form10q_033116.htm

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, 2016

[_] 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 16, 2016, there were 62,974,431 shares of the registrant’s Common Stock, $0.001 par value per share (“Common Stock”), and no 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, 2016

		Page
PART I	FINANCIAL INFORMATION

Item 1.	Financial Statements.	3

	Condensed Consolidated Balance Sheets as of March 31, 2016 (unaudited) and December 31, 2015 (audited)	3
	Condensed Consolidated Statements of Operations (unaudited) for the three months ended March 31, 2016 and 2015	4
	Condensed Consolidated Statements of Cash Flows (unaudited) for the three months ended March 31, 2016 and 2015	5
	Notes to Condensed Consolidated Financial Statements (unaudited)	6

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations.	22

Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	29

Item 4.	Controls and Procedures.	29

PART II	OTHER INFORMATION

Item 1.	Legal Proceedings.	29

Item 1A.	Risk Factors.	30

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	30

Item 3.	Defaults Upon Senior Securities.	30

Item 4.	Mine Safety Disclosures.	30

Item 5.	Other Information.	30

Item 6.	Exhibits.	30

	Signatures.	31

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PART I – FINANCIAL INFORMATION

ITEM 1.

Financial Statements.

ULURU Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS

	March 31, 2016			December 31, 2015
	(Unaudited)			(Audited)
ASSETS
Current Assets
Cash and cash equivalents	$	1,202,691		$	180,000
Accounts receivable, net		91,921			89,378
Accounts receivable – related party, net		---			2,805
Inventory		537,364			531,421
Prepaid expenses and deferred charges		107,110			123,201
Total Current Assets		1,939,086			926,805

Property, Equipment and Leasehold Improvements, net		224,252			257,417

Other Assets
Intangible asset - patents, net		2,602,078			2,720,541
Intangible asset - licensing rights, net		3,426,062			3,506,235
Investment in unconsolidated subsidiary		---			---
Deposits		18,069			18,069
Total Other Assets		6,046,209			6,244,845

TOTAL ASSETS	$	8,209,547		$	7,429,067

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable	$	1,924,145		$	1,780,197
Accrued liabilities		423,628			402,214
Promissory notes payable, net of unamortized debt discount and debt issuance costs, current portion		182,441			315,058
Deferred revenue, current portion		29,202			42,934
Total Current Liabilities		2,559,416			2,540,403

Long Term Liabilities
Deferred revenue, net of current portion		597,743			685,287
Total Long Term Liabilities		597,743			685,287

TOTAL LIABILITIES		3,157,159			3,225,690

COMMITMENTS AND CONTINGENCIES		---			---

STOCKHOLDERS' EQUITY

Preferred stock - $0.001 par value; 20,000 shares authorized;
Preferred Stock Series A, 1,000 shares designated; no shares issued and outstanding at March 31, 2016 and December 31, 2015, respectively		---			---

Common Stock - $0.001 par value; 200,000,000 shares authorized;
62,974,431 and 36,834,933 shares issued and outstanding at March 31, 2016 and December 31, 2015, respectively		62,975			36,835
Additional paid-in capital		62,257,129			60,426,915
Subscription receivable		(361,000	)		---
Accumulated (deficit)		(56,906,716	)		(56,260,373	)
TOTAL STOCKHOLDERS’ EQUITY		5,052,388			4,203,377

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	8,209,547		$	7,429,067

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,
	2016			2015
Revenues
License fees	$	101,276		$	14,539
Royalty income		---			---
Product sales, net		7,516			280,109
Total Revenues		108,792			294,648

Costs and Expenses
Cost of goods sold		924			101,530
Research and development		136,159			204,159
Selling, general and administrative		318,801			446,157
Amortization of intangible assets		198,636			117,161
Depreciation		33,165			58,309
Total Costs and Expenses		687,685			927,316
Operating (Loss)		(578,893	)		(632,668	)

Other Income (Expense)
Interest and miscellaneous income		22			142
Interest expense		(46,758	)		(12,969	)
Equity in earnings (loss) of unconsolidated subsidiary		---			---
Foreign currency transaction gain (loss)		4,286			(92,778	)
Accommodation fee due on promissory note		(25,000	)		---
(Loss) Before Income Taxes		(646,343	)		(738,273	)

