazeal Trading Ltd. were unavailable and our share of any gains or losses of Altrazeal Trading Ltd. for such period have not been recorded in our financial statements.  The financial activity of Altrazeal Trading Ltd. for the three months ended March 31, 2013 would not have a material impact on our financial statements.

Based upon unaudited financial statements provided by Altrazeal Trading Ltd. for the year ended December 31, 2012, our share of Altrazeal Trading Ltd. losses exceeded the carrying value of our investment, therefore the equity method of accounting was suspended and no additional losses were charged to our operations.  Our unrecorded share of Altrazeal Trading Ltd. losses for the year ended December 31, 2012 totaled $82,740.

Summarized financial information for our investment in Altrazeal Trading Ltd. assuming 100% ownership is as follows:

Altrazeal Trading Ltd.	December 31, 2012
Balance sheet
Total assets	$	415,248
Total liabilities	$	205,991
Total stockholders’ equity	$	209,257
Statement of operations
Revenues	$	131,869
Net (loss)	$	(330,961	)

On October 19, 2012, we executed a shareholders’ agreement for the establishment of ORADISC GmbH, a single purpose entity to be used for the exclusive development and marketing of OraDisc™ erodible film technology products.  We received a non-dilutable 25% ownership interest in ORADISC GmbH.

As of March 31, 2013, ORADISC GmbH had not begun operations and accordingly the net book value of the investee assets had not been determined and there were no equity method investee gains or losses for the three months ended March 31, 2013.

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NOTE 10. ACCRUED LIABILITIES

Accrued liabilities consisted of the following at March 31, 2013 and December 31, 2012:

Accrued Liabilities	March 31, 2013		December 31, 2012
Accrued taxes – payroll	$	106,299	$	106,299
Accrued compensation/benefits		241,621		213,005
Accrued insurance payable		16,010		52,629
Product rebates/returns		56		81
Other		16,250		951
Total accrued liabilities	$	380,236	$	372,965

NOTE 11. CONVERTIBLE DEBT

On June 27, 2012, we entered into a Securities Purchase Agreement (the “Purchase Agreement”), related to our issuance of a $2,210,000 Secured Convertible Note, with Inter-Mountain Capital Corp., a Delaware corporation (“Inter-Mountain”).  The purchase price for the June 2012 Note was paid $500,000 at closing in cash and $1,500,000 in the form of six promissory notes in favor of the Company, each in the principal amount of $250,000 (the “Investor Notes”), each of which bears interest at the rate of 8.0% per annum, and each of which becomes due as the outstanding balance under the June 2012 Note is reduced to certain levels.  The purchase price of the June 2012 Note also reflected a $200,000 original issue discount and $10,000 in attorney’s fees. The Purchase Agreement also includes representations and warranties, restrictive covenants, and indemnification provisions standard for similar transactions.

The June 2012 Note bears interest at the rate of 8.0% per annum, with monthly installment payments of $83,333 commencing on the date that is the earlier of (i) thirty calendar days after the effective date of a registration statement registering the re-sale of the shares issuable upon conversion under the June 2012 Note or (ii) December 24, 2012, but in no event sooner than September 25, 2012.  At our option, subject to certain volume, price, and other conditions, the monthly installment payments on the June 2012 Note may be paid in whole, or in part, in cash or in our common stock.  If the monthly installment is paid in common stock, such shares being issued will be based on a price that is 80% of the average of the three lowest volume weighted average prices of the shares of common stock during the preceding twenty trading days.  The percentage declines to 70% if the average of the three lowest volume weighted average prices of the shares of common stock during the preceding twenty trading days is less than $0.05.

At the option of Inter-Mountain, the outstanding principal balance of the June 2012 Note may be converted into shares of our common stock at a conversion price of $0.35 per share, subject to certain pricing adjustments and ownership limitations.  The initial tranche was $710,000 and the six subsequent tranches are each $250,000, plus interest.  At our option, the outstanding principal balance of the June 2012 Note, or a portion thereof, may be prepaid in cash at 120% of the amount elected to be prepaid.  The June 2012 Note is secured by a Security Agreement pursuant to which we granted to Inter-Mountain a first-priority security interest in the assets held by the Company.

Events of default under the June 2012 Note include failure to make required payments or to deliver shares upon conversion, the entry of a $100,000 judgment not stayed within 30 days, breach of representations or covenants under the transaction documents, various events associated with insolvency or failure to pay debts, delisting of our common stock, a restatement of financial statements, and a default under certain other agreements.  In the event of default, the interest rate under the June 2012 Note increases to 18% and the June 2012 Note becomes callable at a premium.  In addition, the holder has all remedies under law and equity, including foreclosing on our assets under a Security Agreement with Intermountain.

As part of the convertible debt financing, Inter-Mountain also received a total of seven warrants (the “Warrants”) to purchase, if they all vest, an aggregate of 3,142,857 shares of common stock, which number of shares could increase based upon the terms and conditions of the Warrants.  The Warrants have an exercise price of $0.35 per share, subject to certain pricing adjustments, and are exercisable, subject to vesting provisions and ownership limitations, until June 27, 2017.  Warrants for 785,714, 392,857, and 392,857 shares of common stock vested on June 27, 2012, December 31, 2012, and February 26, 2013, respectively.  Each of the four remaining Warrants vest upon the payment by the holder of each of the remaining four Investor Notes.

As part of the convertible debt financing, we entered into a Registration Rights Agreement whereby we agreed to prepare and file with the SEC a registration statement for the number of shares referred to therein no later than July 27, 2012 and to cause such registration statement to be declared effective no later than ninety days after such filing with the SEC and to keep such registration statement effective for a period of no less than one hundred and eighty days.  The Registration Rights Agreement also grants Inter-Mountain piggy-back registration rights with respect to future offerings by the Company.  In accordance with our obligations under the Registration Rights Agreement, we filed with the SEC a registration statement that was declared effective on July 31, 2012.

On October 5, 2012, we and Inter-Mountain entered into a First Amendment to Buyer Trust Deed Note #1 for the purpose of revising certain terms and conditions contained in the Buyer Trust Deed Note #1, to include an updated schedule for the timing of certain payment obligations by Inter-Mountain contained therein.

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On July 28, 2011, we completed a convertible debt financing for $125,000 with Mr. Kerry P. Gray, the Company’s Chairman, President, and Chief Executive Officer (the “July 2011 Note”).  The July 2011 Note bears interest at the rate of 10.0% per annum, with annual payments of interest commencing on July 1, 2012.  The full amount of principal and any unpaid interest will be due on July 28, 2014.  The outstanding principal balance of the July 2011 Note may be converted into shares of the Company’s common stock, at the option of the note holder and at any time, at a conversion price of $1.08 per share or 115,741 shares of common stock.  We may force conversion of the July 2011 Note if our common stock trades for a defined period of time at a price greater than $2.16.  The July 2011 Note is collateralized by the grant of a security interest in the inventory, accounts receivables and capital equipment held by the Company.  The securities issuable on conversion have not been registered under the Securities Act of 1933 and may not be sold absent registration or an applicable exemption from the registration requirements.  As part of the convertible debt financing, Mr. Gray also received a warrant to purchase up to 34,722 shares of the Company’s common stock.  The warrant has an exercise price of $1.08 per share and is exercisable at any time until July 28, 2016.  On July 3, 2012, the Company and Mr. Gray entered into a Modification Agreement for the purpose of deferring the annual payment of interest due on July 1, 2012 of $11,542 until such time as Mr. Gray provides written notice to us with such notice being no less than 15 days prior to the relevant payment date.  Moreover, the parties agreed that no Event of Default under the July 2011 Note occurred as a result of any failure by us to make the annual payment of interest due on July 1, 2012.  Commencing on July 1, 2012, interest at the rate of 12.0% per annum will accrue on the deferred interest payment of $11,542 until the relevant payment date.

On June 13, 2011, we completed a $140,000 convertible debt financing with Mr. Gray (the “June 2011 Note”).  The June 2011 Note bears interest at the rate of 10% per annum, with annual payments of interest commencing on July 1, 2012.  The full amount of principal and any unpaid interest will be due on June 13, 2014.  The outstanding principal balance of the June 2011 Note may be converted into shares of the Company’s common stock, at the option of the note holder and at any time, at a conversion price of $1.20 per share or 116,667 shares of common stock.  We may force conversion of the convertible note if our common stock trades for a defined period of time at a price greater than $1.80.  The June 2011 Note is collateralized by the grant of a security interest in the inventory, accounts receivables, and capital equipment held by the Company.  The securities issuable on conversion have not been registered under the Securities Act of 1933 and may not be sold absent registration or an applicable exemption from the registration requirements.  As part of the convertible debt financing, Mr. Gray also received a warrant to purchase up to 35,000 shares of the Company’s common stock.  The warrant has an exercise price of $1.20 per share and is exercisable at any time until June 13, 2016.  On July 3, 2012, the Company and Mr. Gray entered into a Modification Agreement for the purpose of deferring the annual payment of interest due on July 1, 2012 of $14,653 until such time as Mr. Gray provides written notice to us with such notice being no less than 15 days prior to the relevant payment date.  Moreover, the parties agreed that no Event of Default under the June 2011 Note occurred as a result of any failure by us to make the annual payment of interest due on July 1, 2012.  Commencing on July 1, 2012, interest at the rate of 12.0% per annum will accrue on the deferred interest payment of $14,653 until the relevant payment date.

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We account for convertible debt using specific guidelines in accordance with U.S. GAAP.  We allocated the value of the proceeds received to the convertible instrument and to the warrant on a relative fair value basis.  We calculated the fair value of the warrant issued with the convertible instrument using the Black-Scholes valuation method, using the same assumptions used for valuing employee stock options, except the contractual life of the warrant was used. Using the effective interest method, the allocated fair value was recorded as a debt discount and is being amortized over the expected term of the convertible debt to interest expense.

On the date of issuance of the June 2011 Note, the July 2011 Note, and the June 2012 Note, no portion of the proceeds were attributable to a beneficial conversion feature since the conversion price of the June 2011 Note, the July 2011 Note, and the June 2012 Note exceeded the market price of the Company’s common stock.

Information relating to our convertible notes payable is as follows:

									As of March 31, 2013
Transaction	Initial  Principal Amount		Interest Rate			Maturity Date	Conversion Price (1)(2)		Principal Balance		Unamortized Debt Discount		Carrying Value
June 2011 Note	$	140,000		10.0	%	06/13/2014	$	1.20	$	140,000	$	4,802	$	135,198
July 2011 Note		125,000		10.0	%	07/28/2014	$	1.08		125,000		9,972		115,028
June 2012 Note		2,210,000		8.0	%	03/27/2015	$	0.35		1,754,210		330,577		1,423,633
Total	$	2,475,000							$	2,019,210	$	345,351	$	1,673,859

(1)	The outstanding principal balance of the June 2011 Note and the July 2011 Note may be converted, at the option of Mr. Gray, into shares of common stock at a fixed conversion price of $1.20 per share and $1.08 per share, respectively.
(2)	The outstanding principal balance of the June 2012 Note may be converted, at the option of Inter-Mountain, into shares of common stock at a conversion price of $0.35 per share, subject to certain pricing adjustments and ownership limitations.

The amount of interest cost recognized from our convertible notes outstanding was $45,228 and $6,535 for the three months ended March 31, 2013 and 2012, respectively.

The future minimum payments relating to our convertible notes payable, as of March 31, 2013, are as follows:

	Payments Due By Period
Transaction	Total		2013 (Nine Months)		2014		2015		2016		2017
June 2011 Note	$	140,000	$	---	$	140,000	$	---	$	---	$	---
July 2011 Note		125,000		---		125,000		---		---		---
June 2012 Note		1,754,210		877,538		876,672		---		---		---
Total	$	2,019,210	$	877,538	$	1,141,672	$	---	$	---	$	---

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NOTE 12. EQUITY TRANSACTIONS

Common Stock Transactions

On March 14, 2013, we entered into a Securities Purchase Agreement (the “March SPA”) with Kerry P. Gray, the Company’s Chairman, President, and Chief Executive Officer and Terrance K. Wallberg, the Company’s Vice President and Chief Financial Officer (collectively, the “Investors”) relating to an equity investment of $440,000 by the Investors for 1,100,000 shares of our common stock, par value $0.001 per share (the “March Shares”) and warrants to purchase up to 660,000 shares of our common stock (the “March Warrants”) (the “March 2013 Offering”).  Under the March SPA, the purchase and sale of the March Shares and March Warrants will take place at four closings over the next twelve months, with $88,000 being funded at the initial closing under the March SPA, $110,000 being funded on the four-month anniversary of the initial closing, $132,000 being funded on the eight-month anniversary of the initial closing, and $110,000 being funded on the one-year anniversary of the initial closing.  The March Warrants have a fixed exercise price of $0.60 per share, become exercisable in tranches on each of the four funding dates, and expire on the five-year anniversary of the initial closing.

On December 21, 2012, we entered into a Securities Purchase Agreement (the “SPA”) with IPMD GmbH (“IPMD”) relating to an equity investment of $2,000,000 by IPMD for 5,000,000 shares of our common stock, par value $0.001 per share (the “Shares”) and warrants to purchase up to 3,000,000 shares of our common stock (the “Warrants”) (the “January 2013 Offering”).  Under the SPA, the purchase and sale of the Shares and Warrants will take place at four closings over the next twelve months, with $400,000 being funded at the initial closing under the SPA, $500,000 being funded on the four-month anniversary of the initial closing, $600,000 being funded on the eight-month anniversary of the initial closing, and $500,000 being funded on the one-year anniversary of the initial closing.  The Warrants have a fixed exercise price of $0.60 per share, become exercisable in tranches on each of the four funding dates, and expire on the one-year anniversary of the initial closing.  In the SPA, we also agree to appoint up to two directors nominated by IPMD to serve on our Board of Directors.

On January 3, 2013, we closed the January 2013 Offering and received the initial funding tranche of $400,000 for the purchase of 1,000,000 shares of our common stock.  On May 7, 2013, we received the second funding tranche of $500,000 for the purchase of 1,250,000 shares of our common stock.

On January 17, 2013, the Board of Directors of the Company appointed Helmut Kerschbaumer and Klaus Kuehne to each serve as a director of the Company.  Messrs. Kerschbaumer and Kuehne are the designees of IPMD to serve on the Company’s Board of Directors pursuant to covenants in the SPA with IPMD.

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NOTE 13. STOCKHOLDERS’ EQUITY

Common Stock

As of March 31, 2013, we had 12,218,322 shares of common stock issued and outstanding.  We issued 2,143,874 shares of common stock for the three months ended March 31, 2013 comprised of 300 shares of common stock issued for the vesting of certain restricted stock awards, 1,000,000 shares of common stock issued to IPMD pursuant to the January 2013 Offering, 220,000 shares of common stock issued to Messrs. Gray and Wallberg pursuant to the March 2013 Offering, and 923,574 shares of common stock issued for installment payments due on the June 2012 Note with Inter-Mountain.

Preferred Stock

As of March 31, 2013, we had 65 shares of Series A preferred stock issued and outstanding.  For the three months ended March 31, 2013, we did not issue any shares of Series A preferred stock to Ironridge Global pursuant to our agreement related to the purchase of the Series A preferred stock.

Warrants

The following table summarizes the warrants outstanding and the number of shares of common stock subject to exercise as of March 31, 2013 and the changes therein during the three months then ended:

	Number of Shares of Common Stock Subject to Exercise			Weighted – Average Exercise Price
Balance as of December 31, 2012		2,041,165		$	0.98
Warrants issued		4,052,857		$	0.58
Warrants exercised		---			---
Warrants cancelled		(250,000	)	$	0.35
Balance as of March 31, 2013 (1)		5,844,022		$	0.73

(1) As part of the June 2012 Note, Inter-Mountain received a total of seven warrants to purchase, if they all vest, an aggregate of 3,142,857 shares of common stock, which number of shares could increase based upon the terms and conditions of the warrants.  The warrants have an exercise price of $0.35 per share, subject to certain pricing adjustments, and are exercisable, subject to vesting provisions and ownership limitations, until June 27, 2017.  Warrants for 785,714, 392,857, and 392,857 shares of common stock vested on June 27, 2012, December 31, 2012, and February 26, 2013, respectively, and only such shares of common stock (1,571,428 shares) have been included in this Table, based upon an exercise price of $0.35 per share of common stock.  Each of the other four warrants vest upon the payment by Inter-Mountain of each of the four remaining Investor Notes.

For the three months ended March 31, 2013, we issued warrants to purchase up to an aggregate of 4,052,857 shares of our common stock which consisted of (i) a warrant issued to IPMD pursuant to the January 2013 Offering to purchase up to an aggregate of 3,000,000 shares of our common stock at an exercise price of $0.60 per share, (ii) a warrant issued to Kerry P. Gray pursuant to the March 2013 Offering to purchase up to an aggregate of 600,000 shares of our common stock at an exercise price of $0.60 per share, (iii) a warrant issued to Terrance K. Wallberg pursuant to the March 2013 Offering to purchase up to an aggregate of 60,000 shares of our common stock at an exercise price of $0.60 per share, (iv) a warrant issued to Inter-Mountain to purchase up to an aggregate of 392,857 shares of our common stock at an exercise price of $0.35 per share.  Also occurring during the three months ended March 31, 2013 was the cancellation of a warrant issued to NUWA Group LLC to purchase up to an aggregate of 250,000 shares of our common stock at an exercise price of $0.35 per share.

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Of the warrant shares subject to exercise as of March 31, 2013, expiration of the right to exercise is as follows:

Date of Expiration	Number of Warrant Shares of Common Stock Subject to Expiration
January 3, 2014		3,000,000
July 23, 2014		69,050
May 15, 2015		357,155
June 13, 2016		35,000
July 16, 2016		116,667
July 28, 2016		34,722
June 27, 2017		1,571,428
March 14, 2018		660,000
Total		5,844,022

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NOTE 14. EARNINGS PER SHARE

Basic and Diluted Net Loss Per Share

In accordance with FASB Accounting Standards Codification (“ASC”) Topic 260, Earnings per Share, basic earnings (loss) per common share is computed by dividing net income (loss) by the weighted average number of common shares outstanding for the period.  Diluted earnings (loss) per common share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the period, increased to include potential dilutive common shares.  The effect of outstanding stock options, restricted vesting common stock, convertible debt, convertible preferred stock, and warrants, when dilutive, is reflected in diluted earnings (loss) per common share by application of the treasury stock method.  We have excluded all outstanding stock options, restricted vesting common stock, convertible debt, convertible preferred stock, and warrants from the calculation of diluted net loss per common share because all such securities are antidilutive for all periods presented.

Shares used in calculating basic and diluted net loss per common share exclude these potential common shares as of March 31, 2013 and December 31, 2012:

	March 31, 2013		December 31, 2012
Warrants to purchase common stock (1)		5,844,022		2,041,165
Stock options to purchase common stock		1,123,241		158,409
Unvested restricted common stock		---		300
Common stock issuable upon the assumed conversion of our convertible note payable from June 2012 (2)		5,012,028		5,617,974
Common stock issuable upon the assumed conversion of our convertible notes payable from June 2011 and July 2011 (3)		380,125		368,637
Common stock issuable upon the assumed conversion of our Series A preferred stock (4)		1,019,804		1,002,634
Total		13,379,220		9,189,119

(1)	As part of the June 2012 Note, Inter-Mountain received a total of seven warrants to purchase, if they all vest, an aggregate of 3,142,857 shares of common stock, which number of shares could increase based upon the terms and conditions of the warrants.  The warrants have an exercise price of $0.35 per share, subject to certain pricing adjustments, and are exercisable, subject to vesting provisions and ownership limitations, until June 27, 2017.  Warrants for 785,714, 392,857, and 392,857 shares of common stock vested on June 27, 2012, December 31, 2012, and February 26, 2013, respectively, and only such shares of common stock (1,571,428 shares) have been included in this Table, based upon an exercise price of $0.35 per share of common stock.  Each of the other four warrants vest upon the payment by Inter-Mountain of each of the four remaining Investor Notes.
(2)	The outstanding principal balance and the accrued and unpaid interest of the June 2012 Note may be converted, at the option of Inter-Mountain, into shares of common stock at a conversion price of $0.35 per share, subject to certain pricing adjustments and ownership limitations.  For the purposes of this Table, we have assumed a conversion price of $0.35 per share and no ownership limitations.
(3)	The outstanding principal balance of the June 2011 Note and the July 2011 Note may be converted, at the option of Mr. Gray, into shares of common stock at a fixed conversion price of $1.20 per share and $1.08 per share, respectively.  The accrued and unpaid interest for each convertible note payable may be converted, at the option of Mr. Gray, into shares of common stock at a conversion price based upon the average of the five trading days prior to the payment date, which for the purposes of this Table we have assumed to be March 31, 2013.
(4)	The outstanding Series A preferred stock and the accrued and unpaid dividends thereon are convertible into shares of the Company’s common stock at the Company’s option at any time after six-months from the date of issuance of the Series A preferred stock.  The conversion price for the holder is fixed at $0.70 per share with no adjustment mechanisms, resets, ratchets, or anti-dilution covenants other than the customary adjustments for stock splits.  For the purposes of this Table, we have assumed a conversion price of $0.70 per share.

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NOTE 15. SHARE BASED COMPENSATION

The Company’s share-based compensation plan, the 2006 Equity Incentive Plan (“Equity Incentive Plan”), is administered by the compensation committee of the Board of Directors (“Board”), which selects persons to receive awards and determines the number of shares subject to each award and the terms, conditions, performance measures and other provisions of the award.

Our Board granted the following incentive stock option awards to executives or employees and nonstatutory stock option awards to directors or non-employees for the three months ended March 31:

	Three Months Ended March 31,
	2013		2012
Incentive Stock Options
Quantity		232,500		---
Weighted average fair value per share	$	0.24		---
Fair value	$	56,112		---
Nonstatutory Stock Options
Quantity		735,000		---
Weighted average fair value per share	$	0.24		---
Fair value	$	177,388		---

We account for share-based compensation under FASB ASC Topic 718, Stock Compensation, which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees, consultants, and directors based on estimated fair values of the award on the grant date.  We use the Black-Scholes option-pricing model to estimate the fair value of share-based awards with the following weighted average assumptions for the three months ended March 31:

	2013			2012 (4)
Incentive Stock Options
Expected volatility  (1)		103.55	%		---
Risk-free interest rate %  (2)		0.81	%		---
Expected term (in years)		5.0			---
Dividend yield  (3)		---			---
Forfeiture rate		---			---
Nonstatutory Stock Options
Expected volatility  (1)		103.55	%		---
Risk-free interest rate %  (2)		0.81	%		---
Expected term (in years)		5.0			---
Dividend yield  (3)		---			---
Forfeiture rate		---			---

(1)	Expected volatility assumption was based upon a combination of historical stock price volatility measured on a daily basis and an estimate of expected future stock price volatility
(2)	Risk-free interest rate assumption is based upon U.S. Treasury bond interest rates appropriate for the term of the stock options.
(3)	The Company does not currently intend to pay cash dividends, thus has assumed a 0% dividend yield.
(4)	The Company did not award any shared-based compensation for the three months ended March 31, 2012.