Income taxes		---			---
Net (Loss)	$	(646,343	)	$	(738,273	)


Basic and diluted net (loss) per common share	$	(0.02	)	$	(0.03	)

Weighted average number of common shares outstanding		37,658,932			24,458,018

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,
	2016			2015
OPERATING ACTIVITIES :
Net loss	$	(646,343	)	$	(738,273	)

Adjustments to reconcile net loss to net cash used in operating activities:

Amortization of intangible assets		198,636			117,161
Depreciation		33,165			58,309
Share-based compensation for stock and options issued to employees		11,854			12,928
Share-based compensation for options issued to non-employees		16,013			62,420
Equity in earnings (loss) of unconsolidated subsidiary		---			---
Amortization of debt discount on promissory note		13,015			---
Amortization of deferred financing costs		9,368			---
Common stock issued for services		36,000			---
Common stock issued for interest due on promissory note		2,239			---
Accommodation fee due on promissory note		25,000			---

Change in operating assets and liabilities:
Accounts receivable		262			(180,100	)
Inventory		(5,943	)		(40,147	)
Prepaid expenses and deferred charges		16,091			59,235
Accounts payable		143,948			126,157
Accrued liabilities		21,414			(13,740	)
Deferred revenue		(101,276	)		(14,539	)
Total		419,786			187,684

Net Cash Used in Operating Activities		(226,557	)		(550,589	)

INVESTING ACTIVITIES :
Net Cash Used in Investing Activities		---			---

FINANCING ACTIVITIES :
Proceeds from sale of common stock and warrants, net		1,398,426			---
Offering costs associated with acquisition of licensing rights in 2015		(14,178	)		---
Offering cost adjustment – preferred stock sale in 2011		---			10,509
Repayment of principle due on promissory note		(135,000	)		---
Net Cash Provided by Financing Activities		1,249,248			10,509

Net Increase (Decrease) in Cash		1,022,691			(540,080	)

Cash, beginning of period		180,000			550,458
Cash, end of period	$	1,202,691		$	10,378

SUPPLEMENTAL CASH FLOW DISCLOSURE:
Cash paid for interest	$	7,577		$	852

Non-cash investing and financing activities:
Issuance of common stock for principle due on promissory note	$	45,000		$	---

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 specialty pharmaceutical company committed to developing and commercializing a range of innovative wound care and muco-adhesive film products based on our patented Nanoflex® and OraDiscTM 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, 2016 and the results of its operations for the three months ended March 31, 2016 and 2015 and cash flows for the three months ended March 31, 2016 and 2015 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, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016.

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, 2015, as filed with the Securities and Exchange Commission on March 30, 2016, including the risk factors set forth therein.

Liquidity and Going Concern

The report of our independent registered public accounting firm for the fiscal year ended December 31, 2015, contained an explanatory paragraph to reflect its significant doubt about our ability to continue as a going concern as a result of our history of losses and our liquidity position, as discussed herein and in this Form 10-Q. Based on our liquidity as of March 31, 2016, the expected level of operating expenses, and the projected sales of our existing products combined with other revenues, we believe that we will be able to meet our working capital and capital expenditure requirements through the third quarter of 2016.

However, we cannot be sure that our anticipated revenue growth will be realized or that we will generate significant positive cash flow from operations. Moreover, we may not be able to raise sufficient additional capital on acceptable terms, or at all, to continue operations beyond the third quarter of 2016. Therefore, we are unable to assert that our financial position is sufficient to fund operations beyond the third quarter of 2016, and as a result, there is substantial doubt about our ability to continue as a going concern beyond the third quarter of 2016. In order to continue to advance our business plan and outstanding obligations after the third quarter of 2016, we need to raise additional capital.

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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 months ended March 31, 2016 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, 2015, as filed with the Securities and Exchange Commission on March 30, 2016.

NOTE 3.

THE EFFECT OF RECENTLY ISSUED ACCOUNTING STANDARDS

There were no new accounting pronouncements adopted or enacted during the periods presented that had, or are expected to have, a material impact on our financial statements.

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, and royalties 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 product revenues are currently derived primarily from the sale of Altrazeal® in sixteen international markets and from our sales activities in the United States.