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Stock Options (Incentive and Nonstatutory)

The following table summarizes share-based compensation related to stock options for the three months ended March 31:

	Three Months Ended March 31,
	2013		2012
Research and development	$	648	$	6,280
Selling, general and administrative		8,333		15,671
Total share-based compensation expense	$	8,981	$	21,951

At March 31, 2013, the balance of unearned share-based compensation to be expensed in future periods related to unvested stock option awards, as adjusted for expected forfeitures, is approximately $240,587.  The period over which the unearned share-based compensation is expected to be recognized is approximately three years.

The following table summarizes the stock options outstanding and the number of shares of common stock subject to exercise as of March 31, 2013 and the changes therein during the three months then ended:

	Stock Options			Weighted Average Exercise Price per Share
Outstanding as of December 31, 2012		158,409		$	12.32
Granted		967,500			0.33
Forfeited/cancelled		(2,668	)		1.80
Exercised		---			---
Outstanding as of March 31, 2013		1,123,241		$	2.02

The following table presents the stock option grants outstanding and exercisable as of March 31, 2013:

Options Outstanding						Options Exercisable
Stock Options Outstanding		Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Life in Years		Stock Options Exercisable		Weighted Average Exercise Price per Share
	967,500	$	0.33		10.0		122,500	$	0.33
	86,668		2.45		5.9		60,001		2.40
	30,002		14.40		4.0		30,002		14.40
	39,071		33.35		4.6		39,071		33.35
	1,123,241	$	2.02		9.3		251,574	$	7.63

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Restricted Stock Awards

Restricted stock awards, which typically vest over a period of two to five years, are issued to certain key employees and are subject to forfeiture until the end of an established restriction period.  We utilize the market price on the date of grant as the fair market value of restricted stock awards and expense the fair value on a straight-line basis over the vesting period.

The following table summarizes share-based compensation related to restricted stock awards for the three months ended March 31:

	Three Months Ended March 31,
	2013		2012
Research and development	$	444	$	1,594
Selling, general and administrative		547		1,118
Total share-based compensation expense	$	991	$	2,712

At March 31, 2013, the balance of unearned share-based compensation to be expensed in future periods related to restricted stock awards, as adjusted for expected forfeitures, is nil.

The following table summarizes the non-vested restricted stock awards outstanding and the number of shares of common stock subject to potential issue as of March 31, 2013 and the changes therein during the three months then ended:

	Restricted stock			Weighted Average Grant Date Fair Value
Outstanding as of December 31, 2012		300		$	34.59
Shares granted		---			---
Shares forfeited/cancelled		---			---
Shares exercised/issued		(300	)		34.59
Outstanding as of March 31, 2013		---		$	---

Summary of Plans

2006 Equity Incentive Plan

In March 2006, our Board adopted and our stockholders approved our Equity Incentive Plan, which initially provided for the issuance of up to 133,333 shares of our common stock pursuant to stock option and other equity awards.  At the annual meetings of the stockholders held on May 8, 2007, December 17, 2009, June 15, 2010, and on June 14, 2012, our stockholders approved amendments to the Equity Incentive Plan to increase the total number of shares of common stock issuable under the Equity Incentive Plan pursuant to stock options and other equity awards by 266,667 shares, 200,000 shares, 200,000 shares, and 400,000 shares, respectively, to a total of 1,200,000 shares.

In December 2006, we began issuing stock options to employees, consultants, and directors.  The stock options issued generally vest over a period of one to four years and have a maximum contractual term of ten years.  In January 2007, we began issuing restricted stock awards to our employees.  Restricted stock awards generally vest over a period of six months to five years after the date of grant.  Prior to vesting, restricted stock awards do not have dividend equivalent rights, do not have voting rights and the shares underlying the restricted stock awards are not considered issued and outstanding.  Shares of common stock are issued on the date the restricted stock awards vest.

As of March 31, 2013, we had granted options to purchase 1,376,167 shares of common stock since the inception of the Equity Incentive Plan, of which 1,123,241 were outstanding at a weighted average exercise price of $2.02 per share, and we had granted awards for 68,616 shares of restricted stock since the inception of the Equity Incentive Plan, of which none were outstanding.  As of March 31, 2013, there were 7,313 shares that remained available for future grants under our Equity Incentive Plan.

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NOTE 16. FAIR VALUE MEASUREMENTS

In accordance with ASC Topic 820, Fair Value Measurements, (“ASC Topic 820”) certain assets and liabilities of the Company are required to be recorded at fair value.  Fair value is determined based on the exchange price that would be received for an asset or paid to transfer a liability in an orderly transaction between market participants.  The guidance in ASC Topic 820 also establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimized the use of unobservable inputs by requiring that the most observable inputs be used when available.

Observable inputs are based on market data obtained from independent sources, while unobservable inputs are based on our market assumptions.  Unobservable inputs require significant management judgment or estimation.  In some cases, the inputs used to measure an asset or liability may fall into different levels of the fair value hierarchy.  In those instances, the fair value measurement is required to be classified using the lowest level of input that is significant to the fair value measurement.  Such determination requires significant management judgment.

The three-tier value hierarchy, which prioritizes the inputs used in the valuation methodologies, is as follows:

Level 1 — Valuations based on quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 — Valuations based on observable inputs other than quoted prices in Level 1, such as quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, and other inputs that are observable or can be corroborated by observable market data.

Level 3 — Valuations based on unobservable inputs reflecting the Company’s own assumptions, consistent with reasonably available assumptions made by other market participants.

Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurements.  We review the fair value hierarchy classification on a quarterly basis.  Changes in the observability of valuation inputs may result in a reclassification of levels for certain securities within the fair value hierarchy.

Our financial instruments, including cash, cash equivalents, accounts receivable, and accounts payable are carried at cost, which approximates their fair value because of the short-term maturity of these instruments.  We believe that the carrying value of our other receivable and convertible note payable balances approximates fair value based on a valuation methodology using the income approach and a discounted cash flow model.

The following table summarizes the fair value of our financial instruments at March 31, 2013 and December 31, 2012.

Description	March 31, 2013		December 31, 2012
Assets:
Notes receivable and accrued interest	$	1,061,776	$	1,302,220
Liabilities:
Convertible note – June 2011	$	135,198	$	134,154
Convertible note – July 2011	$	115,028	$	113,084
Convertible note – June 2012	$	1,423,633	$	1,593,924

NOTE 17. INCOME TAXES

There was no current federal tax provision or benefit recorded for any period since inception, nor were there any recorded deferred income tax assets, as such amounts were completely offset by valuation allowances.

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NOTE 18. COMMITMENTS AND CONTINGENCIES

Operating Leases

On January 31, 2006 we entered into a lease agreement for office and laboratory space in Addison, Texas.  The lease commenced on April 1, 2006 and continues until April 1, 2013.  The lease required a minimum monthly lease obligation of $9,330, which is inclusive of monthly operating expenses, until April 1, 2011 and at such time increased to $9,776, which is inclusive of monthly operating expenses.  On February 22, 2013, we executed an Amendment to Lease Agreement (the “Lease Amendment”) that renewed and extended our lease until March 31, 2015.  The Lease Amendment requires a minimum monthly lease obligation of $9,128, which is inclusive of monthly operating expenses, until March 31, 2014 and at such time, will increase to $9,314, which is inclusive of monthly operating expenses.  The Lease Amendment includes an option whereby we may convert the term of our lease renewal from a two year term to a five year term by providing written notice on or before October 1, 2013.  If so elected, the minimum monthly lease obligation for the remainder of the first year shall be reduced to $8,751, which is inclusive of monthly operating expenses, effective on the first day of the month following our election and the minimum monthly lease obligation shall increase annually every April 1st thereafter by $186 per month until March 31, 2018.

On December 10, 2010 we entered into a lease agreement for certain office equipment.  The lease, which commenced on February 1, 2011 and continues until February 1, 2015, requires a minimum lease obligation of $744 per month.

The future minimum lease payments under the 2013 office lease and the 2010 equipment lease are as follows as of March 31, 2013:

Calendar Years	Future Lease Expense
2013 (Nine months)	$	88,848
2014		120,136
2015		28,686
2016		---
2017		---
Total	$	237,670

Rent expense for our operating leases amounted to $25,028 and $31,969 for the three months ended March 31, 2013 and 2012, respectively.

Indemnification

In the normal course of business, we enter into contracts and agreements that contain a variety of representations and warranties and provide for general indemnifications. Our exposure under these agreements is unknown because it involves claims that may be made against us in the future, but have not yet been made. To date, we have not paid any claims or been required to defend any action related to our indemnification obligations. However, we may record charges in the future as a result of these indemnification obligations.

In accordance with our restated articles of incorporation and our amended and restated bylaws, we have indemnification obligations to our officers and directors for certain events or occurrences, subject to certain limits, while they are serving at our request in their respective capacities. There have been no claims to date and we have a director and officer insurance policy that enables us to recover a portion of any amounts paid for future potential claims. We have also entered into contractual indemnification agreements with each of our officers and directors.

Employment Agreements

As of March 31, 2013, we are party to employment agreements with our Vice President and Chief Financial Officer, Terrance K. Wallberg, and Daniel G. Moro, Vice President – Polymer Drug Delivery.  The employment agreements with Messrs. Wallberg and Moro each have a term of one year and include an automatic one-year term renewal for each year thereafter.  Each employment agreement provides for a base salary, bonus, stock options, stock grants, and eligibility for Company provided benefit programs.  Under certain circumstances, the employment agreements provide for certain severance benefits in the event of termination or a change in control.  The employment agreements also contain non-solicitation, confidentiality and non-competition covenants, and a requirement for the assignment of certain invention and intellectual property rights to the Company.

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Separation Agreement

As of March 31, 2013, we continue to be a party to a separation agreement with Kerry P. Gray, dated March 9, 2009.  Mr. Gray currently serves as our Chairman of the Board, Chairman of the Board’s Executive Committee, Chief Executive Officer, and President.  Pursuant to the terms of the separation agreement, we provide or have provided, as applicable, certain benefits to Mr. Gray, including: (i) payments totaling $400,000 during the initial 12 month period following March 9, 2009; (ii) commencing March 1, 2010 and continuing for a period of forty-eight (48) months, a payment of $12,500 per month; (iii) full acceleration of all vesting schedules for all outstanding Company stock options and shares of restricted stock of the Company held by Mr. Gray, with all such Company stock options exercisable by Mr. Gray having expired as of March 1, 2012; and (iv) for a period of twenty-four (24) months following March 9, 2009 we were required to maintain and provide coverage under Mr. Gray’s existing health coverage plan.  The separation agreement contains a mutual release of claims, certain stock lock-up provisions, and other standard provisions.

Related Party Transactions

On January 17, 2013, the Board of Directors of ULURU Inc. appointed Helmut Kerschbaumer and Klaus Kuehne to each serve as a director of the Company.  Messrs. Kerschbaumer and Kuehne currently serve as directors of Altrazeal Trading, Ltd and thereby have control of, and make investment and business decisions on behalf of Altrazeal Trading Ltd.

For the three months ended March 31, 2013 and 2012, respectively, the Company had product sales, in approximate numbers, of $71,000 and nil with Altrazeal Trading Ltd., which represented 70% and 0% of our total revenues.  As of March 31, 2013 and December 31, 2012, respectively, Altrazeal Trading Ltd had an outstanding accounts receivable, in approximate numbers, of $76,000 and $101,000, which represented 75% and 77% of our total outstanding accounts receivables.

Related Party Obligations

Since 2011, our named executive officers and certain key executives have temporarily deferred portions of their compensation as part of a plan to conserve the Company’s cash and financial resources.

The following table summarizes the compensation temporarily deferred since 2011:

Name	2013			2012		2011		Total
Kerry P. Gray (1)	$	(28,500	)	$	220,673	$	140,313	$	332,486
Terrance K. Wallberg		6,633		$	24,230	$	36,539	$	67,402
Key executives		---		$	27,253	$	20,986	$	48,239
Total	$	(21,867	)	$	272,156	$	197,838	$	448,127

(1) During 2013, Mr. Gray temporarily deferred compensation of $11,500 earned pursuant to a Separation Agreement and $52,500 for his duties as Chairman of the Executive Committee of the Company’s Board of Directors.  Mr. Gray was also repaid $92,500 of temporarily deferred compensation, of which $80,000 was used by Mr. Gray for funding required pursuant to the March 2013 Offering.

The Company’s obligation for temporarily deferred compensation was $448,127, of which $270,000 was included in accounts payable and $178,127 was included in accrued liabilities, and $469,994 of which $310,000 was included in accounts payable and $159,994 was included in accrued liabilities, as of March 31, 2013 and December 31, 2012, respectively.

Contingent Milestone Obligations

We are subject to paying Access Pharmaceuticals, Inc. (“Access”) for certain milestones based on our achievement of certain annual net sales, cumulative net sales, and/or our having reached certain defined technology milestones including licensing agreements and advancing products to clinical development.  As of March 31, 2013, the future milestone obligations that we are subject to paying Access, if the milestones related thereto are achieved, total $4,750,000.  Such milestones are based on total annual sales of 20 and 40 million dollars of certain products, annual sales of 20 million dollars of any one certain product, and cumulative sales of such products of 50 and 100 million dollars.

On March 7, 2008, we terminated the license agreement with ProStrakan Ltd. for Amlexanox-related products in the United Kingdom and Ireland.  As part of the termination, we agreed to pay ProStrakan Ltd. a royalty of 30% on any future payments received by us from a new licensee in the United Kingdom and Ireland territories, up to a maximum of $1,400,000.  On November 17, 2008, we entered into a licensing agreement for Amlexanox-related product rights to the United Kingdom and Ireland territories with MEDA AB.

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NOTE 19. LEGAL PROCEEDINGS

From time to time, we may be involved in litigation relating to claims arising out of our operations in the normal course of business. We are not currently a party to any legal proceedings, the adverse outcome of which, in management’s opinion, individually or in the aggregate, would have a material adverse effect on the results of our operations or financial position. There are no material proceedings to which any director, officer or any of our affiliates, any owner of record or beneficially of more than five percent of any class of our voting securities, or any associate of any such director, officer, our affiliates, or security holder, is a party adverse to us or our consolidated subsidiary or has a material interest adverse thereto.

NOTE 20. SUBSEQUENT EVENTS

Pursuant to the terms of five stock subscription agreements dated April 15, 2013, we will issue an aggregate of 273,750 shares of our common stock, par value $0.001 per share, related to an aggregate payment of $91,250 for consulting services provided by each of Michael J. Bakes, William E. Bowditch, Paul Sood, and Ric Zarzycki and as partial payment of temporarily deferred compensation by Daniel G. Moro, the Company’s Vice President – Polymer Drug Delivery (the “April 2013 Offering”).  Refer to Part II, Item 2 “Unregistered Sales of Equity Securities and Use of Proceeds” herein for additional information of the April 2013 Offering.

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ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

You should read the following discussion and analysis together with all financial and non-financial information appearing elsewhere in this report and with our consolidated financial statements and related notes included in our 2012 Annual Report on Form 10-K, referred to as our 2012 Form 10-K, which has been previously filed with the Securities and Exchange Commission on March 29, 2013, including the risk factors set forth therein.  In addition to historical information, the following discussion and other parts of this report contain forward-looking information that involve risks and uncertainties, including the statement that our cash and cash equivalents are sufficient to fund our operations and capital expenditures through 2013 and beyond.  Our actual results could differ materially from those anticipated by such forward-looking information due to competitive factors and other risks discussed in our 2012 Form 10-K under “Risks Associated with our Business”.

Business Overview

ULURU Inc. (hereinafter “we”, “our”, “us”, “ULURU”, or the “Company”) is a Nevada corporation.  We are a diversified specialty pharmaceutical company committed to developing and commercializing a broad range of innovative wound care and muco-adhesive film products based on our patented Nanoflex® and OraDiscTM drug delivery technologies, with the goal of improving outcomes for patients, health care professionals, and health care payers.

Our strategy is twofold:

§	Establish the foundation for a market leadership position in wound management by developing and commercializing a customer focused portfolio of innovative wound care products based on the Nanoflex® technology to treat the various phases of wound healing; and
§	Develop our oral-transmucosal technology (OraDiscTM) and generate revenues through multiple licensing agreements.

Utilizing our technologies, three of our products have been approved for marketing in various global markets.  In addition, numerous additional products are under development utilizing our patented Nanoflex® and OraDiscTM drug delivery technologies.

Altrazeal® Transforming Powder Dressing, based on our Nanoflex® technology, has the potential to change the way health care providers approach their treatment of wounds.  Launched domestically in September 2008 and internationally in July 2012, the product is indicated for exuding wounds such as partial thickness burns, donor sites, abrasions, surgical, acute and chronic wounds.

Aphthasol®, our Amlexanox 5% paste product is the first drug approved by the FDA for the treatment of canker sores.

OraDisc™ A was initially developed as a drug delivery system to treat canker sores with the same active ingredient (amlexanox) that is used in Aphthasol® paste. We anticipate that higher amlexanox concentrations will be achieved at the disease site, increasing the effectiveness of the product.  OraDisc™ A was approved by the FDA in September 2004.

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Recent Developments

Common Stock Transactions

Pursuant to the terms of five stock subscription agreements dated April 15, 2013, we will issue an aggregate of 273,750 shares of our common stock, par value $0.001 per share, related to an aggregate payment of $91,250 for consulting services provided by each of Michael J. Bakes, William E. Bowditch, Paul Sood, and Ric Zarzycki and as partial payment of temporarily deferred compensation by Daniel G. Moro, the Company’s Vice President – Polymer Drug Delivery (the “April 2013 Offering”).  Refer to Part II, Item 2 “Unregistered Sales of Equity Securities and Use of Proceeds” herein for additional information of the April 2013 Offering.

On March 14, 2013, we entered into entered into a Securities Purchase Agreement (the “March SPA”) with Kerry P. Gray, the Company’s Chairman, President, and Chief Executive Officer and Terrance K. Wallberg, the Company’s Vice President and Chief Financial Officer (collectively, the “Investors”) relating to an equity investment of $440,000 by the Investors for 1,100,000 shares of our common stock, par value $0.001 per share (the “March Shares”) and warrants to purchase up to 660,000 shares of our common stock (the “March Warrants”) (the “March 2013 Offering”).  Under the March SPA, the purchase and sale of the March Shares and March Warrants will take place at four closings over the next twelve months, with $88,000 being funded at the initial closing under the March SPA, $110,000 being funded on the four-month anniversary of the initial closing, $132,000 being funded on the eight-month anniversary of the initial closing, and $110,000 being funded on the one-year anniversary of the initial closing.  The March Warrants have a fixed exercise price of $0.60 per share, become exercisable in tranches on each of the four funding dates, and expire on the five-year anniversary of the initial closing.

On December 21, 2012, we entered into a Securities Purchase Agreement (the “SPA”) with IPMD GmbH (“IPMD”) relating to an equity investment of $2,000,000 by IPMD for 5,000,000 shares of our common stock, par value $0.001 per share (the “Shares”) and warrants to purchase up to 3,000,000 shares of our common stock (the “Warrants”) (the “January 2013 Offering”).  Under the SPA, the purchase and sale of the Shares and Warrants will take place at four closings over approximately twelve months.  The first two closings have occurred, with 1,000,000 Shares being purchased for $400,000 on January 3, 2013 and 1,250,000 Shares being purchased for $500,000 on May 7, 2013.  Subsequent closings of 1,500,000 Shares for $600,000 and 1,250,000 Shares for $500,000 are scheduled on September 3, 2013 and January 3, 2014, respectively.  The Warrants have a fixed exercise price of $0.60 per share, become exercisable in tranches on each of the four funding dates, and expire on the one-year anniversary of the initial closing.  The Warrants have vested with respect to 1,350,000 shares of Common Stock and, provided that IPMD complies with its obligation to purchase additional shares of Common Stock at the two subsequent closings, will vest with respect to 900,000 shares of Common Stock on September 3, 2013 and 750,000 shares of Common Stock on January 3, 2014, assuming each of the closings scheduled on such date occurs.  In the SPA, we also agreed to appoint up to two directors nominated by IPMD to serve on our Board of Directors.

Board of Director Appointments

On January 17, 2013, the Board of Directors of ULURU Inc. appointed Helmut Kerschbaumer and Klaus Kuehne to each serve as a director of the Company.  Messrs. Kerschbaumer and Kuehne are the designees of IPMD to serve on the Company’s Board of Directors pursuant to covenants in the SPA with IPMD, dated December 21, 2012.

Operating Lease

In February 2013, we executed an Amendment to Lease Agreement (the “Lease Amendment”) that renewed and extended our lease until March 31, 2015.  The Lease Amendment requires a minimum monthly lease obligation of $9,128, which is inclusive of monthly operating expenses, until March 31, 2014 and at such time will increase to $9,314, which is inclusive of monthly operating expenses.  The Lease Amendment includes an option whereby we may convert the term of our lease renewal from a two year term to a five year term by providing written notice on or before October 1, 2013.  If we so elect, the minimum monthly lease obligation for the remainder of the first year shall be reduced to $8,751, which is inclusive of monthly operating expenses, effective on the first day of the month following our election and the minimum monthly lease obligation shall increase annually every April 1st thereafter by $186 per month until March 31, 2018.

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RESULTS OF OPERATIONS

Fluctuations in Operating Results

Our results of operations have fluctuated significantly from period to period in the past and are likely to continue to do so in the future. We anticipate that our quarterly and annual results of operations will be impacted for the foreseeable future by several factors, including the timing and amount of payments received pursuant to our current and future collaborations, and the progress and timing of expenditures related to our development and commercialization efforts. Due to these fluctuations, we believe that the period-to-period comparisons of our operating results may not be a good indication of our future performance.

Comparison of the three months ended March 31, 2013 and 2012

Total Revenues

Revenues were approximately $102,000 for the three months ended March 31, 2013, as compared to revenues of approximately $60,000 for the three months ended March 31, 2012, and were comprised of licensing fees of approximately $11,000 from Altrazeal® and OraDisc™ licensing agreements and product sales of approximately $91,000 for Altrazeal®.

The first quarter 2013 revenues represent an overall increase of approximately $42,000 versus the comparative first quarter 2012 revenues.  The increase in revenues is primarily attributable to, in approximate numbers, an increase of $55,000 in Altrazeal® product sales and an increase of $3,000 in Altrazeal® licensing fees.  These revenue increases were partially offset by a decrease of $16,000 in royalties related to the domestic sale of Aphthasol®.

Costs and Expenses

Cost of Goods Sold

Cost of goods sold for the three months ended March 31, 2013 was approximately $41,000 and was comprised entirely of costs associated with Altrazeal®.  Cost of goods sold for the three months ended March 31, 2012 was approximately $17,000 and was comprised entirely of costs associated with Altrazeal®.

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Research and Development

Research and development expenses totaled approximately $165,000 for the three months ended March 31, 2013, including $1,000 in share-based compensation, compared to approximately $193,000 for the three months ended March 31, 2012, which included $8,000 in share-based compensation.  The decrease of approximately $28,000 in research and development expenses was primarily due to, in approximate numbers, a $61,000 decrease in scientific compensation related to share-based compensation and a lower head count, a decrease of $20,000 in clinical study costs, and a $6,000 decrease in regulatory costs.  These expense decreases were partially offset by an increase of $59,000 in direct research costs related to Altrazeal®.

The direct research and development expenses for the three months ended March 31, 2013 and 2012 were, in approximate numbers, as follows:

	Three Months Ended March 31,
Technology	2013		2012
Wound care & nanoparticle	$	70,000	$	9,000
OraDisc™		3,000		4,000
Aphthasol® & other technologies		---		1,000
Total	$	73,000	$	14,000

Selling, General and Administrative

Selling, general and administrative expenses totaled approximately $261,000 for the three months ended March 31, 2013, including $9,000 in share-based compensation, compared to approximately $476,000 for the three months ended March 31, 2012, which included $17,000 in share-based compensation.

The decrease of approximately $216,000 in selling, general and administrative expenses was primarily due to, in approximate numbers, a $111,000 decrease in sales & marketing costs due to a revised sales and marketing plan and a lower head count, a $28,000 decrease in bad debt expenses, a $21,000 decrease in insurance costs, a $21,000 decrease in investor relations consulting, a $19,000 decrease in consulting costs related to XBRL reporting, a $9,000 decrease in accounting fees associated with our annual audit, a $8,000 decrease in legal costs related to our patents, a $6,000 decrease in compensation costs due to reduced share-based compensation, a $4,000 decrease in fees associated with listing exchange fees, a $4,000 decrease in occupancy costs, a $4,000 decrease due to reduced corporate travel, a $2,000 decrease in costs for director fees, and a $2,000 decrease in operating costs.  These expense decreases were partially offset by, in approximate numbers, a $15,000 increase in legal fees related to a licensing agreement dispute, and an $8,000 increase in consulting fees related to licensing agreement procurement.

Amortization of Intangible Assets

Amortization of intangible assets expense totaled approximately $117,000 for the three months ended March 31, 2013 as compared to approximately $118,000 for the three months ended March 31, 2012.  The expense for each period consists primarily of amortization associated with our acquired patents.  There were no additional purchases of patents during the three months ended March 31, 2013 and 2012, respectively.

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Depreciation

Depreciation expense totaled approximately $65,000 for the three months ended March 31, 2013 as compared to approximately $75,000 for the three months ended March 31, 2012.  The decrease of approximately $10,000 is attributable to certain equipment being fully depreciated.

Interest and Miscellaneous Income

Interest and miscellaneous income totaled approximately $22,000 for the three months ended March 31, 2013 as compared to approximately $2,000 for the three months ended March 31, 2012.  The increase of approximately $20,000 is attributable to an increase in interest income resulting from interest recognized from the outstanding notes receivable from Inter-Mountain.

Interest Expense

Interest expense totaled approximately $132,000 for the three months ended March 31, 2013 as compared to approximately $25,000 for the three months ended March 31, 2012.  Interest expense is comprised of financing costs for our insurance policies, interest costs related to regulatory fees, and interest costs and amortization of debt discount and financing costs related to our convertible debt.  The increase of approximately $107,000 is primarily attributable to costs associated with our convertible debt and interest costs relating to regulatory fees.

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LIQUIDITY AND CAPITAL RESOURCES

We have funded our operations primarily through the public and private sales of convertible debentures and common stock.  Product sales, royalty payments, contract research, licensing fees and milestone payments from our corporate alliances have provided, and are expected in the future to provide, funding for operations. Our principal source of liquidity is cash and cash equivalents.  As of March 31, 2013 our cash and cash equivalents were approximately $6,000 which is a decrease of approximately $16,000 as compared to our cash and cash equivalents at December 31, 2012 of approximately $22,000.  Our working capital (current assets less current liabilities) was approximately $(2,507,000) at March 31, 2013 as compared to our working capital at December 31, 2012 of approximately $(2,774,000).

Consolidated Cash Flow Data

	Three Months Ended March 31,
Net Cash Provided by (Used in)	2013			2012
Operating activities	$	(497,000	)	$	(313,000	)
Investing activities		---			220,000
Financing activities		481,000			305,000
Net Increase (Decrease) in cash and cash equivalents	$	(16,000	)	$	212,000

Operating Activities

For the three months ended March 31, 2013, net cash used in operating activities was approximately $497,000.  The principal components of net cash used for the three months ended March 31, 2013 were, in approximate numbers, our net loss of $656,000, a decrease of $437,000 in accounts payable due to timing of vendor payments, a decrease in deferred revenues of $11,000 due to amortization of revenues, and the cancellation of a warrant issued for service for $49,000.  Our net loss for the three months ended March 31, 2013 included substantial non-cash charges of approximately $294,000 in the form of share-based compensation, amortization of patents, depreciation, amortization of debt discount, amortization of deferred financings costs, and interest due on convertible notes settled with common stock.  The aforementioned net cash used for the three months ended March 31, 2012 was partially offset by, in approximate numbers, a decrease in notes receivable of $241,000 due to remittance of an Investor Note by Inter-Mountain, a decrease in prepaid expenses of $59,000 due to amortization of expenses, a decrease in receivables of $27,000 due to collection activities, a decrease in inventory of $21,000 related to product sales, an increase in accrued interest of $7,000 related to our convertible debt, and an increase in accrued liabilities of $7,000.

For the three months ended March 31, 2012, net cash used in operating activities was approximately $313,000.  The principal components of net cash used for the three months ended March 31, 2012 were, in approximate numbers, our net loss of $843,000, an increase of $31,000 in prepaid expenses, a decrease of $13,000 in accounts payable due to timing of vendor payments, and a decrease in accrued expenses of $61,000.  Our net loss for the three months ended March 31, 2012 included substantial non-cash charges of approximately $352,000 in the form of share-based compensation, amortization of patents, depreciation, debt discount, and common stock issued for services.  The aforementioned net cash used for the three months ended March 31, 2012 was partially offset by, in approximate numbers, an increase in deferred revenue of $217,000, a decrease in receivables of $36,000 due to collection activities, a decrease in inventory of $23,000, and an increase in accrued interest of $7,000 related to our convertible debt,

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Investing Activities

There were no investing activities for the three months ended March 31, 2013.

Net cash provided by investing activities for the three months ended March 31, 2012 was $220,000 and relates to the fourth and final payment from the divestiture of our Zindaclin® intangible asset.

Financing Activities

Net cash provided by financing activities for the three month ended March 31, 2013 was approximately $481,000 and was comprised of approximately $395,000 from the sale of common stock and warrants pursuant to the January 2013 Offering and approximately $86,000 from the sale of common stock and warrants pursuant to the March 2013 Offering.

Net cash provided by financing activities for the three months ended March 31, 2012 was approximately $305,000 and was comprised of approximately $276,000 from the net proceeds of our sale of preferred stock in January 2012 and approximately $29,000 from a decrease in the estimate of offering costs associated with the sale of preferred stock in 2011.

Liquidity

As of April 30, 2013, we had cash and cash equivalents of approximately $16,000.  We expect to use our cash, cash equivalents, and investments on working capital, general corporate purposes, property and equipment, and the payment of contractual obligations.  Our long-term liquidity will depend to a great extent on our ability to fully commercialize our Altrazeal® and OraDisc™ technologies; therefore we are continuing to look both domestically and internationally for opportunities that will enable us to expand our business.  At this time, we cannot accurately predict the effect of certain developments on the rate of sales growth, if any, during 2013 and beyond, such as the speed and degree of market acceptance, patent protection and exclusivity of our products, the impact of competition, the effectiveness of our sales and marketing efforts, and the outcome of our current efforts to develop, receive approval for, and successfully launch our near-term product candidates.

Based on our existing liquidity, the expected level of operating expenses, projected sales of our existing products combined with other revenues, proceeds from the convertible debt transaction in June 2012, proceeds from the January 2013 Offering, and proceeds from the March 2013 Offering, we believe these factors will provide us with adequate financial resources to continue to fund our business plan and meet our operating requirements through 2013 and beyond.  We do not expect any material changes in our capital expenditure spending during 2013.  However, we cannot be sure that revenues or proceeds from capital transactions will reach anticipated levels.

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As we continue to expend funds to advance our business plan, there can be no assurance that changes in our development plans, capital expenditures or other events affecting our operations will not result in the earlier depletion of our funds.  In appropriate situations, we may seek financial assistance from other sources, including contribution by others to joint ventures and other collaborative or licensing arrangements for the development, testing, manufacturing and marketing of products under development.  Additionally, we may explore alternative financing sources for our business activities, including the possibility of loans and public and/or private offerings of debt and equity securities.  Other than outstanding Investor Notes from Inter-Mountain, proceeds from the January 2013 Offering, and proceeds from the March 2013 Offering, we have no agreements with respect to our potential receipt of additional capital.  We cannot be certain that necessary funding will be available on terms acceptable to us, or at all.

Our future capital requirements and adequacy of available funds will depend on many factors including:

§	our ability to successfully commercialize our wound management and burn care products and the market acceptance of these products;
§	our ability to establish and maintain collaborative arrangements with corporate partners for the development and commercialization of certain product opportunities;
§	continued scientific progress in our development programs;
§	the costs involved in filing, prosecuting and enforcing patent claims;
§	competing technological developments; and
§	the cost of manufacturing and production scale-up.

Contractual Obligations

The following table summarizes our outstanding contractual cash obligations as of December 31, 2012, which consists of a lease agreement for office and laboratory space in Addison, Texas which commenced on April 1, 2006, a lease agreement for office equipment, a separation agreement with our current chief executive officer, Kerry P. Gray, and the principal balance due for our three convertible note agreements.  These obligations and commitments assume non-termination of agreements and represent expected payments based on current operating forecasts, which are subject to change:

	Payments Due By Period
Contractual Obligations	Total		Less Than 1 Year		1-2 Years		3-5 Years		After 5 Years
Operating leases	$	237,670	$	118,463	$	119,207	$	---	$	---
Separation agreement		199,986		199,986		---		---		---
Convertible notes		2,058,802		1,183,235		875,567		---		---
Total contractual cash obligations	$	2,496,458	$	1,501,684	$	994,774	$	---	$	---

Capital Expenditures

Our expenditures for property, equipment, and leasehold improved were nil for the three months ended March 31, 2013 and 2012, respectively.  At this time, we believe that our capital expenditures for the remainder of 2013 will be approximately $60,000 and consist of equipment related to the manufacture of our products.

Off-Balance Sheet Arrangements

As of March 31, 2013, we did not have any off balance sheet arrangements.

Impact of Inflation

We have experienced only moderate price increases over the last three fiscal years under our agreements with third-party manufacturers as a result of raw material and labor price increases.  However, there can be no assurance that possible future inflation would not impact our operations.

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CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Management’s Discussion and Analysis of Financial Condition and Results of Operations addresses our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information. The preparation of our financial statements requires that we make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, we evaluate these estimates and judgments. We base our estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.  Our critical accounting policies are summarized in our Annual Report on Form 10-K for the year ended December 31, 2012 as filed with the Securities and Exchange Commission on March 29, 2013.  We had no significant changes in our critical accounting policies since our last annual report.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This quarterly report on Form 10-Q (including documents incorporated by reference) and other written and oral statements the Company makes from time to time contain certain “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. You can identify these forward-looking statements by the fact they use words such as “should”, “expect”, “anticipate”, “estimate”, “will”, “target”, “may”, “project”, “guidance”, “intend”, “plan”, “believe” and other words and terms of similar meaning and expression in connection with any discussion of future operating or financial performance. One can also identify forward-looking statements by the fact that they do not relate strictly to historical or current facts.  Such forward-looking statements are based on current expectations and involve inherent risks and uncertainties, including factors that could delay, divert or change any of them, and could cause actual outcomes to differ materially from current expectations. These statements include, among other things, statements regarding the Company’s expected cash and cash equivalents and working capital being sufficient to fund our operations and capital expenditure requirements through 2013 and beyond, and other statements, including the Company’s goals, plans and projections regarding its financial position, results of operations, cash flows, market position, product development, product approvals, sales efforts, expenses, performance or results of current and anticipated products and the outcome of contingencies such as legal proceedings, and financial results, which are based on current expectations that involve inherent risks and uncertainties, including internal or external factors that could delay, divert or change any of them in the next several years.  The Company has included important factors in the cautionary statements included in its 2012 Annual Report on Form 10-K, particularly under “Risk Associated with our Business” that the Company believes could cause actual results to differ materially from any forward-looking statement.

Although the Company believes it has been prudent in its plans and assumptions, no assurance can be given that any goal or plan set forth in forward-looking statements can be achieved and readers are cautioned not to place undue reliance on such statements, which speak only as of the date made.  The Company undertakes no obligation to release publicly any revisions to forward-looking statements as a result of new information, future events or otherwise.

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ITEM 3. Quantitative and Qualitative Disclosures About Market Risk.

Concentrations of Credit Risk

Concentration of credit risk with respect to financial instruments, consisting primarily of cash and cash equivalents, potentially expose us to concentrations of credit risk due to the use of a limited number of banking institutions and due to maintaining cash balances in banks, which, at times, may exceed the limits of amounts insured by the Federal Deposit Insurance Corporation.  Currently, we utilized Bank of America, N.A. and Bank of America Investment Services, Inc. as our banking institutions.  At March 31, 2013 and December 31, 2012 our cash and cash equivalents totaled $5,913 and $21,549, respectively.  We also invest cash in excess of immediate requirements in money market accounts, certificates of deposit, corporate commercial paper with high quality ratings, and U.S. government securities.  These investments are not held for trading or other speculative purposes.  We are exposed to credit risk in the event of default by these institutions.

Concentration of credit risk with respect to trade accounts receivable are customers with balances that exceed 5% of total consolidated trade accounts receivable at March 31, 2013 and at December 31, 2012.  As of March 31, 2013, two customers exceeded the 5% threshold, with 75% and 16%, respectively.  Two customers exceeded the 5% threshold at December 31, 2012, with 77% and 13%, respectively.  To reduce risk, we routinely assess the financial strength of our most significant customers and monitor the amounts owed to us, taking appropriate action when necessary.  As a result, we believe that accounts receivable credit risk exposure is limited.  We maintain an allowance for doubtful accounts, but historically have not experienced any significant losses related to an individual customer or group of customers.

Concentrations of Foreign Currency Risk

Currently, a portion of our revenue and all of our expenses are denominated in U.S. dollars, although we are recently experiencing an increase in revenues in international territories denominated in a foreign currency.  Certain of our licensing and distribution agreements in international territories are denominated in Euros.  Currently, we do not employ forward contracts or other financial instruments to mitigate foreign currency risk.  As our international operations continue to grow, we may engage in hedging activities to hedge our exposure to foreign currency risk.

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ITEM 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures.

Our chief executive officer and our chief financial officer, after evaluating the effectiveness of our “disclosure controls and procedures” (as defined in Rule 13a-15(e) and Rule 15d015(e) of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this quarterly report, concluded that our disclosure controls and procedures were (1) designed to ensure that material information relating to us, including our consolidated subsidiaries, is made known to our chief executive officer and chief financial officer by others within the Company, particularly during the period in which this report was being prepared, and (2) effective, in that they provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

Changes in Internal Controls.

There were no changes in our internal controls over financial reporting during the quarter ended March 31, 2013 that have materially affected, or are reasonably likely to material affect, our internal controls over financial reporting.

PART II - OTHER INFORMATION

ITEM 1.  Legal Proceedings.

From time to time, we may be involved in litigation relating to claims arising out of our operations in the normal course of business. We are not currently a party to any legal proceedings, the adverse outcome of which, in management’s opinion, individually or in the aggregate, would have a material adverse effect on the results of our operations or financial position. There are no material proceedings to which any director, officer or any of our affiliates, any owner of record or beneficially of more than five percent of any class of our voting securities, or any associate of any such director, officer, our affiliates, or security holder, is a party adverse to us or our consolidated subsidiary or has a material interest adverse thereto.

ITEM 1A.  Risk Factors.

This item is not applicable to smaller reporting companies.  Information about certain risks associated with an investment in our common stock is found in Part I, Item 1A of our Annual Report on Form 10-K, as filed with the SEC on March 29, 2013.

- 36 -

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Set forth below is a description of unregistered sales of equity securities during the quarter ended March 31, 2013, to the extent not previously reported on a Current Report on Form 8-K.

Pursuant to the terms of five stock subscription agreements dated April 15, 2013, we will issue an aggregate of 273,750 shares of our common stock, par value $0.001 per share (the “April Shares”), related to an aggregate payment of $91,250 for consulting services provided by each of Michael J. Bakes, William E. Bowditch, Paul Sood, and Ric Zarzycki and as partial payment of temporarily deferred compensation by Daniel G. Moro, the Company’s Vice President – Polymer Drug Delivery (collectively, the “Investors”)(the “April 2013 Offering”).

On April 15, 2013, pursuant to the terms of a stock subscription agreement, we issued 84,750 shares of our common stock to Michael J. Bakes in full and final payment for $28,250 of consulting services provided to the Company.

On April 15, 2013, pursuant to the terms of a stock subscription agreement, we issued 30,000 shares of our common stock to William E. Bowditch in full and final payment for $10,000 of consulting services provided to the Company.

On April 15, 2013, pursuant to the terms of a stock subscription agreement, we issued 60,000 shares of our common stock to Daniel G. Moro, the Company’s Vice President – Polymer Drug Delivery, in partial payment for $20,000 of temporarily deferred compensation from 2012 and 2011.

Pursuant to the terms of a stock subscription agreement, on June 15, 2013, we will issue 90,000 shares of our common stock to Ric Zarzycki in full and final payment for $30,000 of consulting services provided to the Company.

Pursuant to the terms of a stock subscription agreement, on July 15, 2013 we will issue 9,000 shares of our common stock to Paul Sood in full and final payment for $3,000 of consulting services provided to the Company.

The April Shares are being issued in reliance upon the exemptions for sales of securities not involving a public offering, as set forth in Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”) and/or Regulation D promulgated under the Securities Act, based upon the following: (a) each of the investors confirmed that he had such background education and experience in financial and business matters as to be able to evaluate the merits and risks of an investment in the securities; (b) there was no public offering or general solicitation with respect to the offering; (c) the investors were provided with certain disclosure materials and all other information requested with respect to the Company; (d) the investors acknowledged that the securities being purchased were “restricted securities” for purposes of the Securities Act and agreed to transfer the underlying securities only in a transaction registered under the Securities Act or exempt from registration under the Securities Act; (e) restrictive legends will be placed on the April Shares; and (f) the Company filed a Form D with respect to the April 2013 Offering.

ITEM 3. Defaults Upon Senior Securities.

None.

ITEM 4. Mine Safety Disclosures.

Not applicable.

ITEM 5. Other Information.

None.

- 37 -

ITEM 6. Exhibits.

Exhibit Number		Description
4.14		Common Stock Purchase Warrant dated March 14, 2013 by and between ULURU Inc. and Kerry P. Gray. (1)
4.15		Common Stock Purchase Warrant dated March 14, 2013 by and between ULURU Inc. and Terrance K. Wallberg. (1)
10.1		Form of Indemnification Agreement for directors. (2)
10.2		Amendment to Lease Agreement dated February 22, 2013 by and between ULURU Delaware Inc. and Addison Park Ltd. (3)
10.3		Securities Purchase Agreement dated March 14, 2013 by and ULURU Inc. and the purchasers’ party thereto. (1)
31.1	*	Certification of Principal Executive Officer of ULURU Inc. Pursuant to Rule 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Amended
31.2	*	Certification of Principal Accounting Officer of ULURU Inc. Pursuant to Rule 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Amended
32.1	**	Certification of Chief Executive Officer of ULURU Inc. 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 Chief Financial Officer of ULURU Inc. Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	***	XBRL Instance Document
101.SCH	***	XBRL Taxonomy Extension Schema Document
101.CAL	***	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	***	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	***	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	***	XBRL Taxonomy Extension Presentation Linkbase Document
---------------------------------------------------
	(1)	Incorporated by reference to the Company’s Current Report on Form 8-K filed on March 15, 2013.
	(2)	Incorporated by reference to the Company’s Current Report on Form 8-K filed on January 22, 2013.
	(3)	Incorporated by reference to the Company’s Form 10-K filed on March 29, 2013.
	*	Filed herewith.
	**	Filed herewith.  This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that Section nor shall it be deemed incorporated by reference in any filings under the Securities Act of 1933 or the Securities and Exchange Act of 1934.
	***	Pursuant to Rule 406T of Regulation S-T, the XBRL-related information in Exhibit 101 to this Quarterly Report on Form 10-Q is deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, and otherwise is not subject to liability under these sections.

- 38 -

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	ULURU Inc.
Date:  May 15, 2013	By:	/s/ Kerry P. Gray
		Kerry P. Gray
		Chief Executive Officer and President
		(Principal Executive Officer)
Date:  May 15, 2013	By:	/s/ Terrance K. Wallberg
		Terrance K. Wallberg
		Chief Financial Officer and Vice President
		(Principal Financial and Accounting Officer)

- 39 -

EX-31.1

EXHIBIT 31.1

Certification of Principal Executive Officer of ULURU Inc.

Pursuant to Rule 13a-14(a) and 15d-14(a) under

the Securities Exchange Act of 1934, as Amended

I, Kerry P. Gray, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of ULURU Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:
	(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report, based on such evaluation; and
	(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
	(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 15, 2013	/s/ Kerry P. Gray
	Kerry P. Gray
	President and Chief Executive Officer
	(Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

Certification of Principal Accounting Officer of ULURU Inc.