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

Revenues	2016		%			2015		%
Domestic	$	7,516		7	%	$	6,802		2	%
International		101,276		93	%		287,846		98	%
Total	$	108,792		100	%	$	294,648		100	%

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

Customers	Product	2016			2015
Customer A	Altrazeal®		87	%		1	%
Customer B	Altrazeal®		---			93	%
Total			87	%		94	%

NOTE 5.

INVENTORY

As of March 31, 2016, 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, 2016 and December 31, 2015:

Inventory	March 31, 2016		December 31, 2015
Raw materials	$	38,439	$	38,037
Work-in-progress		444,358		485,123
Finished goods		54,567		8,261
Total	$	537,364	$	531,421

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NOTE 6.

PROPERTY, EQUIPMENT and LEASEHOLD IMPROVEMENTS

Property, equipment and leasehold improvements, net, consisted of the following at March 31, 2016 and December 31, 2015:

Property, equipment and leasehold improvements	March 31, 2016			December 31, 2015
Laboratory equipment	$	424,888		$	424,888
Manufacturing equipment		1,604,894			1,604,894
Computers, office equipment, and furniture		153,865			153,865
Computer software		4,108			4,108
Leasehold improvements		95,841			95,841
		2,283,596			2,283,596
Less: accumulated depreciation and amortization		(2,059,344	)		(2,026,179	)
Property, equipment and leasehold improvements, net	$	224,252		$	257,417

Depreciation expense on property, equipment and leasehold improvements was $33,165 and $58,309 for the three months ended March 31, 2016 and 2015, respectively.

NOTE 7.

INTANGIBLE ASSETS

Patents

Intangible patent assets are comprised of patents acquired in October, 2005. Intangible assets, net consisted of the following at March 31, 2016 and December 31, 2015:

Intangible assets – patents	March 31, 2016			December 31, 2015
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		( 7,023,860	)		(6,905,397	)
Intangible assets - patents, net	$	2,602,078		$	2,720,541

Amortization expense for intangible patents assets was $118,463 and $117,161 for the three months ended March 31, 2016 and 2015, respectively.

The future aggregate amortization expense for intangible patent assets, remaining as of March 31, 2016, is as follows:

Calendar Years	Future Amortization Expense
2016 (Nine months)	$	357,987
2017		475,148
2018		475,148
2019		475,148
2020		476,450
2021 & Beyond		342,197
Total	$	2,602,078

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Licensing rights

On December 24, 2015, we entered into and closed the transaction contemplated by a License Purchase and Termination Agreement (the “Altrazeal Termination Agreement”) with Altrazeal Trading GmbH (“Altrazeal Trading”) and IPMD GmbH (“IPMD”). The Altrazeal Termination Agreement relates to the License and Supply Agreement dated January 11, 2012 (the “Altrazeal License”), under which Altrazeal Trading and its affiliates were authorized by the Company to distribute our Altrazeal® wound care product in the European Union, Australia, New Zealand, Middle East (excluding Jordan and Syria), North Africa, Albania, Bosnia, Croatia, Kosovo, Macedonia, Montenegro, and Serbia. Under the Altrazeal Termination Agreement, the Altrazeal License was assigned to the Company thereby effecting its termination and the Company’s 25% ownership interest in Altrazeal Trading was cancelled. In addition, the Company assumed from Altrazeal Trading and certain affiliated entities rights and future obligations under sub-distribution agreements in numerous territories within the scope of the Altrazeal License and related consulting agreements.

Under the terms of the Altrazeal Termination Agreement, we agreed to pay to Altrazeal Trading a net transfer fee of €1,570,271 and to pay IPMD a transfer fee of €703,500. The net transfer fee to Altrazeal Trading includes adjustments for amounts owed by Altrazeal Trading to the Company. The Company paid the net transfer fee (a) to Altrazeal Trading by means of the issuance of 4,441,606 shares of Common Stock together with warrants to purchase 444,161 shares of Common Stock and (b) to IPMD by means of the issuance of 2,095,241 shares of Common Stock, together with warrants to purchase 209,525 shares of Common Stock. The warrants have an exercise price of $0.68 per share and a term of one-year.