Pursuant to Rule 13a-14(a) and 15d-14(a) under

the Securities Exchange Act of 1934, as Amended

I, Terrance K. Wallberg, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of ULURU Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:
	(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report, based on such evaluation; and
	(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
	(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 15, 2013	/s/ Terrance K. Wallberg
	Terrance K. Wallberg
	Vice President and Chief Financial Officer
	(Principal Financial and Accounting Officer)

EX-32.1

EXHIBIT 32.1

Certification of Chief Executive Officer of ULURU Inc.

Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant

to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of ULURU Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2013, as filed with the Securities and Exchange Commission and to which this Certification is an exhibit (the “Report”), the undersigned officer of ULURU Inc. does hereby certify, pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350), that to my knowledge:

(1.)	The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2.)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

A signed original of this written statement required by Section 906 or other document authenticating, acknowledging or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

Date: May 15, 2013	/s/ Kerry P. Gray
	Kerry P. Gray
	President and Chief Executive Officer
	(Principal Executive Officer)

EX-32.2

EXHIBIT 32.2

Certification of Chief Financial Officer of ULURU Inc.

Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant

to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of ULURU Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2013, as filed with the Securities and Exchange Commission and to which this Certification is an exhibit (the “Report”), the undersigned officer of ULURU Inc. does hereby certify, pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350), that to my knowledge:

(1.)	The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2.)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

A signed original of this written statement required by Section 906 or other document authenticating, acknowledging or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

Date: May 15, 2013	/s/ Terrance K. Wallberg
	Terrance K. Wallberg
	Vice President and Chief Financial Officer
	(Principal Financial and Accounting Officer)

XML

SEGMENT INFORMATION (Details) (USD $)	3 Months Ended
	Mar. 31, 2013 Licensee Segment		Mar. 31, 2012
SEGMENT INFORMATION [Abstract]
Number of business segments	1
Number of international licensees	5
Revenues per geographic area [Abstract]
Domestic revenues	$ 19,787		$ 52,046
International revenues	82,257		7,959
Total Revenues	$ 102,044		$ 60,005
Percentage of domestic revenue (in hundredths)	19.00%		87.00%
Percentage of international revenue (in hundredths)	81.00%		13.00%
Total revenue, percentage (in hundredths)	100.00%		100.00%
Revenue, Major Customer [Line Items]
Sales from major customer, percentage (in hundredths)	75.00%		54.00%
Customer A [Member] | Altrazeal [Member]
Revenue, Major Customer [Line Items]
Sales from major customer, percentage (in hundredths)	75.00%		0.00%	[1]
Customer B [Member] | Aphthasol [Member]
Revenue, Major Customer [Line Items]
Sales from major customer, percentage (in hundredths)	0.00%		27.00%
Customer C [Member] | Altrazeal [Member]
Revenue, Major Customer [Line Items]
Sales from major customer, percentage (in hundredths)	0.00%	[1]	16.00%
Customer D [Member] | Altrazeal [Member]
Revenue, Major Customer [Line Items]
Sales from major customer, percentage (in hundredths)	0.00%	[1]	11.00%

[1] Sales from this customer were less than 10% of total sales for the period reported.

XML

COMMITMENTS AND CONTINGENCIES (Details) (USD $)	3 Months Ended				3 Months Ended						3 Months Ended															3 Months Ended			12 Months Ended			1 Months Ended	3 Months Ended	23 Months Ended	60 Months Ended	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Mar. 31, 2011	Dec. 31, 2012	Mar. 31, 2013 Access Pharmaceuticals [Member] Annual Sales, Certain Products [Member] Minimum [Member]	Mar. 31, 2013 Access Pharmaceuticals [Member] Annual Sales, Certain Products [Member] Maximum [Member]	Mar. 31, 2013 Access Pharmaceuticals [Member] Annual Sales, Any One Certain Product [Member]	Mar. 31, 2013 Access Pharmaceuticals [Member] Cumulative Sales, Certain Products [Member] Minimum [Member]	Mar. 31, 2013 Access Pharmaceuticals [Member] Cumulative Sales, Certain Products [Member] Maximum [Member]	Mar. 07, 2008 ProStrakan Ltd [Member]	Mar. 31, 2013 Kerry P. Gray [Member]		Mar. 31, 2012 Kerry P. Gray [Member]		Mar. 31, 2011 Kerry P. Gray [Member]		Mar. 31, 2013 Terrance K. Wallberg [Member]	Mar. 31, 2012 Terrance K. Wallberg [Member]	Mar. 31, 2011 Terrance K. Wallberg [Member]	Mar. 31, 2013 Key Executives [Member]	Mar. 31, 2012 Key Executives [Member]	Mar. 31, 2011 Key Executives [Member]	Mar. 31, 2013 Altrazeal Trading Ltd. [Member]	Mar. 31, 2012 Altrazeal Trading Ltd. [Member]	Dec. 31, 2012 Altrazeal Trading Ltd. [Member]	Mar. 31, 2013 Altrazeal Trading Ltd. [Member] Sales Revenue, Goods, Net [Member]	Mar. 31, 2012 Altrazeal Trading Ltd. [Member] Sales Revenue, Goods, Net [Member]	Mar. 31, 2013 Altrazeal Trading Ltd. [Member] Accounts Receivable [Member]	Dec. 31, 2012 Altrazeal Trading Ltd. [Member] Accounts Receivable [Member]	Mar. 31, 2013 Chairman, CEO and President [Member]	Mar. 09, 2009 Chairman, CEO and President [Member]	Mar. 31, 2013 Office and Laboratory Space [Member]	Mar. 31, 2013 Office and Laboratory Space [Member]	Feb. 22, 2013 Office and Laboratory Space [Member]	Mar. 31, 2011 Office and Laboratory Space [Member]	Mar. 31, 2013 Office Equipment [Member]
Operating Leased Assets [Line Items]
Minimum monthly lease obligation																																$ 9,128		$ 9,776	$ 9,330	$ 744
Future minimum monthly lease obligation after specified period																																	9,314
Minimum monthly lease obligation on exercise of option																																	8,751
Lease term																																	2 years
Amended lease term on exercise of option																																	5 years
Increase in minimum monthly lease obligation																																	186
Future minimum lease payments [Abstract]
2013 (Nine months)	88,848
2014	120,136
2015	28,686
2016	0
2017	0
Total	237,670
Rent expense for operating lease	25,028	31,969
Employment Agreements [Abstract]
Term of employment	1 year
Renewal term	1 year
Separation Agreements [Line Items]
Total separation benefit payments																															400,000
Period for separation benefit payments																														48 months	12 months
Monthly separation benefits payments																														12,500
Period for separation health coverage																															24 months
Related Party Obligations [Abstract]
Related party sales																							71,000
Accounts Receivable, Related Parties, Current																							76,000		101,000
Concentration Risk, Percentage																										70.00%	0.00%	75.00%	77.00%
Summary of compensation earned, compensation paid in cash, and compensation temporarily deferred [Abstract]
Deferred compensation liability	(21,867)	272,156	197,838								(28,500)	[1]	220,673	[1]	140,313	[1]	6,633	24,230	36,539	0	27,253	20,986
Deferred compensation	448,127			469,994							332,486	[1]					67,402			48,239
Deferred compensation liability pursuant to separation agreement											11,500
Deferred compensation liability pursuant to duties as chairman											52,500
Repayment of temporarily deferred compensation											92,500
Proceeds from issuance of common stock under March 2013 offering											80,000
Compensation accounts payable	270,000			310,000
Compensation accrued liabilities	178,127			159,994
Milestone payments [Line Items]
Future milestone obligations	4,750,000									1,400,000
Milestone for payment					$ 20,000,000	$ 40,000,000	$ 20,000,000	$ 50,000,000	$ 100,000,000
Royalty percentage (in hundredths)										30.00%

[1] During 2013, Mr. Gray temporarily deferred compensation of $11,500 earned pursuant to a Separation Agreement and $52,500 for his duties as Chairman of the Executive Committee of the Company's Board of Directors. Mr. Gray was also repaid $92,500 of temporarily deferred compensation, of which $80,000 was used by Mr. Gray for funding required pursuant to the March 2013 Offering.

XML

STOCKHOLDERS' EQUITY (Details) (USD $)	3 Months Ended																			3 Months Ended
	Mar. 31, 2013	Dec. 31, 2012	Jun. 30, 2012	Mar. 31, 2013 Kerry P. Gray [Member]	Mar. 31, 2013 Terrace K. Wallberg [Member]	Mar. 31, 2013 Inter-Mountain [Member]	Mar. 31, 2013 Warrant - June 2012 Debt Offering [Member]	Mar. 31, 2013 Warrant - June 2012 Debt Offering [Member] Private Placement [Member]	Feb. 26, 2013 Warrant - June 2012 Debt Offering [Member] Private Placement [Member]	Dec. 31, 2012 Warrant - June 2012 Debt Offering [Member] Private Placement [Member]	Jun. 27, 2012 Warrant - June 2012 Debt Offering [Member] Private Placement [Member]	Mar. 31, 2013 January 3, 2014 [Member]	Mar. 31, 2013 July 23, 2014 [Member]	Mar. 31, 2013 May 15, 2015 [Member]	Mar. 31, 2013 June 13, 2016 [Member]	Mar. 31, 2013 July 16, 2016 [Member]	Mar. 31, 2013 July 28, 2016 [Member]	Mar. 31, 2013 June 27, 2017 [Member]	Mar. 31, 2013 March 14, 2018 [Member]	Mar. 31, 2013 Series A Preferred Stock [Member]
Common Stock [Abstract]
Common Stock, shares issued (in shares)	12,218,322	10,074,448
Common Stock, shares outstanding (in shares)	12,218,322	10,074,448
Common stock issued during period (in shares)	2,143,874
Number of shares of common stock issued for vesting of restricted stock awards (in shares)	300
Number of shares of common stock issued for IPMD pursuant (in shares)	1,000,000
Number shares of common stock issued for Messrs. Grey and Wallberg (in shares)	220,000
Number shares of common stock issued for installment payments (in shares)	923,574
Preferred Stock [Abstract]
Preferred stock, shares issued (in shares)																				65
Preferred stock, shares outstanding (in shares)																				65
Number shares of series A preferred stock issued for Ironridge (in shares)																				0
Warrants and number of shares of common stock subject to exercise [Roll Forward]
Balance (in shares)	2,041,165							1,571,428	392,857	392,857	785,714	3,000,000	69,050	357,155	35,000	116,667	34,722	1,571,428	660,000
Warrants issued (in shares)	4,052,857
Warrants exercised (in shares)	0
Warrants cancelled (in shares)	(250,000)
Balance (in shares)	5,844,022							1,571,428	392,857	392,857	785,714	3,000,000	69,050	357,155	35,000	116,667	34,722	1,571,428	660,000
Warrants, weighted-average exercise price [Abstract]
Balance (in dollars per share)	$ 0.98
Warrants issued (in dollars per share)	$ 0.58
Warrants exercised (in dollars per share)	$ 0
Warrants cancelled (in dollars per share)	$ 0.35
Balance (in dollars per share)	$ 0.73
Warrant shares subject to expiration [Abstract]
Number of warrant shares of common stock subject to expiration (in shares)	5,844,022							1,571,428	392,857	392,857	785,714	3,000,000	69,050	357,155	35,000	116,667	34,722	1,571,428	660,000
Number of warrants to purchase common stock (in shares)	7		7			392,857
Aggregate shares of common stock issued upon exercise of warrants (in shares)	4,052,857			600,000	60,000		3,142,857					3,000,000
Common stock vested upon initial warrant (in shares)	5,844,022							1,571,428	392,857	392,857	785,714	3,000,000	69,050	357,155	35,000	116,667	34,722	1,571,428	660,000
Exercise price of warrants (in dollars per share)	$ 0.35		$ 0.35	$ 0.60	$ 0.60	$ 0.35	$ 0.35					$ 0.60
Number of warrants that vest upon payment of notes (in shares)	4		4

XML

LEGAL PROCEEDINGS (Details)	3 Months Ended
	Mar. 31, 2013
LEGAL PROCEEDINGS [Abstract]
Percentage of voting securities (in hundredths)	5.00%

XML

CONVERTIBLE DEBT (Details) (USD $)	3 Months Ended							3 Months Ended						3 Months Ended				3 Months Ended				6 Months Ended	12 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Jun. 30, 2012	Jul. 31, 2011	Jun. 30, 2011	Jun. 30, 2011 Warrant - June 2011 Debt Offering [Member]	Jul. 31, 2011 Warrant - July 2011 Debt Offering [Member]	Mar. 31, 2013 Warrant - June 2012 Debt Offering [Member] Warrant	Jun. 27, 2012 Warrant - June 2012 Debt Offering [Member]	Feb. 26, 2013 Common Stock [Member]	Dec. 31, 2012 Common Stock [Member]	Mar. 31, 2013 June 2011 Note [Member]	Mar. 31, 2013 July 2011 Note [Member]	Mar. 31, 2013 June 2012 Note [Member]		Dec. 31, 2012 June 2012 Note [Member]	Jun. 30, 2011 Secured convertible note [Member]	Mar. 31, 2013 Secured convertible note [Member] June 2011 Note [Member]		Mar. 31, 2013 Secured convertible note [Member] July 2011 Note [Member]		Jun. 30, 2012 Secured convertible note [Member] June 2012 Note [Member] Tranche PromissoryNote	Dec. 31, 2012 Secured convertible note [Member] June 2012 Note [Member] PromissoryNote	Mar. 31, 2013 Secured convertible note [Member] June 2012 Note [Member]	Jul. 31, 2011 Secured convertible note [Member] June 2012 Note [Member]
Debt Instrument [Line Items]
Purchase price paid in cash																							$ 500,000
Purchase price paid in the form of promissory notes																						1,500,000	1,500,000
Number of promissory notes issued under purchase agreement																						6	6
Principal amount of promissory notes																						250,000	250,000
Original issue discount reflected in purchase price																						200,000
Attorney's fees reflected in purchase price																						10,000
Amount of monthly installment																						83,333
Number of calendar days after the date of registration to commence monthly installment																						30 days
Monthly installment payment terms																						If the monthly installment is paid in common stock, such shares being issued will be based on a price that is 80% of the average of the three lowest volume weighted average prices of the shares of common stock during the preceding twenty trading days. The percentage declines to 70% if the average of the three lowest volume weighted average prices of the shares of common stock during the preceding twenty trading days is less than $0.05.
Percentage of weighted average prices of shares of common stock (in hundredths)																						80.00%
Declined percentage of weighted average prices of shares of common stock (in hundredths)																						70.00%
Preceding number of trading days to calculate weighted average common stock price																						20 days
Weighted average price of shares of common stock, Maximum (in dollars per share)																						$ 0.05
Amount convertible under initial tranche																						710,000
Number of subsequent tranches																						6
Amount of each subsequent tranche plus interest																						250,000
Percentage of outstanding principal balance prepaid in cash (in hundredths)																						120.00%
Entry amount of judgment not stayed																						100,000
Period with in which judgment not stayed																						30 days
Increased interest rate in the event of default (in hundredths)																						18.00%
Conversion number of equity instruments (in shares)																		116,667		115,741
Stock price trigger (in dollars per share)																				$ 2.16
Annual principal payment																	14,653								11,542
Information relating to convertible notes payable [Abstract]
Initial Principal Amount	2,475,000													2,210,000		2,210,000		140,000		125,000
Interest Rate (in hundredths)														8.00%				10.00%		10.00%				12.00%
Maturity Date														Mar. 27, 2015				Jun. 13, 2014		Jul. 28, 2014
Conversion Price (in dollars per share)	$ 0.70			$ 1.08	$ 1.20									$ 0.35	[1],[2]			$ 1.20	[1],[2]	$ 1.08	[1],[2]
Principal Balance	2,019,210											140,000	125,000	1,754,210
Unamortized Debt Discount	345,351											4,802	9,972	330,577
Carrying Value	1,673,859											135,198	115,028	1,423,633
Interest cost recognized	45,228	6,535
Future Minimum payments due, convertible notes [Abstract]
2013 (Nine Months)	877,538											0	0	877,538
2014	1,141,672											140,000	125,000	876,672
2015	0											0	0	0
2016	0											0	0	0
2017	0											0	0	0
Total	$ 2,019,210											$ 140,000	$ 125,000	$ 1,754,210
Class of Warrant or Right [Line Items]
Number of warrants								7
Number of securities called by warrants (in shares)	4,052,857					35,000	34,722	3,142,857
Exercise price of warrants (in dollars per share)	$ 0.35		$ 0.35			$ 1.2	$ 1.08	$ 0.35
Number of warrants that vest upon payment of notes (in shares)	4		4
Number of securities vested (in shares)									785,714	392,857	392,857

[1] The outstanding principal balance of the June 2011 Note and the July 2011 Note may be converted, at the option of Mr. Gray, into shares of common stock at a fixed conversion price of $1.20 per share and $1.08 per share, respectively.

[2] The outstanding principal balance of the June 2012 Note may be converted, at the option of Inter-Mountain, into shares of common stock at a conversion price of $0.35 per share, subject to certain pricing adjustments and ownership limitations.

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CONVERTIBLE DEBT (Tables)

3 Months Ended

Mar. 31, 2013

CONVERTIBLE DEBT [Abstract]

Information relating to convertible notes payable

Information relating to our convertible notes payable is as follows:

									As of March 31, 2013
Transaction	Initial  Principal Amount		Interest Rate			Maturity Date	Conversion Price (1)(2)		Principal Balance		Unamortized Debt Discount		Carrying Value
June 2011 Note	$	140,000		10.0	%	06/13/2014	$	1.20	$	140,000	$	4,802	$	135,198
July 2011 Note		125,000		10.0	%	07/28/2014	$	1.08		125,000		9,972		115,028
June 2012 Note		2,210,000		8.0	%	03/27/2015	$	0.35		1,754,210		330,577		1,423,633
Total	$	2,475,000							$	2,019,210	$	345,351	$	1,673,859

(1)	The outstanding principal balance of the June 2011 Note and the July 2011 Note may be converted, at the option of Mr. Gray, into shares of common stock at a fixed conversion price of $1.20 per share and $1.08 per share, respectively.
(2)	The outstanding principal balance of the June 2012 Note may be converted, at the option of Inter-Mountain, into shares of common stock at a conversion price of $0.35 per share, subject to certain pricing adjustments and ownership limitations.

Schedule of future minimum payments relating to our convertible notes payable

The future minimum payments relating to our convertible notes payable, as of March 31, 2013, are as follows:

	Payments Due By Period
Transaction	Total		2013 (Nine Months)		2014		2015		2016		2017
June 2011 Note	$	140,000	$	---	$	140,000	$	---	$	---	$	---
July 2011 Note		125,000		---		125,000		---		---		---
June 2012 Note		1,754,210		877,538		876,672		---		---		---
Total	$	2,019,210	$	877,538	$	1,141,672	$	---	$	---	$	---

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SUBSEQUENT EVENTS

3 Months Ended

Mar. 31, 2013

SUBSEQUENT EVENTS [Abstract]

SUBSEQUENT EVENTS

NOTE 20.            SUBSEQUENT EVENTS

Pursuant to the terms of five stock subscription agreements dated April 15, 2013, we will issue an aggregate of 273,750 shares of our common stock, par value $0.001 per share, related to an aggregate payment of $91,250 for consulting services provided by each of Michael J. Bakes, William E. Bowditch, Paul Sood, and Ric Zarzycki and as partial payment of temporarily deferred compensation by Daniel G. Moro, the Company's Vice President – Polymer Drug Delivery (the "April 2013 Offering").  Refer to Part II, Item 2 "Unregistered Sales of Equity Securities and Use of Proceeds" herein for additional information of the April 2013 Offering.

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SHARE BASED COMPENSATION (Details) (USD $)	0 Months Ended					3 Months Ended															3 Months Ended			3 Months Ended
	Jun. 14, 2012	Jun. 15, 2010	Dec. 17, 2009	May 08, 2007	Mar. 31, 2013	Mar. 31, 2013 Incentive Stock Options [Member]		Mar. 31, 2012 Incentive Stock Options [Member]		Mar. 31, 2013 Nonstatutory Stock Options [Member]		Mar. 31, 2012 Nonstatutory Stock Options [Member]		Mar. 31, 2013 Stock Options [Member]	Mar. 31, 2013 Restricted Stock [Member]	Mar. 31, 2013 Restricted Stock [Member] Minimum [Member]	Mar. 31, 2013 Restricted Stock [Member] Maximum [Member]	Mar. 31, 2013 2006 Equity Incentive Plan [Member]	Mar. 31, 2006 2006 Equity Incentive Plan [Member]	Mar. 31, 2013 2006 Equity Incentive Plan [Member] Stock Options [Member]	Mar. 31, 2013 2006 Equity Incentive Plan [Member] Stock Options [Member] Minimum [Member]	Mar. 31, 2013 2006 Equity Incentive Plan [Member] Stock Options [Member] Maximum [Member]	Mar. 31, 2013 2006 Equity Incentive Plan [Member] Restricted Stock [Member]	Mar. 31, 2013 2006 Equity Incentive Plan [Member] Restricted Stock [Member] Minimum [Member]	Mar. 31, 2013 2006 Equity Incentive Plan [Member] Restricted Stock [Member] Maximum [Member]
Options Granted [Abstract]
Quantity (in shares)						232,500		0		735,000		0		967,500
Weighted average fair value per share (in dollars per share)						$ 0.24		$ 0		$ 0.24		$ 0
Fair value						$ 56,112		$ 0		$ 177,388		$ 0
Weighted average assumptions to estimate the fair value of share-based awards [Abstract]
Expected volatility (in hundredths)						103.55%	[1]	0.00%	[1],[2]	103.55%	[1]	0.00%	[1],[2]
Risk-fee interest rate % (in hundredths)						0.81%	[3]	0.00%	[2],[3]	0.81%	[3]	0.00%	[2],[3]
Expected term (in years)						5 years		0 years	[2]	5 years		0 years	[2]
Dividend yield (in hundredths)						0.00%	[4]	0.00%	[2],[4]	0.00%	[4]	0.00%	[2],[4]
Forfeiture rate (in hundredths)						0.00%		0.00%	[2]	0.00%		0.00%	[2]
Options, Outstanding [Roll Forward]
Outstanding, beginning of period (in shares)														158,409
Granted (in shares)						232,500		0		735,000		0		967,500
Forfeited/cancelled (in shares)														(2,668)
Exercised (in shares)														0
Outstanding, end of period (in shares)														1,123,241
Outstanding, Weighted Average Exercise Price [Roll Forward]
Outstanding, beginning of period (in dollars per share)														$ 12.32
Granted (in dollars per share)														$ 0.33
Forfeited/cancelled (in dollars per share)														$ 1.80
Exercised (in dollars per share)														$ 0
Outstanding, end of period (in dollars per share)														$ 2.02
Nonvested restricted stock awards, Number of Shares [Roll Forward]
Outstanding, beginning of period (in shares)															300
Granted (in shares)															0
Forfeited/cancelled (in shares)															0
Exercised/issued (in shares)															(300)
Outstanding, end of period (in shares)															0
Nonvested restricted stock awards, Weighted Average Grant Date Fair Value [Roll Forward]
Outstanding, beginning of period (in dollars per share)															$ 34.59
Granted (in dollars per share)															$ 0
Forfeited/cancelled (in dollars per share)															$ 0
Exercised/issued (in dollars per share)															$ 34.59
Outstanding, end of period (in dollars per share)															$ 0
Additional disclosures [Abstract]
Vesting period																2 years	5 years				1 year	4 years		6 months	5 years
Number of shares authorized (in shares)					1,200,000														133,333
Number of additional shares authorized (in shares)	400,000	200,000	200,000	266,667
Contractual term																	10 years
Number of options granted to date (in shares)																				1,376,167
Number of restricted shares granted to date (in shares)																							68,616
Number of shares available for grant (in shares)																		7,313
Nonvested Awards, unearned share-based compensation [Abstract]
Unearned share-based compensation expense														$ 240,587
Unearned share-based compensation, recognition period														3 years

[1] Expected volatility assumption was based upon a combination of historical stock price volatility measured on a daily basis and an estimate of expected future stock price volatility

[2] The Company did not award any shared-based compensation for the three months ended March 31, 2012.

[3] Risk-free interest rate assumption is based upon U.S. Treasury bond interest rates appropriate for the term of the stock options.

[4] The Company does not currently intend to pay cash dividends, thus has assumed a 0% dividend yield.

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PROPERTY, EQUIPMENT and LEASEHOLD IMPROVEMENTS (Details) (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Dec. 31, 2012
Property, equipment and leasehold improvements, net [Abstract]
Property, equipment and leasehold improvements, gross	$ 2,212,769		$ 2,212,769
Less: accumulated depreciation and amortization	(1,432,622)		(1,367,234)
Property, equipment and leasehold improvements, net	780,147		845,535
Depreciation expense	65,388	75,261
Laboratory Equipment [Member]
Property, equipment and leasehold improvements, net [Abstract]
Property, equipment and leasehold improvements, gross	424,888		424,888
Manufacturing Equipment [Member]
Property, equipment and leasehold improvements, net [Abstract]
Property, equipment and leasehold improvements, gross	1,547,572		1,547,572
Computers, Office Equipment, and Furniture [Member]
Property, equipment and leasehold improvements, net [Abstract]
Property, equipment and leasehold improvements, gross	140,360		140,360
Computer Software [Member]
Property, equipment and leasehold improvements, net [Abstract]
Property, equipment and leasehold improvements, gross	4,108		4,108
Leasehold Improvements [Member]
Property, equipment and leasehold improvements, net [Abstract]
Property, equipment and leasehold improvements, gross	$ 95,841		$ 95,841

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FAIR VALUE MEASUREMENTS (Tables)

3 Months Ended

Mar. 31, 2013

FAIR VALUE MEASUREMENTS [Abstract]

Fair value of our financial instruments

The following table summarizes the fair value of our financial instruments at March 31, 2013 and December 31, 2012.

Description	March 31, 2013		December 31, 2012
Assets:
Notes receivable and accrued interest	$	1,061,776	$	1,302,220
Liabilities:
Convertible note – June 2011	$	135,198	$	134,154
Convertible note – July 2011	$	115,028	$	113,084
Convertible note – June 2012	$	1,423,633	$	1,593,924

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SHARE BASED COMPENSATION, Stock options grant outstanding and excercisable (Details) (USD $)	3 Months Ended
	Mar. 31, 2013
Stock option grants outstanding and exercisable [Line Items]
Stock Options Outstanding (in shares)	1,123,241
Options Outstanding, Weighted Average Exercise Price per Share (in dollars per share)	$ 2.02
Options Outstanding, Weighted Average Remaining Contractual Life in Years	9 years 3 months 18 days
Stock Options Exercisable (in shares)	251,574
Options Exercisable, Weighted Average Exercise Price per Share (in dollars per share)	$ 7.63
Exercise Price Range 1 [Member]
Stock option grants outstanding and exercisable [Line Items]
Stock Options Outstanding (in shares)	967,500
Options Outstanding, Weighted Average Exercise Price per Share (in dollars per share)	$ 0.33
Options Outstanding, Weighted Average Remaining Contractual Life in Years	10 years
Stock Options Exercisable (in shares)	122,500
Options Exercisable, Weighted Average Exercise Price per Share (in dollars per share)	$ 0.33
Exercise Price Range 2 [Member]
Stock option grants outstanding and exercisable [Line Items]
Stock Options Outstanding (in shares)	86,668
Options Outstanding, Weighted Average Exercise Price per Share (in dollars per share)	$ 2.45
Options Outstanding, Weighted Average Remaining Contractual Life in Years	5 years 10 months 24 days
Stock Options Exercisable (in shares)	60,001
Options Exercisable, Weighted Average Exercise Price per Share (in dollars per share)	$ 2.40
Exercise Price Range 3 [Member]
Stock option grants outstanding and exercisable [Line Items]
Stock Options Outstanding (in shares)	30,002
Options Outstanding, Weighted Average Exercise Price per Share (in dollars per share)	$ 14.40
Options Outstanding, Weighted Average Remaining Contractual Life in Years	4 years
Stock Options Exercisable (in shares)	30,002
Options Exercisable, Weighted Average Exercise Price per Share (in dollars per share)	$ 14.40
Exercise Price Range 4 [Member]
Stock option grants outstanding and exercisable [Line Items]
Stock Options Outstanding (in shares)	39,071
Options Outstanding, Weighted Average Exercise Price per Share (in dollars per share)	$ 33.35
Options Outstanding, Weighted Average Remaining Contractual Life in Years	4 years 7 months 6 days
Stock Options Exercisable (in shares)	39,071
Options Exercisable, Weighted Average Exercise Price per Share (in dollars per share)	$ 33.35

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EQUITY TRANSACTIONS (Details) (USD $)			1 Months Ended	3 Months Ended			3 Months Ended					12 Months Ended
	Mar. 31, 2013	Jun. 30, 2012	May 07, 2013 Common Stock [Member]	Mar. 31, 2013 Common Stock [Member]	Mar. 14, 2013 Common Stock [Member]	Dec. 31, 2012 Common Stock [Member]	Mar. 31, 2013 Common Stock [Member] March SPA [Member]	Mar. 14, 2013 Common Stock [Member] March SPA [Member]	Mar. 14, 2013 Common Stock [Member] March SPA [Member] Four-month anniversary [Member]	Mar. 14, 2013 Common Stock [Member] March SPA [Member] Eight-month anniversary [Member]	Mar. 14, 2013 Common Stock [Member] March SPA [Member] One-year anniversary [Member]	Dec. 31, 2012 Common Stock [Member] SPA [Member]	Dec. 21, 2012 Common Stock [Member] SPA [Member]	Dec. 21, 2012 Common Stock [Member] SPA [Member] Four-month anniversary [Member]	Dec. 21, 2012 Common Stock [Member] SPA [Member] Eight-month anniversary [Member]
Common Stock Transactions [Abstract]
Equity investment							$ 440,000					$ 2,000,000
Common Stock, par value (in dollars per share)	$ 0.35	$ 0.35					$ 0.001					$ 0.001
Share price (in dollars per share)								$ 0.60					$ 0.60
Issuance of shares of common stock under securities purchase agreement (in shares)							1,100,000					5,000,000
Promissory notes issued for common stock					88,000
Number of securities called by warrants (in shares)	4,052,857						660,000					3,000,000
Maximum amount of common stock purchased under common stock purchase agreement						500,000		88,000	110,000	132,000	110,000		400,000	500,000	600,000
Proceeds from offering			$ 500,000	$ 400,000
Shares purchased under stock purchased agreement			1,250,000	1,000,000

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SEGMENT INFORMATION

3 Months Ended

Mar. 31, 2013

SEGMENT INFORMATION [Abstract]

SEGMENT INFORMATION

NOTE 4.              SEGMENT INFORMATION

We operate in one business segment: the research, development and commercialization of pharmaceutical products.  Our corporate headquarters in the United States collects product sales, licensing fees, royalties, and sponsored research revenues from our arrangements with external customers and licensees.  Our entire business is managed by a single management team, which reports to the Chief Executive Officer.

Our revenues are currently derived primarily from five licensees for international activities and our domestic sales activities of Altrazeal®.

Revenues per geographic area for the three months ended March 31 are summarized as follows:

Revenues	2013		%			2012		%
Domestic	$	19,787		19	%	$	52,046		87	%
International		82,257		81	%		7,959		13	%
Total	$	102,044		100	%	$	60,005		100	%

A significant portion of our revenues are derived from a few major customers.  Customers with greater than 10% of total sales for the three months ended March 31 are represented on the following table:

Customers	Product	2013			2012
Customer A	Altrazeal®		75	%		*
Customer B	Aphthasol®		---			27	%
Customer C	Altrazeal®		*			16	%
Customer D	Altrazeal®		*			11	%
Total			75	%		54	%
* Sales from this customer were less than 10% of total sales for the period reported.

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INTANGIBLE ASSETS (Details) (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Dec. 31, 2012
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross	$ 9,625,938		$ 9,625,938
Less: accumulated amortization	(5,597,114)		(5,479,953)
Intangible assets, net	4,028,824		4,145,985
Amortization expense	117,161	118,463
Future aggregate amortization expense for intangible assets [Abstract]
2013 (Nine months)	357,987
2014	475,148
2015	475,148
2016	476,450
2017	475,148
2018 & Beyond	1,768,943
Total	4,028,824
Patents [Member] | Amlexanox (Aphthasol) [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross	2,090,000		2,090,000
Patents [Member] | Amlexanox (OraDiscA) [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross	6,873,080		6,873,080
Patents [Member] | OraDisc [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross	73,000		73,000
Patents [Member] | Hydrogel Nanoparticle Aggregate [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross	$ 589,858		$ 589,858

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PROPERTY, EQUIPMENT and LEASEHOLD IMPROVEMENTS (Tables)

3 Months Ended

Mar. 31, 2013

PROPERTY, EQUIPMENT and LEASEHOLD IMPROVEMENTS [Abstract]

Property, equipment and leasehold improvements

Property, equipment and leasehold improvements, net, consisted of the following at March 31, 2013 and December 31, 2012:

Property, equipment and leasehold improvements	March 31, 2013			December 31, 2012
Laboratory equipment	$	424,888		$	424,888
Manufacturing equipment		1,547,572			1,547,572
Computers, office equipment, and furniture		140,360			140,360
Computer software		4,108			4,108
Leasehold improvements		95,841			95,841
		2,212,769			2,212,769
Less: accumulated depreciation and amortization		( 1,432,622	)		(1,367,234	)
Property, equipment and leasehold improvements, net	$	780,147		$	845,535

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INVENTORY (Tables)

3 Months Ended

Mar. 31, 2013

INVENTORY [Abstract]

Inventory

The components of inventory, at the different stages of production, consisted of the following at March 31, 2013 and December 31, 2012:

Inventory	March 31, 2013		December 31, 2012
Finished goods	$	116,031	$	303,779
Work-in-progress		357,104		190,794
Raw materials		33,070		33,070
Total	$	506,205	$	527,643

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SUBSEQUENT EVENTS (Details) (USD $)	Mar. 31, 2013	Dec. 31, 2012	Apr. 15, 2013 Subsequent Event [Member] Issuance of Equity [Member]
Subsequent Event [Line Items]
Aggregate number of shares for which stock subscription agreements were entered into			273,750
Common Stock, par value (in dollars per share)	$ 0.001	$ 0.001	$ 0.001
Aggregate value of shares subscribed			$ 91,250

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INVESTMENTS IN UNCONSOLIDATED ENTITIES (Details) (USD $)	3 Months Ended				12 Months Ended	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Mar. 31, 2013 Minimum [Member]	Mar. 31, 2013 Maximum [Member]	Dec. 31, 2012 Altrazeal Trading Ltd. [Member]	Mar. 31, 2013 OraDisc [Member]	Dec. 31, 2012 OraDisc [Member]
Schedule Of Equity Method Investments [Line Items]
Percentage of noncontrolling interest (in hundredths)			20.00%	50.00%
Non-dilutable ownership interest (in hundredths)					25.00%		25.00%
Unrecorded profit (loss)					$ 82,740
Balance sheet [Abstract]
Total assets					415,248
Total liabilities					205,991
Total stockholders' equity					209,257
Statement of operations [Abstract]
Revenues					131,869
Net (loss)					(330,961)
Gains losses on equity method investments	$ 0	$ 0				$ 0

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INTANGIBLE ASSETS (Tables)

3 Months Ended

Mar. 31, 2013

INTANGIBLE ASSETS [Abstract]

Intangible assets

Intangible assets are comprised of patents acquired in October, 2005.  Intangible assets, net consisted of the following at March 31, 2013 and December 31, 2012:

Intangible assets	March 31, 2013			December 31, 2012
Patent - Amlexanox (Aphthasol®)	$	2,090,000		$	2,090,000
Patent - Amlexanox (OraDisc™ A)		6,873,080			6,873,080
Patent - OraDisc™		73,000			73,000
Patent - Hydrogel nanoparticle aggregate		589,858			589,858
		9,625,938			9,625,938
Less: accumulated amortization		( 5,597,114	)		(5,479,953	)
Intangible assets, net	$	4,028,824		$	4,145,985

Future aggregate amortization expense for intangible assets

The future aggregate amortization expense for intangible assets, remaining as of March 31, 2013, is as follows:

Calendar Years	Future Amortization Expense
2013 (Nine months)	$	357,987
2014		475,148
2015		475,148
2016		476,450
2017		475,148
2018 & Beyond		1,768,943
Total	$	4,028,824

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INVESTMENTS IN UNCONSOLIDATED ENTITIES (Tables)

3 Months Ended

Mar. 31, 2013

INVESTMENTS IN UNCONSOLIDATED ENTITIES [Abstract]

Summarized financial information for investment

Summarized financial information for our investment in Altrazeal Trading Ltd. assuming 100% ownership is as follows:

Altrazeal Trading Ltd.	December 31, 2012
Balance sheet
Total assets	$	415,248
Total liabilities	$	205,991
Total stockholders' equity	$	209,257
Statement of operations
Revenues	$	131,869
Net (loss)	$	(330,961	)

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THE EFFECT OF RECENTLY ISSUED ACCOUNTING STANDARDS

3 Months Ended

Mar. 31, 2013

THE EFFECT OF RECENTLY ISSUED ACCOUNTING STANDARDS [Abstract]

THE EFFECT OF RECENTLY ISSUED ACCOUNTING STANDARDS

NOTE 3.              THE EFFECT OF RECENTLY ISSUED ACCOUNTING STANDARDS

In September 2011, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2011-08, "Intangibles – Goodwill and Other (Topic 350): Testing Goodwill for Impairment" ("ASU 2011-08"). ASU 2011-08 updated guidance on the periodic testing of goodwill for impairment. This guidance will allow companies to assess qualitative factors to determine if it is more-likely-than-not that goodwill might be impaired and whether it is necessary to perform the two-step goodwill impairment test required under current accounting standards. This new guidance is effective for fiscal years beginning after December 15, 2011; however, early adoption is permitted in certain circumstances.  We adopted the provisions of ASU 2011-08 in the first quarter of 2012.  The adoption of this update does not materially impact our financial statements.

In June 2011, the FASB issued Accounting Standards Update No. 2011-05, "Comprehensive Income (Topic 220): Presentation of Comprehensive Income" ("ASU 2011-05"). ASU 2011-05 amended existing guidance by allowing only two options for presenting the components of net income and other comprehensive income: (1) in a single continuous financial statement of comprehensive income or (2) in two separate but consecutive financial statements, consisting of an income statement followed by a separate statement of other comprehensive income. Also, items that are reclassified from other comprehensive income to net income must be presented on the face of the financial statements. ASU No. 2011-05 requires retrospective application, and it is effective for fiscal years beginning after December 15, 2011.  We adopted the provisions of ASU 2011-05 in the first quarter of 2012.  The adoption of this update does not materially impact our financial statements.

In May 2011, the FASB issued Accounting Standards Update No. 2011-04, "Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs" ("ASU 2011-04"). ASU 2011-04 generally provides a uniform framework for fair value measurements and related disclosures between U.S. generally accepted accounting principles and International Financial Reporting Standards. Additional disclosure requirements in the update include: (1) for Level 3 fair value measurements, quantitative information about unobservable inputs used, a description of the valuation processes used by the entity, and a qualitative discussion about the sensitivity of the measurements to changes in the unobservable inputs; (2) for an entity's use of a nonfinancial asset that is different from the asset's highest and best use, the reason for the difference; (3) for financial instruments not measured at fair value but for which disclosure of fair value is required, the fair value hierarchy level in which the fair value measurements were determined; and (4) the disclosure of all transfers between Level 1 and Level 2 of the fair value hierarchy. ASU 2011-04 was effective for interim and annual periods beginning on or after December 15, 2011. We adopted the provisions of ASU 2011-04 in the first quarter of 2012.  The adoption of this update does not materially impact our financial statements.

There are no other new accounting pronouncements adopted or enacted during the three months ended March 31, 2013 that had, or are expected to have, a material impact on our financial statements.

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ACCRUED LIABILITIES (Tables)

3 Months Ended

Mar. 31, 2013

ACCRUED LIABILITIES [Abstract]

Accrued liabilities

Accrued liabilities consisted of the following at March 31, 2013 and December 31, 2012:

Accrued Liabilities	March 31, 2013		December 31, 2012
Accrued taxes – payroll	$	106,299	$	106,299
Accrued compensation/benefits		241,621		213,005
Accrued insurance payable		16,010		52,629
Product rebates/returns		56		81
Other		16,250		951
Total accrued liabilities	$	380,236	$	372,965

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NOTES RECEIVABLE (Details) (USD $)	0 Months Ended			6 Months Ended	12 Months Ended
	Dec. 31, 2012	Nov. 30, 2012	Oct. 05, 2012	Jun. 30, 2012 PromissoryNote	Dec. 31, 2012 PromissoryNote	Mar. 31, 2013
Information relating to convertible notes payable [Abstract]
Initial Principal Amount						$ 2,475,000
June 2012 Note [Member]
Information relating to convertible notes payable [Abstract]
Initial Principal Amount	2,210,000				2,210,000	2,210,000
Secured convertible note [Member] | June 2012 Note [Member]
Information relating to convertible notes payable [Abstract]
Purchase price paid in the form of promissory notes				1,500,000	1,500,000
Number of promissory notes issued under purchase agreement				6	6
Principal amount of promissory notes	250,000			250,000	250,000
Payment received	50,000	100,000	100,000
Notes receivable and accrued interest						1,061,776
Notes receivable						1,000,000
Accrued interest						$ 61,776

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FAIR VALUE MEASUREMENTS (Details) (USD $)	Mar. 31, 2013	Dec. 31, 2012
Assets [Abstract]
Notes receivable and accrued interest	$ 1,061,776	$ 1,302,220
Convertible note - June 2011 [Member]
Liabilities [Abstract]
Convertible note payable	135,198	134,154
Convertible note - July 2011 [Member]
Liabilities [Abstract]
Convertible note payable	115,028	113,084
Convertible note - June 2012 [Member]
Liabilities [Abstract]
Convertible note payable	$ 1,423,633	$ 1,593,924

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CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (USD $)	Mar. 31, 2013	Dec. 31, 2012
Current Assets
Cash and cash equivalents	$ 5,913	$ 21,549
Accounts receivable, net	84,541	111,898
Notes receivable and accrued interest, current portion	265,444	260,444
Inventory	506,205	527,643
Prepaid expenses and deferred charges	135,972	194,448
Total Current Assets	998,075	1,115,982
Property, Equipment and Leasehold Improvements, net	780,147	845,535
Other Assets
Intangible assets, net	4,028,824	4,145,985
Notes receivable and accrued interest, net of current portion	796,332	1,041,776
Investment in unconsolidated subsidiary	0	0
Deferred financing costs, net	141,926	160,770
Deposits	18,069	18,069
Total Other Assets	4,985,151	5,366,600
TOTAL ASSETS	6,763,373	7,328,117
Current Liabilities
Accounts payable	1,903,862	2,340,782
Accrued liabilities	380,236	372,965
Accrued interest	48,451	41,141
Convertible notes payable, net of unamortized debt discount, current portion	1,127,537	1,089,619
Deferred revenue, current portion	45,227	45,227
Total Current Liabilities	3,505,313	3,889,734
Long Term Liabilities
Convertible notes payable, net of unamortized debt discount and current portion	546,322	751,543
Deferred revenue, net of current portion	824,400	835,553
Total Long Term Liabilities	1,370,722	1,587,096
TOTAL LIABILITIES	4,876,035	5,476,830
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock - $0.001 par value; 20,000 shares authorized; Preferred Stock Series A, 1,000 shares designated; 65 and 65 shares issued and outstanding, aggregate liquidation value of $713,864 and $701,843, at March 31, 2013 and December 31, 2012, respectively	0	0
Common Stock - $0.001 par value; 200,000,000 shares authorized; 12,218,322 and 10,074,448 shares issued and outstanding at March 31, 2013 and December 31, 2012, respectively	12,218	10,075
Additional paid-in capital	52,043,033	51,336,931
Promissory notes receivable and accrued interest for common stock issuance	(988,871)	(985,287)
Accumulated (deficit)	(49,179,042)	(48,510,432)
TOTAL STOCKHOLDERS' EQUITY	1,887,338	1,851,287
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 6,763,373	$ 7,328,117

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ACCRUED LIABILITIES (Details) (USD $)	Mar. 31, 2013	Dec. 31, 2012
Accrued liabilities [Abstract]
Accrued taxes - payroll	$ 106,299	$ 106,299
Accrued compensation/benefits	241,621	213,005
Accrued insurance payable	16,010	52,629
Product rebates/returns	56	81
Other	16,250	951
Total accrued liabilities	$ 380,236	$ 372,965

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COMPANY OVERVIEW AND BASIS OF PRESENTATION

3 Months Ended

Mar. 31, 2013

COMPANY OVERVIEW AND BASIS OF PRESENTATION [Abstract]

COMPANY OVERVIEW AND BASIS OF PRESENTATION

NOTE 1.              COMPANY OVERVIEW AND BASIS OF PRESENTATION

Company Overview

ULURU Inc. (hereinafter "we", "our", "us", "ULURU", or the "Company") is a Nevada corporation.  We are a diversified specialty pharmaceutical company committed to developing and commercializing a broad range of innovative wound care and muco-adhesive film products based on our patented Nanoflex® and OraDiscTM drug delivery technologies, with the goal of improving outcomes for patients, health care professionals, and health care payers.