Altrazeal Trading also agreed to return inventory of Altrazeal® blisters held in its possession in an amount up to €88,834 (“Inventory Payment”). To the extent Altrazeal Trading does not return the entire inventory, we may deduct from the Inventory Payment €4.20 per Altrazeal® blister not returned in usable condition. We are currently in the process of confirming with Altrazeal Trading the actual number of Altrazeal® blisters to be returned.

Under the Altrazeal Termination Agreement, we also agreed to file within twenty (20) days of closing a registration statement registering the resale of 2,500,000 shares of Common Stock issued under the Altrazeal Termination Agreement and to use all commercially reasonable efforts to cause such registration Statement to become effective. In accordance with our obligations under the Altrazeal Termination Agreement, we filed with the SEC a registration statement that was declared effective on February 16, 2016. We are required to keep the registration statement effective at all times with respect to such 2,500,000 shares, other than permitted suspension periods, until the earliest of (i) June 24, 2016, (ii) the date when Altrazeal Trading and IPMD may sell all of the registered shares under Rule 144 under the Securities Act without volume limitations, or (iii) the date when Altrazeal Trading and IPMD no longer owns any of the registered shares.

In connection with the Altrazeal Termination Agreement, we also entered into a Mutual Termination and Release Agreement, dated December 24, 2015, for the purpose of terminating the Binding Term Sheet dated May 12, 2015 with Altrazeal Trading and Firnron LTD (the “Term Sheet”). Under the Term Sheet, it was contemplated that the Company would acquire all of the remaining equity interests in Altrazeal Trading.

Licensing rights, net consisted of the following at March 31, 2016 and December 31, 2015:

Intangible assets - licensing rights	March 31, 2016			December 31, 2015
European Union, Australia, New Zealand, Middle East (excluding Jordan and Syria), North Africa, Albania, Bosnia, Croatia, Kosovo, Macedonia, Montenegro, and Serbia.	$	3,512,506		$	3,512,506
Less: accumulated amortization		(86,444	)		(6,271	)
Intangible assets - licensing rights, net	$	3,426,062		$	3,506,235

Amortization expense for intangible licensing rights assets was $80,173 and nil for the three months ended March 31, 2016 and 2015, respectively.

The future aggregate amortization expense for intangible licensing rights assets, remaining as of March 31, 2016, is as follows:

Calendar Years	Future Amortization Expense
2016 (Nine months)	$	244,975
2017		325,148
2018		325,148
2019		325,148
2020		325,148
2021 & Beyond		1,880,495
Total	$	3,426,062

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NOTE 8.

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.

Altrazeal Trading GmbH

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. On February 1, 2014, Altrazeal Trading Ltd. transferred all of their rights and obligations under the existing shareholders’ agreement to Altrazeal Trading GmbH (“Altrazeal Trading”). As a result of this transfer, we were entitled to receive a non-dilutable 25% ownership interest in Altrazeal Trading.

On December 24, 2015, we completed the Altrazeal Termination Agreement with Altrazeal Trading and IPMD GmbH (“IPMD”) as more fully described in Note 7. Under the Altrazeal Termination Agreement, our ownership interest in Altrazeal Trading was cancelled.

Altrazeal AG

On February 1, 2014, we executed a shareholders’ agreement with Altrazeal AG, a single purpose entity for the marketing of Altrazeal® in several territories, including Africa (markets not already licensed), Latin America, Georgia, Turkmenistan, Ukraine, the Commonwealth of Independent States, Jordan, Syria, Asia and the Pacific (excluding China, Hong Kong, Macau, Taiwan, South Korea, Japan, Australia, and New Zealand). As a result of this transaction, we were entitled to receive a non-dilutable 25% ownership interest in Altrazeal AG.

In late March 2016, we provided Altrazeal AG with a notice identifying certain breaches in the Exclusive License and Supply Agreement, dated September 30, 2013 with Altrazeal AG (as amended, the “ELSA”). On or about March 24, 2016, we learned that Altrazeal AG had commenced an insolvency proceeding in Switzerland and immediately sent an additional notice of termination referencing the insolvency. On or about April 18, 2016, we learned that the insolvency petition filed by Altrazeal AG in Switzerland has been accepted by the court and an administrator is to be appointed. As a result of the breaches by Altrazeal AG in the ELSA, the ELSA has been terminated in accordance with its terms. As a result of the accepted insolvency petition, we believe that our ownership interest in Altrazeal AG is deemed to be worthless and certain net accounts receivables with Altrazeal AG are uncollectible.