Basis of Presentation

In the opinion of management, the accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP") for interim financial information and with the instructions to Form 10-Q and include the accounts of ULURU Inc., a Nevada corporation, and its wholly-owned subsidiary, Uluru Delaware Inc., a Delaware corporation.  They do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the Company's financial position as of March 31, 2013 and the results of its operations for the three months ended March 31, 2013 and 2012 and cash flows for the three months ended March 31, 2013 and 2012 have been made.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, as well as disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods.  Actual results may differ from those estimates and assumptions.  These differences are usually minor and are included in our consolidated financial statements as soon as they are known.  Our estimates, judgments, and assumptions are continually evaluated based on available information and experience. Because of the use of estimates inherent in the financial reporting process, actual results could differ from those estimates.

All intercompany transactions and balances have been eliminated in consolidation.

Operating results for the three months ended March 31, 2013 are not necessarily indicative of the results that may be expected for the year ending December 31, 2013.

These condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2012, as filed with the Securities and Exchange Commission on March 29, 2013, including the risk factors set forth therein.

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EARNINGS PER SHARE (Tables)

3 Months Ended

Mar. 31, 2013

EARNINGS PER SHARE [Abstract]

Common shares excluded from calculating basic and diluted net loss per common share

Shares used in calculating basic and diluted net loss per common share exclude these potential common shares as of March 31, 2013 and December 31, 2012:

	March 31, 2013		December 31, 2012
Warrants to purchase common stock (1)		5,844,022		2,041,165
Stock options to purchase common stock		1,123,241		158,409
Unvested restricted common stock		---		300
Common stock issuable upon the assumed conversion of our convertible note payable from June 2012 (2)		5,012,028		5,617,974
Common stock issuable upon the assumed conversion of our convertible notes payable from June 2011 and July 2011 (3)		380,125		368,637
Common stock issuable upon the assumed conversion of our Series A preferred stock (4)		1,019,804		1,002,634
Total		13,379,220		9,189,119

(1)	As part of the June 2012 Note, Inter-Mountain received a total of seven warrants to purchase, if they all vest, an aggregate of 3,142,857 shares of common stock, which number of shares could increase based upon the terms and conditions of the warrants.  The warrants have an exercise price of $0.35 per share, subject to certain pricing adjustments, and are exercisable, subject to vesting provisions and ownership limitations, until June 27, 2017.  Warrants for 785,714, 392,857, and 392,857 shares of common stock vested on June 27, 2012, December 31, 2012, and February 26, 2013, respectively, and only such shares of common stock (1,571,428 shares) have been included in this Table, based upon an exercise price of $0.35 per share of common stock.  Each of the other four warrants vest upon the payment by Inter-Mountain of each of the four remaining Investor Notes.
(2)	The outstanding principal balance and the accrued and unpaid interest of the June 2012 Note may be converted, at the option of Inter-Mountain, into shares of common stock at a conversion price of $0.35 per share, subject to certain pricing adjustments and ownership limitations.  For the purposes of this Table, we have assumed a conversion price of $0.35 per share and no ownership limitations.
(3)	The outstanding principal balance of the June 2011 Note and the July 2011 Note may be converted, at the option of Mr. Gray, into shares of common stock at a fixed conversion price of $1.20 per share and $1.08 per share, respectively.  The accrued and unpaid interest for each convertible note payable may be converted, at the option of Mr. Gray, into shares of common stock at a conversion price based upon the average of the five trading days prior to the payment date, which for the purposes of this Table we have assumed to be March 31, 2013.
(4)	The outstanding Series A preferred stock and the accrued and unpaid dividends thereon are convertible into shares of the Company's common stock at the Company's option at any time after six-months from the date of issuance of the Series A preferred stock.  The conversion price for the holder is fixed at $0.70 per share with no adjustment mechanisms, resets, ratchets, or anti-dilution covenants other than the customary adjustments for stock splits.  For the purposes of this Table, we have assumed a conversion price of $0.70 per share.

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INCOME TAXES

3 Months Ended

Mar. 31, 2013

INCOME TAXES [Abstract]

INCOME TAXES

NOTE 17. INCOME TAXES

There was no current federal tax provision or benefit recorded for any period since inception, nor were there any recorded deferred income tax assets, as such amounts were completely offset by valuation allowances.

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SHARE BASED COMPENSATION (Tables)

3 Months Ended

Mar. 31, 2013

SHARE BASED COMPENSATION [Abstract]

Stock option awards granted

Our Board granted the following incentive stock option awards to executives or employees and nonstatutory stock option awards to directors or non-employees for the three months ended March 31:

	Three Months Ended March 31,
	2013		2012
Incentive Stock Options
Quantity		232,500		---
Weighted average fair value per share	$	0.24		---
Fair value	$	56,112		---
Nonstatutory Stock Options
Quantity		735,000		---
Weighted average fair value per share	$	0.24		---
Fair value	$	177,388		---

Weighted average assumptions to estimate the fair value of share based awards

We account for share-based compensation under FASB ASC Topic 718, Stock Compensation, which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees, consultants, and directors based on estimated fair values of the award on the grant date.  We use the Black-Scholes option-pricing model to estimate the fair value of share-based awards with the following weighted average assumptions for the three months ended March 31:

	2013			2012(4)
Incentive Stock Options
Expected volatility  (1)		103.55	%		---
Risk-free interest rate %  (2)		0.81	%		---
Expected term (in years)		5.0			---
Dividend yield  (3)		---			---
Forfeiture rate		---			---
Nonstatutory Stock Options
Expected volatility  (1)		103.55	%		---
Risk-free interest rate %  (2)		0.81	%		---
Expected term (in years)		5.0			---
Dividend yield  (3)		---			---
Forfeiture rate		---			---

(1)	Expected volatility assumption was based upon a combination of historical stock price volatility measured on a daily basis and an estimate of expected future stock price volatility
(2)	Risk-free interest rate assumption is based upon U.S. Treasury bond interest rates appropriate for the term of the stock options.
(3)	The Company does not currently intend to pay cash dividends, thus has assumed a 0% dividend yield.
(4)	The Company did not award any shared-based compensation for the three months ended March 31, 2012.

Allocated share-based compensation expense

The following table summarizes share-based compensation related to stock options for the three months ended March 31:

	Three Months Ended  March 31,
	2013		2012
Research and development	$	648	$	6,280
Selling, general and administrative		8,333		15,671
Total share-based compensation expense	$	8,981	$	21,951

The following table summarizes share-based compensation related to restricted stock awards for the three months ended March 31:

	Three Months Ended  March 31,
	2013	2012
Research and development	$       444	$    1,594
Selling, general and administrative	547	1,118
Total share-based compensation expense	$       991	$    2,712

Stock option activity

The following table summarizes the stock options outstanding and the number of shares of common stock subject to exercise as of March 31, 2013 and the changes therein during the three months then ended:

	Stock Options			Weighted Average Exercise Price per Share
Outstanding as of December 31, 2012		158,409		$	12.32
Granted		967,500			0.33
Forfeited/cancelled		(2,668	)		1.80
Exercised		---			---
Outstanding as of March 31, 2013		1,123,241		$	2.02

Stock option grants outstanding and exercisable

The following table presents the stock option grants outstanding and exercisable as of March 31, 2013:

Options Outstanding						Options Exercisable
Stock Options Outstanding		Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Life in Years		Stock Options Exercisable		Weighted Average Exercise Price per Share
	967,500	$	0.33		10.0		122,500	$	0.33
	86,668		2.45		5.9		60,001		2.40
	30,002		14.40		4.0		30,002		14.40
	39,071		33.35		4.6		39,071		33.35
	1,123,241	$	2.02		9.3		251,574	$	7.63

Nonvested restricted stock awards

The following table summarizes the non-vested restricted stock awards outstanding and the number of shares of common stock subject to potential issue as of March 31, 2013 and the changes therein during the three months then ended:

	Restricted stock			Weighted Average Grant Date Fair Value
Outstanding as of December 31, 2012		300		$	34.59
Shares granted		---			---
Shares forfeited/cancelled		---			---
Shares exercised/issued		(300	)		34.59
Outstanding as of March 31, 2013		---		$	---

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LEGAL PROCEEDINGS

3 Months Ended

Mar. 31, 2013

LEGAL PROCEEDINGS [Abstract]

LEGAL PROCEEDINGS

NOTE 19.            LEGAL PROCEEDINGS

From time to time, we may be involved in litigation relating to claims arising out of our operations in the normal course of business. We are not currently a party to any legal proceedings, the adverse outcome of which, in management's opinion, individually or in the aggregate, would have a material adverse effect on the results of our operations or financial position. There are no material proceedings to which any director, officer or any of our affiliates, any owner of record or beneficially of more than five percent of any class of our voting securities, or any associate of any such director, officer, our affiliates, or security holder, is a party adverse to us or our consolidated subsidiary or has a material interest adverse thereto.

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SIGNIFICANT ACCOUNTING POLICIES

3 Months Ended

Mar. 31, 2013

SIGNIFICANT ACCOUNTING POLICIES [Abstract]

SIGNIFICANT ACCOUNTING POLICIES

NOTE 2.              SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies used in preparation of these condensed consolidated financial statements for the three ended March 31, 2013 are consistent with those discussed in Note 2 to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2012, as filed with the Securities and Exchange Commission on March 29, 2013.

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CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) (USD $)	Mar. 31, 2013	Dec. 31, 2012
STOCKHOLDERS' EQUITY
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized (in shares)	20,000	20,000
Common Stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common Stock, shares authorized (in shares)	200,000,000	200,000,000
Common Stock, shares issued (in shares)	12,218,322	10,074,448
Common Stock, shares outstanding (in shares)	12,218,322	10,074,448
Series A Preferred Stock [Member]
STOCKHOLDERS' EQUITY
Shares designated to Series A (in shares)	1,000	1,000
Preferred stock, shares issued (in shares)	65	65
Preferred stock, shares outstanding (in shares)	65	65
Preferred stock, aggregate liquidation value	$ 713,864	$ 701,843

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EQUITY TRANSACTIONS

3 Months Ended

Mar. 31, 2013

EQUITY TRANSACTIONS [Abstract]

EQUITY TRANSACTIONS

NOTE 12.           EQUITY TRANSACTIONS

Common Stock Transactions

On March 14, 2013, we entered into a Securities Purchase Agreement (the "March SPA") with Kerry P. Gray, the Company's Chairman, President, and Chief Executive Officer and Terrance K. Wallberg, the Company's Vice President and Chief Financial Officer (collectively, the "Investors") relating to an equity investment of $440,000 by the Investors for 1,100,000 shares of our common stock, par value $0.001 per share (the "March Shares") and warrants to purchase up to 660,000 shares of our common stock (the "March Warrants") (the "March 2013 Offering").  Under the March SPA, the purchase and sale of the March Shares and March Warrants will take place at four closings over the next twelve months, with $88,000 being funded at the initial closing under the March SPA, $110,000 being funded on the four-month anniversary of the initial closing, $132,000 being funded on the eight-month anniversary of the initial closing, and $110,000 being funded on the one-year anniversary of the initial closing.  The March Warrants have a fixed exercise price of $0.60 per share, become exercisable in tranches on each of the four funding dates, and expire on the five-year anniversary of the initial closing.

On December 21, 2012, we entered into a Securities Purchase Agreement (the "SPA") with IPMD GmbH ("IPMD") relating to an equity investment of $2,000,000 by IPMD for 5,000,000 shares of our common stock, par value $0.001 per share (the "Shares") and warrants to purchase up to 3,000,000 shares of our common stock (the "Warrants") (the "January 2013 Offering").  Under the SPA, the purchase and sale of the Shares and Warrants will take place at four closings over the next twelve months, with $400,000 being funded at the initial closing under the SPA, $500,000 being funded on the four-month anniversary of the initial closing, $600,000 being funded on the eight-month anniversary of the initial closing, and $500,000 being funded on the one-year anniversary of the initial closing.  The Warrants have a fixed exercise price of $0.60 per share, become exercisable in tranches on each of the four funding dates, and expire on the one-year anniversary of the initial closing.  In the SPA, we also agree to appoint up to two directors nominated by IPMD to serve on our Board of Directors.

On January 3, 2013, we closed the January 2013 Offering and received the initial funding tranche of $400,000 for the purchase of 1,000,000 shares of our common stock.  On May 7, 2013, we received the second funding tranche of $500,000 for the purchase of 1,250,000 shares of our common stock.

On January 17, 2013, the Board of Directors of the Company appointed Helmut Kerschbaumer and Klaus Kuehne to each serve as a director of the Company.  Messrs. Kerschbaumer and Kuehne are the designees of IPMD to serve on the Company's Board of Directors pursuant to covenants in the SPA with IPMD.

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Document and Entity Information	3 Months Ended
	Mar. 31, 2013	May 15, 2013
Document and Entity Information [Abstract]
Entity Registrant Name	ULURU INC.
Entity Central Index Key	0001168220
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		14,199,190
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q1
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2013

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STOCKHOLDERS' EQUITY

3 Months Ended

Mar. 31, 2013

STOCKHOLDERS' EQUITY [Abstract]

STOCKHOLDERS' EQUITY

NOTE 13.            STOCKHOLDERS' EQUITY

Common Stock

As of March 31, 2013, we had 12,218,322 shares of common stock issued and outstanding.  We issued 2,143,874 shares of common stock for the three months ended March 31, 2013 comprised of 300 shares of common stock issued for the vesting of certain restricted stock awards, 1,000,000 shares of common stock issued to IPMD pursuant to the January 2013 Offering, 220,000 shares of common stock issued to Messrs. Gray and Wallberg pursuant to the March 2013 Offering, and 923,574 shares of common stock issued for installment payments due on the June 2012 Note with Inter-Mountain.

Preferred Stock

As of March 31, 2013, we had 65 shares of Series A preferred stock issued and outstanding.  For the three months ended March 31, 2013, we did not issue any shares of Series A preferred stock to Ironridge Global pursuant to our agreement related to the purchase of the Series A preferred stock.

Warrants

The following table summarizes the warrants outstanding and the number of shares of common stock subject to exercise as of March 31, 2013 and the changes therein during the three months then ended:

	Number of Shares of Common Stock Subject to Exercise			Weighted – Average Exercise Price
Balance as of December 31, 2012		2,041,165		$	0.98
Warrants issued		4,052,857		$	0.58
Warrants exercised		---			---
Warrants cancelled		(250,000	)	$	0.35
Balance as of March 31, 2013 (1)		5,844,022		$	0.73

(1) As part of the June 2012 Note, Inter-Mountain received a total of seven warrants to purchase, if they all vest, an aggregate of 3,142,857 shares of common stock, which number of shares could increase based upon the terms and conditions of the warrants.  The warrants have an exercise price of $0.35 per share, subject to certain pricing adjustments, and are exercisable, subject to vesting provisions and ownership limitations, until June 27, 2017.  Warrants for 785,714, 392,857, and 392,857 shares of common stock vested on June 27, 2012, December 31, 2012, and February 26, 2013, respectively, and only such shares of common stock (1,571,428 shares) have been included in this Table, based upon an exercise price of $0.35 per share of common stock.  Each of the other four warrants vest upon the payment by Inter-Mountain of each of the four remaining Investor Notes.

For the three months ended March 31, 2013, we issued warrants to purchase up to an aggregate of 4,052,857 shares of our common stock which consisted of (i) a warrant issued to IPMD pursuant to the January 2013 Offering to purchase up to an aggregate of 3,000,000 shares of our common stock at an exercise price of $0.60 per share, (ii) a warrant issued to Kerry P. Gray pursuant to the March 2013 Offering to purchase up to an aggregate of 600,000 shares of our common stock at an exercise price of $0.60 per share, (iii) a warrant issued to Terrance K. Wallberg pursuant to the March 2013 Offering to purchase up to an aggregate of 60,000 shares of our common stock at an exercise price of $0.60 per share, (iv) a warrant issued to Inter-Mountain to purchase up to an aggregate of 392,857 shares of our common stock at an exercise price of $0.35 per share.  Also occurring during the three months ended March 31, 2013 was the cancellation of a warrant issued to NUWA Group LLC to purchase up to an aggregate of 250,000 shares of our common stock at an exercise price of $0.35 per share.

Of the warrant shares subject to exercise as of March 31, 2013, expiration of the right to exercise is as follows:

Date of Expiration	Number of Warrant Shares of Common Stock Subject to Expiration
January 3, 2014		3,000,000
July 23, 2014		69,050
May 15, 2015		357,155
June 13, 2016		35,000
July 16, 2016		116,667
July 28, 2016		34,722
June 27, 2017		1,571,428
March 14, 2018		660,000
Total		5,844,022

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Revenues
License fees	$ 11,153	$ 7,959
Royalty income	0	16,185
Product sales, net	90,891	35,861
Total Revenues	102,044	60,005
Costs and Expenses
Cost of goods sold	40,889	16,734
Research and development	165,285	192,960
Selling, general and administrative	260,690	476,299
Amortization of intangible assets	117,161	118,463
Depreciation	65,388	75,261
Total Costs and Expenses	649,413	879,717
OPERATING (LOSS)	(547,369)	(819,712)
Other Income (Expense)
Interest and miscellaneous income	22,465	1,654
Interest expense	(131,686)	(25,351)
Equity in earnings (loss) of unconsolidated subsidiary	0	0
(LOSS) Before Income Taxes	(656,590)	(843,409)
Income taxes	0	0
NET (LOSS)	(656,590)	(843,409)
Less preferred stock dividends	(12,021)	(10,726)
NET (LOSS) Allocable to Common Stockholders	$ (668,611)	$ (854,135)
Basic and diluted net (loss) per common share (in dollars per share)	$ (0.06)	$ (0.11)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING (in shares)	11,657,123	7,962,421

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PROPERTY, EQUIPMENT and LEASEHOLD IMPROVEMENTS

3 Months Ended

Mar. 31, 2013

PROPERTY, EQUIPMENT and LEASEHOLD IMPROVEMENTS [Abstract]

PROPERTY, EQUIPMENT and LEASEHOLD IMPROVEMENTS

NOTE 7.              PROPERTY, EQUIPMENT and LEASEHOLD IMPROVEMENTS

Property, equipment and leasehold improvements, net, consisted of the following at March 31, 2013 and December 31, 2012:

Property, equipment and leasehold improvements	March 31, 2013			December 31, 2012
Laboratory equipment	$	424,888		$	424,888
Manufacturing equipment		1,547,572			1,547,572
Computers, office equipment, and furniture		140,360			140,360
Computer software		4,108			4,108
Leasehold improvements		95,841			95,841
		2,212,769			2,212,769
Less: accumulated depreciation and amortization		( 1,432,622	)		(1,367,234	)
Property, equipment and leasehold improvements, net	$	780,147		$	845,535

Depreciation expense on property, equipment and leasehold improvements was $65,388 and $75,261 for the three months ended March 31, 2013 and 2012, respectively.

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INVENTORY

3 Months Ended

Mar. 31, 2013

INVENTORY [Abstract]

INVENTORY

NOTE 6.              INVENTORY

As of March 31, 2013, our inventory was comprised of Altrazeal® finished goods, manufacturing costs incurred in the production of Altrazeal®, and raw materials.  Inventories are stated at the lower of cost (first in, first out method) or market.  We regularly review inventories on hand and write down the carrying value of our inventories for excess and potentially obsolete inventories based on historical usage and estimated future usage.  In assessing the ultimate realization of our inventories, we are required to make judgments as to future demand requirements.  As actual future demand or market conditions may vary from those projected by us, adjustment to inventories may be required.

The components of inventory, at the different stages of production, consisted of the following at March 31, 2013 and December 31, 2012:

Inventory	March 31, 2013		December 31, 2012
Finished goods	$	116,031	$	303,779
Work-in-progress		357,104		190,794
Raw materials		33,070		33,070
Total	$	506,205	$	527,643

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COMMITMENTS AND CONTINGENCIES

3 Months Ended

Mar. 31, 2013

COMMITMENTS AND CONTINGENCIES [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE 18.           COMMITMENTS AND CONTINGENCIES

Operating Leases

On January 31, 2006 we entered into a lease agreement for office and laboratory space in Addison, Texas.  The lease commenced on April 1, 2006 and continues until April 1, 2013.  The lease required a minimum monthly lease obligation of $9,330, which is inclusive of monthly operating expenses, until April 1, 2011 and at such time increased to $9,776, which is inclusive of monthly operating expenses.  On February 22, 2013, we executed an Amendment to Lease Agreement (the "Lease Amendment") that renewed and extended our lease until March 31, 2015.  The Lease Amendment requires a minimum monthly lease obligation of $9,128, which is inclusive of monthly operating expenses, until March 31, 2014 and at such time, will increase to $9,314, which is inclusive of monthly operating expenses.  The Lease Amendment includes an option whereby we may convert the term of our lease renewal from a two year term to a five year term by providing written notice on or before October 1, 2013.  If so elected, the minimum monthly lease obligation for the remainder of the first year shall be reduced to $8,751, which is inclusive of monthly operating expenses, effective on the first day of the month following our election and the minimum monthly lease obligation shall increase annually every April 1st thereafter by $186 per month until March 31, 2018.

On December 10, 2010 we entered into a lease agreement for certain office equipment.  The lease, which commenced on February 1, 2011 and continues until February 1, 2015, requires a minimum lease obligation of $744 per month.

The future minimum lease payments under the 2013 office lease and the 2010 equipment lease are as follows as of March 31, 2013:

Calendar Years	Future Lease Expense
2013 (Nine months)	$	88,848
2014		120,136
2015		28,686
2016		---
2017		---
Total	$	237,670

Rent expense for our operating leases amounted to $25,028 and $31,969 for the three months ended March 31, 2013 and 2012, respectively.

Indemnification

In the normal course of business, we enter into contracts and agreements that contain a variety of representations and warranties and provide for general indemnifications. Our exposure under these agreements is unknown because it involves claims that may be made against us in the future, but have not yet been made. To date, we have not paid any claims or been required to defend any action related to our indemnification obligations. However, we may record charges in the future as a result of these indemnification obligations.

In accordance with our restated articles of incorporation and our amended and restated bylaws, we have indemnification obligations to our officers and directors for certain events or occurrences, subject to certain limits, while they are serving at our request in their respective capacities. There have been no claims to date and we have a director and officer insurance policy that enables us to recover a portion of any amounts paid for future potential claims. We have also entered into contractual indemnification agreements with each of our officers and directors.

Employment Agreements

As of March 31, 2013, we are party to employment agreements with our Vice President and Chief Financial Officer, Terrance K. Wallberg, and Daniel G. Moro, Vice President – Polymer Drug Delivery.  The employment agreements with Messrs. Wallberg and Moro each have a term of one year and include an automatic one-year term renewal for each year thereafter.  Each employment agreement provides for a base salary, bonus, stock options, stock grants, and eligibility for Company provided benefit programs.  Under certain circumstances, the employment agreements provide for certain severance benefits in the event of termination or a change in control.  The employment agreements also contain non-solicitation, confidentiality and non-competition covenants, and a requirement for the assignment of certain invention and intellectual property rights to the Company.

Separation Agreement

As of March 31, 2013, we continue to be a party to a separation agreement with Kerry P. Gray, dated March 9, 2009.  Mr. Gray currently serves as our Chairman of the Board, Chairman of the Board's Executive Committee, Chief Executive Officer, and President.  Pursuant to the terms of the separation agreement, we provide or have provided, as applicable, certain benefits to Mr. Gray, including: (i) payments totaling $400,000 during the initial 12 month period following March 9, 2009; (ii) commencing March 1, 2010 and continuing for a period of forty-eight (48) months, a payment of $12,500 per month; (iii) full acceleration of all vesting schedules for all outstanding Company stock options and shares of restricted stock of the Company held by Mr. Gray, with all such Company stock options exercisable by Mr. Gray having expired on March 1, 2012; and (iv) for a period of twenty-four (24) months following March 9, 2009 we were required to maintain and provide coverage under Mr. Gray's existing health coverage plan.  The separation agreement contains a mutual release of claims, certain stock lock-up provisions, and other standard provisions.

Related Party Transactions

On January 17, 2013, the Board of Directors of ULURU Inc. appointed Helmut Kerschbaumer and Klaus Kuehne to each serve as a director of the Company.  Messrs. Kerschbaumer and Kuehne currently serve as directors of Altrazeal Trading, Ltd and thereby have control of, and make investment and business decisions on behalf of Altrazeal Trading Ltd.

For the three months ended March 31, 2013 and 2012, respectively, the Company had product sales, in approximate numbers, of $71,000 and nil with Altrazeal Trading Ltd., which represented 70% and 0% of our total revenues.  As of March 31, 2013 and December 31, 2012, respectively, Altrazeal Trading Ltd had an outstanding accounts receivable, in approximate numbers, of $76,000 and $101,000, which represented 75% and 77% of our total outstanding accounts receivables.

Related Party Obligations

Since 2011, our named executive officers and certain key executives have temporarily deferred portions of their compensation as part of a plan to conserve the Company's cash and financial resources.

The following table summarizes the compensation temporarily deferred since 2011:

Name	2013			2012		2011		Total
Kerry P. Gray (1)	$	(28,500	)	$	220,673	$	140,313	$	332,486
Terrance K. Wallberg		6,633		$	24,230	$	36,539	$	67,402
Key executives		---		$	27,253	$	20,986	$	48,239
Total	$	(21,867	)	$	272,156	$	197,838	$	448,127

(1) During 2013, Mr. Gray temporarily deferred compensation of $11,500 earned pursuant to a Separation Agreement and $52,500 for his duties as Chairman of the Executive Committee of the Company's Board of Directors.  Mr. Gray was also repaid $92,500 of temporarily deferred compensation, of which $80,000 was used by Mr. Gray for funding required pursuant to the March 2013 Offering.

The Company's obligation for temporarily deferred compensation was $448,127, of which $270,000 was included in accounts payable and $178,127 was included in accrued liabilities, and $469,994 of which $310,000 was included in accounts payable and $159,994 was included in accrued liabilities, as of March 31, 2013 and December 31, 2012, respectively.

Contingent Milestone Obligations

We are subject to paying Access Pharmaceuticals, Inc. ("Access") for certain milestones based on our achievement of certain annual net sales, cumulative net sales, and/or our having reached certain defined technology milestones including licensing agreements and advancing products to clinical development.  As of March 31, 2013, the future milestone obligations that we are subject to paying Access, if the milestones related thereto are achieved, total $4,750,000.  Such milestones are based on total annual sales of 20 and 40 million dollars of certain products, annual sales of 20 million dollars of any one certain product, and cumulative sales of such products of 50 and 100 million dollars.

On March 7, 2008, we terminated the license agreement with ProStrakan Ltd. for Amlexanox-related products in the United Kingdom and Ireland.  As part of the termination, we agreed to pay ProStrakan Ltd. a royalty of 30% on any future payments received by us from a new licensee in the United Kingdom and Ireland territories, up to a maximum of $1,400,000.  On November 17, 2008, we entered into a licensing agreement for Amlexanox-related product rights to the United Kingdom and Ireland territories with MEDA AB.

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EARNINGS PER SHARE

3 Months Ended

Mar. 31, 2013

EARNINGS PER SHARE [Abstract]

EARNINGS PER SHARE

NOTE 14.            EARNINGS PER SHARE

Basic and Diluted Net Loss Per Share

In accordance with FASB Accounting Standards Codification ("ASC") Topic 260, Earnings per Share, basic earnings (loss) per common share is computed by dividing net income (loss) by the weighted average number of common shares outstanding for the period.  Diluted earnings (loss) per common share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the period, increased to include potential dilutive common shares.  The effect of outstanding stock options, restricted vesting common stock, convertible debt, convertible preferred stock, and warrants, when dilutive, is reflected in diluted earnings (loss) per common share by application of the treasury stock method.  We have excluded all outstanding stock options, restricted vesting common stock, convertible debt, convertible preferred stock, and warrants from the calculation of diluted net loss per common share because all such securities are antidilutive for all periods presented.

Shares used in calculating basic and diluted net loss per common share exclude these potential common shares as of March 31, 2013 and December 31, 2012:

	March 31, 2013		December 31, 2012
Warrants to purchase common stock (1)		5,844,022		2,041,165
Stock options to purchase common stock		1,123,241		158,409
Unvested restricted common stock		---		300
Common stock issuable upon the assumed conversion of our convertible note payable from June 2012 (2)		5,012,028		5,617,974
Common stock issuable upon the assumed conversion of our convertible notes payable from June 2011 and July 2011 (3)		380,125		368,637
Common stock issuable upon the assumed conversion of our Series A preferred stock (4)		1,019,804		1,002,634
Total		13,379,220		9,189,119

(1)	As part of the June 2012 Note, Inter-Mountain received a total of seven warrants to purchase, if they all vest, an aggregate of 3,142,857 shares of common stock, which number of shares could increase based upon the terms and conditions of the warrants.  The warrants have an exercise price of $0.35 per share, subject to certain pricing adjustments, and are exercisable, subject to vesting provisions and ownership limitations, until June 27, 2017.  Warrants for 785,714, 392,857, and 392,857 shares of common stock vested on June 27, 2012, December 31, 2012, and February 26, 2013, respectively, and only such shares of common stock (1,571,428 shares) have been included in this Table, based upon an exercise price of $0.35 per share of common stock.  Each of the other four warrants vest upon the payment by Inter-Mountain of each of the four remaining Investor Notes.
(2)	The outstanding principal balance and the accrued and unpaid interest of the June 2012 Note may be converted, at the option of Inter-Mountain, into shares of common stock at a conversion price of $0.35 per share, subject to certain pricing adjustments and ownership limitations.  For the purposes of this Table, we have assumed a conversion price of $0.35 per share and no ownership limitations.
(3)	The outstanding principal balance of the June 2011 Note and the July 2011 Note may be converted, at the option of Mr. Gray, into shares of common stock at a fixed conversion price of $1.20 per share and $1.08 per share, respectively.  The accrued and unpaid interest for each convertible note payable may be converted, at the option of Mr. Gray, into shares of common stock at a conversion price based upon the average of the five trading days prior to the payment date, which for the purposes of this Table we have assumed to be March 31, 2013.
(4)	The outstanding Series A preferred stock and the accrued and unpaid dividends thereon are convertible into shares of the Company's common stock at the Company's option at any time after six-months from the date of issuance of the Series A preferred stock.  The conversion price for the holder is fixed at $0.70 per share with no adjustment mechanisms, resets, ratchets, or anti-dilution covenants other than the customary adjustments for stock splits.  For the purposes of this Table, we have assumed a conversion price of $0.70 per share.

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ACCRUED LIABILITIES

3 Months Ended

Mar. 31, 2013

ACCRUED LIABILITIES [Abstract]

ACCRUED LIABILITIES

NOTE 10.           ACCRUED LIABILITIES

Accrued liabilities consisted of the following at March 31, 2013 and December 31, 2012:

Accrued Liabilities	March 31, 2013		December 31, 2012
Accrued taxes – payroll	$	106,299	$	106,299
Accrued compensation/benefits		241,621		213,005
Accrued insurance payable		16,010		52,629
Product rebates/returns		56		81
Other		16,250		951
Total accrued liabilities	$	380,236	$	372,965

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INTANGIBLE ASSETS

3 Months Ended

Mar. 31, 2013

INTANGIBLE ASSETS [Abstract]

INTANGIBLE ASSETS

NOTE 8.              INTANGIBLE ASSETS

Intangible assets are comprised of patents acquired in October, 2005.  Intangible assets, net consisted of the following at March 31, 2013 and December 31, 2012:

Intangible assets	March 31, 2013			December 31, 2012
Patent - Amlexanox (Aphthasol®)	$	2,090,000		$	2,090,000
Patent - Amlexanox (OraDisc™ A)		6,873,080			6,873,080
Patent - OraDisc™		73,000			73,000
Patent - Hydrogel nanoparticle aggregate		589,858			589,858
		9,625,938			9,625,938
Less: accumulated amortization		( 5,597,114	)		(5,479,953	)
Intangible assets, net	$	4,028,824		$	4,145,985

Amortization expense for intangible assets was $117,161 and $118,463 for the three months ended March 31, 2013 and 2012, respectively.

The future aggregate amortization expense for intangible assets, remaining as of March 31, 2013, is as follows:

Calendar Years	Future Amortization Expense
2013 (Nine months)	$	357,987
2014		475,148
2015		475,148
2016		476,450
2017		475,148
2018 & Beyond		1,768,943
Total	$	4,028,824

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INVESTMENTS IN UNCONSOLIDATED ENTITIES

3 Months Ended

Mar. 31, 2013

INVESTMENTS IN UNCONSOLIDATED ENTITIES [Abstract]

INVESTMENTS IN UNCONSOLIDATED ENTITIES

NOTE 9.              INVESTMENTS IN UNCONSOLIDATED ENTITIES

We use the equity method of accounting for investments in other companies that are not controlled by us and in which our interest is generally between 20% and 50% of the voting shares or we have significant influence over the entity, or both.

On January 11, 2012, we executed a shareholders' agreement for the establishment of Altrazeal Trading Ltd., a single purpose entity to be used for the exclusive marketing of Altrazeal® throughout the European Union, Australia, New Zealand, North Africa, and the Middle East.  As a result of this transaction, we received a non-dilutable 25% ownership interest in Altrazeal Trading Ltd.

For the three months ended March 31, 2013, the financial statements of Altrazeal Trading Ltd. were unavailable and our share of any gains or losses of Altrazeal Trading Ltd. for such period have not been recorded in our financial statements.  The financial activity of Altrazeal Trading Ltd. for the three months ended March 31, 2013 would not have a material impact on our financial statements. 

Based upon unaudited financial statements provided by Altrazeal Trading Ltd. for the year ended December 31, 2012, our share of Altrazeal Trading Ltd. losses exceeded the carrying value of our investment, therefore the equity method of accounting was suspended and no additional losses were charged to our operations.  Our unrecorded share of Altrazeal Trading Ltd. losses for the year ended December 31, 2012 totaled $82,740.

Summarized financial information for our investment in Altrazeal Trading Ltd. assuming 100% ownership is as follows:

Altrazeal Trading Ltd.	December 31, 2012
Balance sheet
Total assets	$	415,248
Total liabilities	$	205,991
Total stockholders' equity	$	209,257
Statement of operations
Revenues	$	131,869
Net (loss)	$	(330,961	)

On October 19, 2012, we executed a shareholders' agreement for the establishment of ORADISC GmbH, a single purpose entity to be used for the exclusive development and marketing of OraDisc™ erodible film technology products.  We received a non-dilutable 25% ownership interest in ORADISC GmbH.

As of March 31, 2013, ORADISC GmbH had not begun operations and accordingly the net book value of the investee assets had not been determined and there were no equity method investee gains or losses for the three months ended March 31, 2013.

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CONVERTIBLE DEBT

3 Months Ended

Mar. 31, 2013

CONVERTIBLE DEBT [Abstract]

CONVERTIBLE DEBT

NOTE 11.           CONVERTIBLE DEBT

On June 27, 2012, we entered into a Securities Purchase Agreement (the "Purchase Agreement"), related to our issuance of a $2,210,000 Secured Convertible Note, with Inter-Mountain Capital Corp., a Delaware corporation ("Inter-Mountain").  The purchase price for the June 2012 Note was paid $500,000 at closing in cash and $1,500,000 in the form of six promissory notes in favor of the Company, each in the principal amount of $250,000 (the "Investor Notes"), each of which bears interest at the rate of 8.0% per annum, and each of which becomes due as the outstanding balance under the June 2012 Note is reduced to certain levels.  The purchase price of the June 2012 Note also reflected a $200,000 original issue discount and $10,000 in attorney's fees. The Purchase Agreement also includes representations and warranties, restrictive covenants, and indemnification provisions standard for similar transactions.

The June 2012 Note bears interest at the rate of 8.0% per annum, with monthly installment payments of $83,333 commencing on the date that is the earlier of (i) thirty calendar days after the effective date of a registration statement registering the re-sale of the shares issuable upon conversion under the June 2012 Note or (ii) December 24, 2012, but in no event sooner than September 25, 2012.  At our option, subject to certain volume, price, and other conditions, the monthly installment payments on the June 2012 Note may be paid in whole, or in part, in cash or in our common stock.  If the monthly installment is paid in common stock, such shares being issued will be based on a price that is 80% of the average of the three lowest volume weighted average prices of the shares of common stock during the preceding twenty trading days.  The percentage declines to 70% if the average of the three lowest volume weighted average prices of the shares of common stock during the preceding twenty trading days is less than $0.05.

At the option of Inter-Mountain, the outstanding principal balance of the June 2012 Note may be converted into shares of our common stock at a conversion price of $0.35 per share, subject to certain pricing adjustments and ownership limitations.  The initial tranche was $710,000 and the six subsequent tranches are each $250,000, plus interest.  At our option, the outstanding principal balance of the June 2012 Note, or a portion thereof, may be prepaid in cash at 120% of the amount elected to be prepaid.  The June 2012 Note is secured by a Security Agreement pursuant to which we granted to Inter-Mountain a first-priority security interest in the assets held by the Company.

Events of default under the June 2012 Note include failure to make required payments or to deliver shares upon conversion, the entry of a $100,000 judgment not stayed within 30 days, breach of representations or covenants under the transaction documents, various events associated with insolvency or failure to pay debts, delisting of our common stock, a restatement of financial statements, and a default under certain other agreements.  In the event of default, the interest rate under the June 2012 Note increases to 18% and the June 2012 Note becomes callable at a premium.  In addition, the holder has all remedies under law and equity, including foreclosing on our assets under a Security Agreement with Intermountain.

As part of the convertible debt financing, Inter-Mountain also received a total of seven warrants (the "Warrants") to purchase, if they all vest, an aggregate of 3,142,857 shares of common stock, which number of shares could increase based upon the terms and conditions of the Warrants.  The Warrants have an exercise price of $0.35 per share, subject to certain pricing adjustments, and are exercisable, subject to vesting provisions and ownership limitations, until June 27, 2017.  Warrants for 785,714, 392,857, and 392,857 shares of common stock vested on June 27, 2012, December 31, 2012, and February 26, 2013, respectively.  Each of the four remaining Warrants vest upon the payment by the holder of each of the remaining four Investor Notes.

As part of the convertible debt financing, we entered into a Registration Rights Agreement whereby we agreed to prepare and file with the SEC a registration statement for the number of shares referred to therein no later than July 27, 2012 and to cause such registration statement to be declared effective no later than ninety days after such filing with the SEC and to keep such registration statement effective for a period of no less than one hundred and eighty days.  The Registration Rights Agreement also grants Inter-Mountain piggy-back registration rights with respect to future offerings by the Company.  In accordance with our obligations under the Registration Rights Agreement, we filed with the SEC a registration statement that was declared effective on July 31, 2012.

On October 5, 2012, we and Inter-Mountain entered into a First Amendment to Buyer Trust Deed Note #1 for the purpose of revising certain terms and conditions contained in the Buyer Trust Deed Note #1, to include an updated schedule for the timing of certain payment obligations by Inter-Mountain contained therein.

On July 28, 2011, we completed a convertible debt financing for $125,000 with Mr. Kerry P. Gray, the Company's Chairman, President, and Chief Executive Officer (the "July 2011 Note").  The July 2011 Note bears interest at the rate of 10.0% per annum, with annual payments of interest commencing on July 1, 2012.  The full amount of principal and any unpaid interest will be due on July 28, 2014.  The outstanding principal balance of the July 2011 Note may be converted into shares of the Company's common stock, at the option of the note holder and at any time, at a conversion price of $1.08 per share or 115,741 shares of common stock.  We may force conversion of the July 2011 Note if our common stock trades for a defined period of time at a price greater than $2.16.  The July 2011 Note is collateralized by the grant of a security interest in the inventory, accounts receivables and capital equipment held by the Company.  The securities issuable on conversion have not been registered under the Securities Act of 1933 and may not be sold absent registration or an applicable exemption from the registration requirements.  As part of the convertible debt financing, Mr. Gray also received a warrant to purchase up to 34,722 shares of the Company's common stock.  The warrant has an exercise price of $1.08 per share and is exercisable at any time until July 28, 2016.  On July 3, 2012, the Company and Mr. Gray entered into a Modification Agreement for the purpose of deferring the annual payment of interest due on July 1, 2012 of $11,542 until such time as Mr. Gray provides written notice to us with such notice being no less than 15 days prior to the relevant payment date.  Moreover, the parties agreed that no Event of Default under the July 2011 Note occurred as a result of any failure by us to make the annual payment of interest due on July 1, 2012.  Commencing on July 1, 2012, interest at the rate of 12.0% per annum will accrue on the deferred interest payment of $11,542 until the relevant payment date.

On June 13, 2011, we completed a $140,000 convertible debt financing with Mr. Gray (the "June 2011 Note").  The June 2011 Note bears interest at the rate of 10% per annum, with annual payments of interest commencing on July 1, 2012.  The full amount of principal and any unpaid interest will be due on June 13, 2014.  The outstanding principal balance of the June 2011 Note may be converted into shares of the Company's common stock, at the option of the note holder and at any time, at a conversion price of $1.20 per share or 116,667 shares of common stock.  We may force conversion of the convertible note if our common stock trades for a defined period of time at a price greater than $1.80.  The June 2011 Note is collateralized by the grant of a security interest in the inventory, accounts receivables, and capital equipment held by the Company.  The securities issuable on conversion have not been registered under the Securities Act of 1933 and may not be sold absent registration or an applicable exemption from the registration requirements.  As part of the convertible debt financing, Mr. Gray also received a warrant to purchase up to 35,000 shares of the Company's common stock.  The warrant has an exercise price of $1.20 per share and is exercisable at any time until June 13, 2016.  On July 3, 2012, the Company and Mr. Gray entered into a Modification Agreement for the purpose of deferring the annual payment of interest due on July 1, 2012 of $14,653 until such time as Mr. Gray provides written notice to us with such notice being no less than 15 days prior to the relevant payment date.  Moreover, the parties agreed that no Event of Default under the June 2011 Note occurred as a result of any failure by us to make the annual payment of interest due on July 1, 2012.  Commencing on July 1, 2012, interest at the rate of 12.0% per annum will accrue on the deferred interest payment of $14,653 until the relevant payment date.

We account for convertible debt using specific guidelines in accordance with U.S. GAAP.  We allocated the value of the proceeds received to the convertible instrument and to the warrant on a relative fair value basis.  We calculated the fair value of the warrant issued with the convertible instrument using the Black-Scholes valuation method, using the same assumptions used for valuing employee stock options, except the contractual life of the warrant was used. Using the effective interest method, the allocated fair value was recorded as a debt discount and is being amortized over the expected term of the convertible debt to interest expense.

On the date of issuance of the June 2011 Note, the July 2011 Note, and the June 2012 Note, no portion of the proceeds were attributable to a beneficial conversion feature since the conversion price of the June 2011 Note, the July 2011 Note, and the June 2012 Note exceeded the market price of the Company's common stock.

Information relating to our convertible notes payable is as follows:

									As of March 31, 2013
Transaction	Initial  Principal Amount		Interest Rate			Maturity Date	Conversion Price (1)(2)		Principal Balance		Unamortized Debt Discount		Carrying Value
June 2011 Note	$	140,000		10.0	%	06/13/2014	$	1.20	$	140,000	$	4,802	$	135,198
July 2011 Note		125,000		10.0	%	07/28/2014	$	1.08		125,000		9,972		115,028
June 2012 Note		2,210,000		8.0	%	03/27/2015	$	0.35		1,754,210		330,577		1,423,633
Total	$	2,475,000							$	2,019,210	$	345,351	$	1,673,859

(1)	The outstanding principal balance of the June 2011 Note and the July 2011 Note may be converted, at the option of Mr. Gray, into shares of common stock at a fixed conversion price of $1.20 per share and $1.08 per share, respectively.
(2)	The outstanding principal balance of the June 2012 Note may be converted, at the option of Inter-Mountain, into shares of common stock at a conversion price of $0.35 per share, subject to certain pricing adjustments and ownership limitations.

The amount of interest cost recognized from our convertible notes outstanding was $45,228 and $6,535 for the three months ended March 31, 2013 and 2012, respectively.