ORADISC GmbH

On October 19, 2012, we executed a shareholders’ agreement for the establishment of ORADISC GmbH, through which OraDisc™ erodible film technology products would be developed and marketed. We were entitled to receive a non-dilutable 25% ownership interest in ORADISC GmbH.

In October 2012, we executed a License and Supply Agreement with ORADISC GmbH for the marketing of applications of our OraDisc™ erodible film technology for dental applications including benzocaine (OraDisc™ B), re-mineralization dental strips, fluoride dental strips, long-acting breath freshener, Amlexanox (OraDisc™ A). We also granted to ORADISC GmbH a twenty-four month option to utilize the OraDisc™ erodible film technology for drug delivery for migraine, nausea and vomiting, cough and cold, and pain. In January 2015, the initial twenty-four month option period to utilize the OraDisc™ erodible film technology by ORADISC GmbH was extended until December 31, 2015. In addition, this option expanded the applications for use to include anti-psychotics, neurologic products, and actives for the treatment of erectile dysfunction. On December 30, 2015, we received notice from ORADISC GmbH of their exercise of the option. We informed ORADISC GmbH that under the terms of the option, the right to use the OraDisc™erodible film technology expired on December 31, 2015. In March 2016, we also provided ORADISC GmbH with a notice identifying certain breaches in the License and Supply Agreement with ORADISC GmbH. As a result of the breaches by ORADISC GmbH in the License and Supply Agreement, the License and Supply Agreement has been terminated in accordance with its terms and ORADISC GmbH has ceased to be a product distributor for the Company. Since delivering the termination notice to ORADISC GmbH we have not had any communication from ORADISC GmbH with respect to the License and Supply Agreement.

In March 2016, we learned that insolvency proceedings have been initiated with an Austrian commercial court with respect to IPMD GmbH and that one of its affiliated operating entities, ORADISC GmbH, might be affected by such insolvency proceeding filing. We are continuing to evaluate our position with respect to IPMD GmbH and ORADISC GmbH in light of this recent development.

Financial statements for the three months ended March 31, 2016 and for the year ended December 31, 2015 have not been released to us and, therefore, we have not included the effect of the financial activities of ORADISC GmbH in our financial statements for such reporting periods. We believe that our share of the cumulative losses of ORADISC GmbH for the three months ended March 31, 2016 and for the years ended December 31, 2015, 2014, and 2013 would exceed the carrying value of our investment, therefore the equity method of accounting would be suspended for such reporting periods and no additional losses would be charged to operations.

Based upon the unaudited financial statements for the years ended December 31, 2014 and 2013, as provided to us by ORADISC GmbH, our unrecorded share of ORADISC GmbH cumulative losses as of December 31, 2014 totaled $22,826.

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Summarized financial information for our investment in ORADISC GmbH assuming 100% ownership is as follows:

ORADISC GmbH	December 31, 2014 (Unaudited)			December 31, 2013 (Unaudited)
Balance sheet
Total assets	$	237,726		$	305,069
Total liabilities	$	286,643		$	302,572
Total stockholders’ (deficit)/equity	$	(48,917	)	$	2,497
Statement of operations
Revenues	$	---		$	---
Net (loss)	$	(47,450	)	$	(34,671	)

NOTE 9.

ACCRUED LIABILITIES

Accrued liabilities consisted of the following at March 31, 2016 and December 31, 2015:

Accrued Liabilities	March 31, 2016		December 31, 2015
Accrued compensation/benefits	$	394,117	$	329,131
Accrued insurance payable		27,032		73,074
Accrued property taxes		2,475		---
Product rebates/returns		4		9
Total accrued liabilities	$	423,628	$	402,214

NOTE 10.

CONVERTIBLE DEBT

Debt Financing – April 2015

On April 15, 2015, we entered into a Securities Purchase Agreement dated April 14, 2015 (the “Purchase Agreement”) with Inter-Mountain Capital Corp. (“Inter-Mountain”) related to our issuance of a $550,000 Promissory Note (the “April 2015 Note”). The purchase price for the April 2015 Note, which reflects a $50,000 original issue discount, was $500,000. The Purchase Agreement also included representations and warranties, restrictive covenants and indemnification provisions standard for similar transactions.

The April 2015 Note bears interest at the rate of 10.0% per annum, with monthly installment payments of $45,000 commencing on the date that is 120 calendar days after the issuance date of the April 2015 Note. At our option, subject to certain volume, price and other conditions, the monthly installments may be paid in whole, or in part, in cash or in Common Stock. If the monthly installments are 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 per share. At our option, the outstanding principal balance of the April 2015 Note, or a portion thereof, may be prepaid in cash at 120% of the amount elected to be prepaid. The April 2015 Note is unsecured and is not subject to conversion at the discretion of Inter-Mountain.

Events of default under the April 2015 Note include failure to make required payments, 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 the Common Stock, a restatement of financial statements and a default under certain other agreements. In the event of default, the interest rate under the April 2015 Note increases to 18% and the April 2015 Note becomes callable at a premium. In addition, Inter-Mountain has all remedies under law and equity.

As part of the debt financing, Inter-Mountain also received a warrant (the “Warrant”) to purchase up to an aggregate of 194,118 shares of Common Stock. The Warrant has an exercise price of $0.85 per share and expires on April 30, 2020. The Warrant includes a standard net cashless exercise provision and provisions requiring proportionate adjustments in connection with a recapitalization transaction.

As part of the debt financing, we entered into a Registration Rights Agreement whereby we agreed to prepare and file with the Securities and Exchange Commission (the “SEC”) a registration statement no later than May 11, 2015 and to cause such registration statement to be declared effective no later than 120 after the closing date and to keep such registration statement effective for a period of no less than 180 days. In accordance with our obligations under the Registration Rights Agreement, we filed with the SEC a registration statement that was declared effective on June 4, 2015. Such registration statement ceased to be effective in April 2016.

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On January 11, 2016, we executed a Waiver Agreement with Inter-Mountain. The Waiver Agreement relates to the April 2015 Note and our failure to make the installment payment under the April 2015 Note due in November 2015 on a timely basis. Subsequent installment payments with respect to 2015 and 2016 have all been made on a timely basis. Under the terms of the Waiver Agreement, we agreed to remit the November 2015 installment payment of $45,000 in cash and to pay Inter-Mountain an accommodation fee of $25,000, with the accommodation fee being added to the outstanding loan balance.

Using specific guidelines in accordance with U.S. GAAP, we allocated the value of the proceeds received to the promissory note and to the warrant on a relative fair value basis. We calculated the fair value of the warrant issued with the debt 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 of the warrant was recorded as a debt discount and is being amortized over the expected term of the promissory note to interest expense.

Information relating to the April 2015 Note is as follows:

								As of March 31, 2016
Transaction	Initial Principal Amount		Interest Rate			Maturity Date	Conversion Price (1)	Principal Balance		Unamortized Debt Discount		Unamortized Debt Issuance Costs		Carrying Value
April 2015 Note	$	550,000		10.0	%	08/12/2016		$	215,000	$	19,000	$	13,559	$	182,441
Total	$	550,000						$	215,000	$	19,000	$	13,559	$	182,441

(1)

For the three months ended March 31, 2016, we issued 694,056 shares of Common Stock for one installment payment of principal and interest due under the April 2015 Note. For the same period, we also remitted three installment payments in cash of principal and interest due under the April 2015 Note.

The future minimum payments relating to the April 2015 Note, as of March 31, 2016, are as follows:

	Payments Due By Period
Transaction	Total		2016		2017		2018		2019		2020
April 2015 Note	$	215,000	$	215,000	$	---	$	---	$	---	$	---
Total	$	215,000	$	215,000	$	---	$	---	$	---	$	---

The amount of interest cost recognized from our promissory note was $8,226 and nil for the three months ended March 31, 2016 and 2015, respectively. The amount of debt discount amortized from our promissory note was $13,015 and nil for the three months ended March 31, 2016 and 2015, respectively. The amount of debt issuance costs amortized from our promissory note was $9,368 and nil for the three months ended March 31, 2016 and 2015, respectively.

NOTE 11.