The future minimum payments relating to our convertible notes payable, as of March 31, 2013, are as follows:

	Payments Due By Period
Transaction	Total		2013 (Nine Months)		2014		2015		2016		2017
June 2011 Note	$	140,000	$	---	$	140,000	$	---	$	---	$	---
July 2011 Note		125,000		---		125,000		---		---		---
June 2012 Note		1,754,210		877,538		876,672		---		---		---
Total	$	2,019,210	$	877,538	$	1,141,672	$	---	$	---	$	---

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STOCKHOLDERS' EQUITY (Tables)

3 Months Ended

Mar. 31, 2013

STOCKHOLDERS' EQUITY [Abstract]

Warrants outstanding and number of shares of common stock subject to exercise

The following table summarizes the warrants outstanding and the number of shares of common stock subject to exercise as of March 31, 2013 and the changes therein during the three months then ended:

	Number of Shares of Common Stock Subject to Exercise			Weighted – Average Exercise Price
Balance as of December 31, 2012		2,041,165		$	0.98
Warrants issued		4,052,857		$	0.58
Warrants exercised		---			---
Warrants cancelled		(250,000	)	$	0.35
Balance as of March 31, 2013 (1)		5,844,022		$	0.73

(1) As part of the June 2012 Note, Inter-Mountain received a total of seven warrants to purchase, if they all vest, an aggregate of 3,142,857 shares of common stock, which number of shares could increase based upon the terms and conditions of the warrants.  The warrants have an exercise price of $0.35 per share, subject to certain pricing adjustments, and are exercisable, subject to vesting provisions and ownership limitations, until June 27, 2017.  Warrants for 785,714, 392,857, and 392,857 shares of common stock vested on June 27, 2012, December 31, 2012, and February 26, 2013, respectively, and only such shares of common stock (1,571,428 shares) have been included in this Table, based upon an exercise price of $0.35 per share of common stock.  Each of the other four warrants vest upon the payment by Inter-Mountain of each of the four remaining Investor Notes.

Expiration dates for warrants subject to exercise

Of the warrant shares subject to exercise as of March 31, 2013, expiration of the right to exercise is as follows:

Date of Expiration	Number of Warrant Shares of Common Stock Subject to Expiration
January 3, 2014		3,000,000
July 23, 2014		69,050
May 15, 2015		357,155
June 13, 2016		35,000
July 16, 2016		116,667
July 28, 2016		34,722
June 27, 2017		1,571,428
March 14, 2018		660,000
Total		5,844,022

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SHARE BASED COMPENSATION, Allocated Compensation expense (Details) (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Stock Options [Member]
Allocation of Recognized Period Costs [Line Items]
Share-based compensation expense	$ 8,981	$ 21,951
Stock Options [Member] | Research and Development [Member]
Allocation of Recognized Period Costs [Line Items]
Share-based compensation expense	648	6,280
Stock Options [Member] | Selling, General and Administrative [Member]
Allocation of Recognized Period Costs [Line Items]
Share-based compensation expense	8,333	15,671
Restricted Stock [Member]
Allocation of Recognized Period Costs [Line Items]
Share-based compensation expense	991	2,712
Restricted Stock [Member] | Research and Development [Member]
Allocation of Recognized Period Costs [Line Items]
Share-based compensation expense	444	1,594
Restricted Stock [Member] | Selling, General and Administrative [Member]
Allocation of Recognized Period Costs [Line Items]
Share-based compensation expense	$ 547	$ 1,118

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FAIR VALUE MEASUREMENTS

3 Months Ended

Mar. 31, 2013

FAIR VALUE MEASUREMENTS [Abstract]

FAIR VALUE MEASUREMENTS

NOTE 16.            FAIR VALUE MEASUREMENTS

In accordance with ASC Topic 820, Fair Value Measurements, ("ASC Topic 820") certain assets and liabilities of the Company are required to be recorded at fair value.  Fair value is determined based on the exchange price that would be received for an asset or paid to transfer a liability in an orderly transaction between market participants.  The guidance in ASC Topic 820 also establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimized the use of unobservable inputs by requiring that the most observable inputs be used when available.

Observable inputs are based on market data obtained from independent sources, while unobservable inputs are based on our market assumptions.  Unobservable inputs require significant management judgment or estimation.  In some cases, the inputs used to measure an asset or liability may fall into different levels of the fair value hierarchy.  In those instances, the fair value measurement is required to be classified using the lowest level of input that is significant to the fair value measurement.  Such determination requires significant management judgment.

The three-tier value hierarchy, which prioritizes the inputs used in the valuation methodologies, is as follows:

Level 1 - Valuations based on quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 - Valuations based on observable inputs other than quoted prices in Level 1, such as quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, and other inputs that are observable or can be corroborated by observable market data.

Level 3 - Valuations based on unobservable inputs reflecting the Company's own assumptions, consistent with reasonably available assumptions made by other market participants.

Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurements.  We review the fair value hierarchy classification on a quarterly basis.  Changes in the observability of valuation inputs may result in a reclassification of levels for certain securities within the fair value hierarchy.

Our financial instruments, including cash, cash equivalents, accounts receivable, and accounts payable are carried at cost, which approximates their fair value because of the short-term maturity of these instruments.  We believe that the carrying value of our other receivable and convertible note payable balances approximates fair value based on a valuation methodology using the income approach and a discounted cash flow model.

The following table summarizes the fair value of our financial instruments at March 31, 2013 and December 31, 2012.

Description	March 31, 2013		December 31, 2012
Assets:
Notes receivable and accrued interest	$	1,061,776	$	1,302,220
Liabilities:
Convertible note – June 2011	$	135,198	$	134,154
Convertible note – July 2011	$	115,028	$	113,084
Convertible note – June 2012	$	1,423,633	$	1,593,924

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COMPANY OVERVIEW AND BASIS OF PRESENTATION (Policies)

3 Months Ended

Mar. 31, 2013

COMPANY OVERVIEW AND BASIS OF PRESENTATION [Abstract]

Basis of Presentation

Basis of Presentation

In the opinion of management, the accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP") for interim financial information and with the instructions to Form 10-Q and include the accounts of ULURU Inc., a Nevada corporation, and its wholly-owned subsidiary, Uluru Delaware Inc., a Delaware corporation.  They do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the Company's financial position as of March 31, 2013 and the results of its operations for the three months ended March 31, 2013 and 2012 and cash flows for the three months ended March 31, 2013 and 2012 have been made.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, as well as disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods.  Actual results may differ from those estimates and assumptions.  These differences are usually minor and are included in our consolidated financial statements as soon as they are known.  Our estimates, judgments, and assumptions are continually evaluated based on available information and experience. Because of the use of estimates inherent in the financial reporting process, actual results could differ from those estimates.

All intercompany transactions and balances have been eliminated in consolidation.

Operating results for the three months ended March 31, 2013 are not necessarily indicative of the results that may be expected for the year ending December 31, 2013.

These condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2012, as filed with the Securities and Exchange Commission on March 29, 2013, including the risk factors set forth therein.

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EARNINGS PER SHARE (Details) (USD $)	3 Months Ended	12 Months Ended				3 Months Ended		12 Months Ended					3 Months Ended	12 Months Ended	3 Months Ended	12 Months Ended	3 Months Ended		12 Months Ended		3 Months Ended		12 Months Ended		3 Months Ended		12 Months Ended
	Mar. 31, 2013	Dec. 31, 2012	Jun. 30, 2012	Jul. 31, 2011	Jun. 30, 2011	Mar. 31, 2013 Warrants to purchase common stock [Member]		Dec. 31, 2012 Warrants to purchase common stock [Member]		Feb. 26, 2013 Warrants to purchase common stock [Member]	Mar. 31, 2013 Warrants to purchase common stock [Member] Private Placement [Member]	Jun. 27, 2012 Warrants to purchase common stock [Member] Private Placement [Member]	Mar. 31, 2013 Stock options to purchase common stock [Member]	Dec. 31, 2012 Stock options to purchase common stock [Member]	Mar. 31, 2013 Unvested restricted common stock [Member]	Dec. 31, 2012 Unvested restricted common stock [Member]	Mar. 31, 2013 Common stock issuable upon the assumed conversion of our convertible note payable from June 2012 [Member]		Dec. 31, 2012 Common stock issuable upon the assumed conversion of our convertible note payable from June 2012 [Member]		Mar. 31, 2013 Common stock issuable upon the assumed conversion of our convertible notes payable from June 2011 and July 2011 [Member]		Dec. 31, 2012 Common stock issuable upon the assumed conversion of our convertible notes payable from June 2011 and July 2011 [Member]		Mar. 31, 2013 Common stock issuable upon the assumed conversion of our Series A preferred stock [Member]		Dec. 31, 2012 Common stock issuable upon the assumed conversion of our Series A preferred stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from calculating basic and diluted net loss per common share (in shares)	13,379,220	9,189,119				5,844,022	[1]	2,041,165	[1]				1,123,241	158,409	0	300	5,012,028	[2]	5,617,974	[2]	380,125	[3]	368,637	[3]	1,019,804	[4]	1,002,634	[4]
Number of warrants to purchase common stock (in shares)	7		7
Number of warrants that vest upon payment of notes	4		4
Aggregate shares of common stock issued upon exercise of warrants (in shares)	4,052,857					3,142,857					785,714
Common stock vested upon initial warrant (in shares)	5,844,022	2,041,165						392,857		392,857		1,571,428
Exercise price of warrants (in dollars per share)	$ 0.35		$ 0.35
Average number of trading days prior to the payment of note taken to calculate the conversion price	5 days
Conversion price (in dollars per share)	$ 0.70			$ 1.08	$ 1.20
Number of months from date of issuance of Series A preferred stock taken for conversion of accrued dividends	6 months

[1] As part of the June 2012 Note, Inter-Mountain received a total of seven warrants to purchase, if they all vest, an aggregate of 3,142,857 shares of common stock, which number of shares could increase based upon the terms and conditions of the warrants. The warrants have an exercise price of $0.35 per share, subject to certain pricing adjustments, and are exercisable, subject to vesting provisions and ownership limitations, until June 27, 2017. Warrants for 785,714, 392,857, and 392,857 shares of common stock vested on June 27, 2012, December 31, 2012, and February 26, 2013, respectively, and only such shares of common stock (1,571,428 shares) have been included in this Table, based upon an exercise price of $0.35 per share of common stock. Each of the other four warrants vest upon the payment by Inter-Mountain of each of the four remaining Investor Notes.

[2] The outstanding principal balance and the accrued and unpaid interest of the June 2012 Note may be converted, at the option of Inter-Mountain, into shares of common stock at a conversion price of $0.35 per share, subject to certain pricing adjustments and ownership limitations. For the purposes of this Table, we have assumed a conversion price of $0.35 per share and no ownership limitations.

[3] The outstanding principal balance of the June 2011 Note and the July 2011 Note may be converted, at the option of Mr. Gray, into shares of common stock at a fixed conversion price of $1.20 per share and $1.08 per share, respectively. The accrued and unpaid interest for each convertible note payable may be converted, at the option of Mr. Gray, into shares of common stock at a conversion price based upon the average of the five trading days prior to the payment date, which for the purposes of this Table we have assumed to be March 31, 2013.

[4] The outstanding Series A preferred stock and the accrued and unpaid dividends thereon are convertible into shares of the Company's common stock at the Company's option at any time after six-months from the date of issuance of the Series A preferred stock. The conversion price for the holder is fixed at $0.70 per share with no adjustment mechanisms, resets, ratchets, or anti-dilution covenants other than the customary adjustments for stock splits. For the purposes of this Table, we have assumed a conversion price of $0.70 per share.

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INVENTORY (Details) (USD $)	Mar. 31, 2013	Dec. 31, 2012
Components of inventory [Abstract]
Finished goods	$ 116,031	$ 303,779
Work-in-progress	357,104	190,794
Raw materials	33,070	33,070
Total	$ 506,205	$ 527,643

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
OPERATING ACTIVITIES :
Net loss	$ (656,590)	$ (843,409)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of intangible assets	117,161	118,463
Depreciation	65,388	75,261
Share-based compensation for stock and options issued to employees	1,554	12,551
Share-based compensation for options issued to non-employees	8,418	12,112
Equity in earnings (loss) of unconsolidated subsidiary	0	0
Amortization of debt discount on convertible note	44,778	3,151
Amortization of deferred financing costs	18,844	0
Cancellation of warrants issued for services	(48,776)	0
Common stock issued for services	0	130,000
Common stock issued for interest due on convertible note	37,918	0
Change in operating assets and liabilities:
Accounts receivable	27,357	10,049
Other receivable	0	26,410
Inventory	21,438	22,748
Prepaid expenses and deferred charges	58,476	(30,843)
Notes receivable and accrued interest	240,444	0
Accounts payable	(436,920)	(12,498)
Accrued liabilities	7,271	(60,614)
Accrued interest	7,310	6,535
Deferred revenue	(11,153)	217,041
Total	159,508	530,366
Net Cash Used in Operating Activities	(497,082)	(313,043)
INVESTING ACTIVITIES :
Proceeds from sale of intangible asset	0	220,000
Net Cash Provided by Investing Activities	0	220,000
FINANCING ACTIVITIES :
Proceeds from sale of common stock and warrants, net	481,446	0
Proceeds from sale of preferred stock, net	0	275,761
Offering cost adjustment - preferred stock sale in 2011	0	28,928
Net Cash Provided by Financing Activities	481,446	304,689
Net Increase (Decrease) in Cash	(15,636)	211,646
Cash, beginning of period	21,549	46,620
Cash, end of period	5,913	258,266
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Cash paid for interest	1,264	1,095
Non-cash investing and financing activities:
Issuance of common stock for promissory note	0	245,818
Issuance of common stock for principle due on convertible note	$ 212,081	$ 0

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NOTES RECEIVABLE

3 Months Ended

Mar. 31, 2013

NOTES RECEIVABLE [Abstract]

NOTES RECEIVABLE

NOTE 5.              NOTES RECEIVABLE

On June 27, 2012, we entered into a Securities Purchase Agreement related to our issuance of a $2,210,000 Secured Convertible Note (the "June 2012 Note"), with Inter-Mountain Capital Corp., a Delaware corporation ("Inter-Mountain").  As part of the June 2012 Note transaction, we received $1,500,000 in the form of six promissory notes in favor of the Company, each in the principal amount of $250,000 (the "Investor Notes") and each of which becomes due as the outstanding balance under the June 2012 Note is reduced to certain levels.  On October 5, 2012, we and Inter-Mountain entered into a First Amendment to Buyer Trust Deed Note #1 (the "Trust Deed Note Amendment") for the purpose of revising certain terms and conditions contained in the Buyer Trust Deed Note #1, to include receiving payments of $100,000, $100,000, and $50,000 on October 5, 2012, November 30, 2012, and December 31, 2012, respectively, and any interest thereon.

As of March 31, 2013, we had $1,061,776 in notes receivable which is comprised of $1,000,000 for four Investor Notes and $61,776 for accrued interest thereon.

Please refer to Note 11 for a more detailed description of the June 2012 Note transaction.

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SEGMENT INFORMATION (Tables)

3 Months Ended

Mar. 31, 2013

SEGMENT INFORMATION [Abstract]

Revenues per geographic area

Revenues per geographic area for the three months ended March 31 are summarized as follows:

Revenues	2013		%			2012		%
Domestic	$	19,787		19	%	$	52,046		87	%
International		82,257		81	%		7,959		13	%
Total	$	102,044		100	%	$	60,005		100	%

Customers with greater than 10% of total sales

A significant portion of our revenues are derived from a few major customers.  Customers with greater than 10% of total sales for the three months ended March 31 are represented on the following table:

Customers	Product	2013			2012
Customer A	Altrazeal®		75	%		*
Customer B	Aphthasol®		---			27	%
Customer C	Altrazeal®		*			16	%
Customer D	Altrazeal®		*			11	%
Total			75	%		54	%
* Sales from this customer were less than 10% of total sales for the period reported.

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COMMITMENTS AND CONTINGENCIES (Tables)

3 Months Ended

Mar. 31, 2013

COMMITMENTS AND CONTINGENCIES [Abstract]

Future minimum lease payments

The future minimum lease payments under the 2013 office lease and the 2010 equipment lease are as follows as of March 31, 2013:

Calendar Years	Future Lease Expense
2013 (Nine months)	$	88,848
2014		120,136
2015		28,686
2016		---
2017		---
Total	$	237,670

Summary of compensation earned, compensation paid in cash, and compensation temporarily deferred

The following table summarizes the compensation temporarily deferred since 2011:

Name	2013			2012		2011		Total
Kerry P. Gray (1)	$	(28,500	)	$	220,673	$	140,313	$	332,486
Terrance K. Wallberg		6,633		$	24,230	$	36,539	$	67,402
Key executives		---		$	27,253	$	20,986	$	48,239
Total	$	(21,867	)	$	272,156	$	197,838	$	448,127

(1) During 2013, Mr. Gray temporarily deferred compensation of $11,500 earned pursuant to a Separation Agreement and $52,500 for his duties as Chairman of the Executive Committee of the Company's Board of Directors.  Mr. Gray was also repaid $92,500 of temporarily deferred compensation, of which $80,000 was used by Mr. Gray for funding required pursuant to the March 2013 Offering.

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SHARE BASED COMPENSATION

3 Months Ended

Mar. 31, 2013

SHARE BASED COMPENSATION [Abstract]

SHARE BASED COMPENSATION

NOTE 15.            SHARE BASED COMPENSATION

The Company's share-based compensation plan, the 2006 Equity Incentive Plan ("Equity Incentive Plan"), is administered by the compensation committee of the Board of Directors ("Board"), which selects persons to receive awards and determines the number of shares subject to each award and the terms, conditions, performance measures and other provisions of the award.

Our Board granted the following incentive stock option awards to executives or employees and nonstatutory stock option awards to directors or non-employees for the three months ended March 31:

	Three Months Ended March 31,
	2013		2012
Incentive Stock Options
Quantity		232,500		---
Weighted average fair value per share	$	0.24		---
Fair value	$	56,112		---
Nonstatutory Stock Options
Quantity		735,000		---
Weighted average fair value per share	$	0.24		---
Fair value	$	177,388		---

We account for share-based compensation under FASB ASC Topic 718, Stock Compensation, which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees, consultants, and directors based on estimated fair values of the award on the grant date.  We use the Black-Scholes option-pricing model to estimate the fair value of share-based awards with the following weighted average assumptions for the three months ended March 31:

	2013			2012(4)
Incentive Stock Options
Expected volatility  (1)		103.55	%		---
Risk-free interest rate %  (2)		0.81	%		---
Expected term (in years)		5.0			---
Dividend yield  (3)		---			---
Forfeiture rate		---			---
Nonstatutory Stock Options
Expected volatility  (1)		103.55	%		---
Risk-free interest rate %  (2)		0.81	%		---
Expected term (in years)		5.0			---
Dividend yield  (3)		---			---
Forfeiture rate		---			---

(1)	Expected volatility assumption was based upon a combination of historical stock price volatility measured on a daily basis and an estimate of expected future stock price volatility
(2)	Risk-free interest rate assumption is based upon U.S. Treasury bond interest rates appropriate for the term of the stock options.
(3)	The Company does not currently intend to pay cash dividends, thus has assumed a 0% dividend yield.
(4)	The Company did not award any shared-based compensation for the three months ended March 31, 2012.

Stock Options (Incentive and Nonstatutory)

The following table summarizes share-based compensation related to stock options for the three months ended March 31:

	Three Months Ended  March 31,
	2013		2012
Research and development	$	648	$	6,280
Selling, general and administrative		8,333		15,671
Total share-based compensation expense	$	8,981	$	21,951

At March 31, 2013, the balance of unearned share-based compensation to be expensed in future periods related to unvested stock option awards, as adjusted for expected forfeitures, is approximately $240,587.  The period over which the unearned share-based compensation is expected to be recognized is approximately three years.

The following table summarizes the stock options outstanding and the number of shares of common stock subject to exercise as of March 31, 2013 and the changes therein during the three months then ended:

	Stock Options			Weighted Average Exercise Price per Share
Outstanding as of December 31, 2012		158,409		$	12.32
Granted		967,500			0.33
Forfeited/cancelled		(2,668	)		1.80
Exercised		---			---
Outstanding as of March 31, 2013		1,123,241		$	2.02

The following table presents the stock option grants outstanding and exercisable as of March 31, 2013:

Options Outstanding						Options Exercisable
Stock Options Outstanding		Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Life in Years		Stock Options Exercisable		Weighted Average Exercise Price per Share
	967,500	$	0.33		10.0		122,500	$	0.33
	86,668		2.45		5.9		60,001		2.40
	30,002		14.40		4.0		30,002		14.40
	39,071		33.35		4.6		39,071		33.35
	1,123,241	$	2.02		9.3		251,574	$	7.63

Restricted Stock Awards

Restricted stock awards, which typically vest over a period of two to five years, are issued to certain key employees and are subject to forfeiture until the end of an established restriction period.  We utilize the market price on the date of grant as the fair market value of restricted stock awards and expense the fair value on a straight-line basis over the vesting period.

The following table summarizes share-based compensation related to restricted stock awards for the three months ended March 31:

	Three Months Ended  March 31,
	2013	2012
Research and development	$       444	$    1,594
Selling, general and administrative	547	1,118
Total share-based compensation expense	$       991	$    2,712

At March 31, 2013, the balance of unearned share-based compensation to be expensed in future periods related to restricted stock awards, as adjusted for expected forfeitures, is nil.

The following table summarizes the non-vested restricted stock awards outstanding and the number of shares of common stock subject to potential issue as of March 31, 2013 and the changes therein during the three months then ended:

	Restricted stock			Weighted Average Grant Date Fair Value
Outstanding as of December 31, 2012		300		$	34.59
Shares granted		---			---
Shares forfeited/cancelled		---			---
Shares exercised/issued		(300	)		34.59
Outstanding as of March 31, 2013		---		$	---

Summary of Plans

2006 Equity Incentive Plan

In March 2006, our Board adopted and our stockholders approved our Equity Incentive Plan, which initially provided for the issuance of up to 133,333 shares of our common stock pursuant to stock option and other equity awards.  At the annual meetings of the stockholders held on May 8, 2007, December 17, 2009, June 15, 2010, and June 14, 2012, our stockholders approved amendments to the Equity Incentive Plan to increase the total number of shares of common stock issuable under the Equity Incentive Plan pursuant to stock options and other equity awards by 266,667 shares, 200,000 shares, 200,000 shares, and 400,000, respectively, to a total of 1,200,000 shares.

In December 2006, we began issuing stock options to employees, consultants, and directors.  The stock options issued generally vest over a period of one to four years and have a maximum contractual term of ten years.  In January 2007, we began issuing restricted stock awards to our employees.  Restricted stock awards generally vest over a period of six months to five years after the date of grant.  Prior to vesting, restricted stock awards do not have dividend equivalent rights, do not have voting rights and the shares underlying the restricted stock awards are not considered issued and outstanding.  Shares of common stock are issued on the date the restricted stock awards vest.

As of March 31, 2013, we had granted options to purchase 1,376,167 shares of common stock since the inception of the Equity Incentive Plan, of which 1,123,241 were outstanding at a weighted average exercise price of $2.02 per share, and we had granted awards for 68,616 shares of restricted stock since the inception of the Equity Incentive Plan, of which none were outstanding.  As of March 31, 2013, there were 7,313 shares that remained available for future grants under our Equity Incentive Plan.