EQUITY TRANSACTIONS

Common Stock Transaction

March 2016 Offering

On March 29, 2016, we entered into a Stock Purchase Agreement with fifteen investors for the offer and sale of 25,245,442 shares of Common Stock and warrants to purchase an additional 25,245,442 shares of Common Stock at a purchase price of $0.0713 per unit, with each unit consisting of one share and one warrant to purchase Common Stock, for an aggregate purchase price of $1,800,000 (the “March 2016 Offering). The issue price of the shares sold was based on a 10% discount to the average closing price between March 7, 2016 and March 11, 2016 and the warrant exercise price was based on a 10% premium to the same average closing price. The warrants have an exercise price of $0.0871 per share and a five-year term. The warrants also include cashless exercise provisions and a “full ratchet” anti-dilution provision under which the exercise price of such warrants resets to any lower sales price at which the Company offers or sells Common Stock or Common Stock equivalents for one year (subject to standard exceptions).

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Purchasers in the March 2016 Offering include Michael I. Sacks ($1,000,000), the father of Bradley J. Sacks, the Chairman of our Board of Directors, Centric Capital Ventures, LLC ($19,000), an investment entity controlled by Bradley J. Sacks, Terrance K. Wallberg ($50,000), our Vice President and Chief Financial Officer, and Daniel G. Moro ($10,000), our Vice President of Polymer Drug Delivery.

NOTE 12.

STOCKHOLDERS’ EQUITY

Common Stock

As of March 31, 2016, we had 62,974,431 shares of Common Stock issued and outstanding. For the three months ended March 31, 2016, we issued 26,139,498 shares of Common Stock composed of 25,245,442 shares of Common Stock issued to investors pursuant to the March 2016 offering, 694,056 shares of Common Stock issued for installment payments due under the April 2015 Note with Inter-Mountain, and 200,000 shares issued for consulting services related to investor relations.

Preferred Stock

As of March 31, 2016, we had no shares of Series A Preferred Stock (the “Series A Shares”) issued and outstanding. For the three months ended March 31, 2016, we did not issue or redeem any Series A Shares.

Warrants

The following table summarizes the warrants outstanding and the number of shares of Common Stock subject to exercise as of March 31, 2016 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, 2015		1,774,193	$	0.77
Warrants issued		25,245,442	$	0.09
Warrants exercised		---		---
Warrants cancelled		---		---
Balance as of March 31, 2016		27,019,635	$	0.13

For the three months ended March 31, 2016, we issued warrants to purchase up to an aggregate of 25,245,442 shares of our Common Stock at an exercise price of $0.0871 per shares pursuant to the March 2016 Offering.

Of the warrant shares subject to exercise as of March 31, 2016, expiration of the right to exercise is as follows:

Date of Expiration	Number of Warrant Shares of Common Stock Subject to Expiration
June 13, 2016		35,000
July 16, 2016		116,667
July 28, 2016		34,722
December 24, 2016		653,686
March 14, 2018		660,000
January 15, 2019		80,000
April 30, 2020		194,118
March 30, 2021		25,245,442
Total		27,019,635

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NOTE 13.

EARNINGS PER SHARE

Basic and Diluted Net Loss Per Share

In accordance with the Financial Accounting Standards Board (“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, 2016 and December 31, 2015:

	March 31, 2016		December 31, 2015
Warrants to purchase Common Stock		27,019,635		1,774,193
Stock options to purchase Common Stock		1,409,571		1,664,573
Common stock issuable upon the assumed conversion of payments due under our promissory note from April 2015 (1)		3,307,693		1,934,718
Total		31,736,899		5,373,484

(1)

As part of the April 2015 Note, at our option, subject to certain volume, price and other conditions, the monthly installments of principle and interest due under the April 2015 Note may be paid in whole, or in part, in cash or in Common Stock. If the monthly installments are 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 per share. For the purposes of this Table, we have assumed that all outstanding monthly installments of principal and interest will be paid in Common Stock based on a price of $0.06 per share (80% of the average of the three lowest volume weighted average prices of the shares of Common Stock during the preceding twenty trading days prior to March 31, 2016), subject to certain ownership limitations.

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NOTE 14.

SHARE BASED COMPENSATION

The Company’s share-based compensation plan, the 2006 Equity Incentive Plan, as amended (“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 did not grant any incentive stock option awards to executives or employees or any nonstatutory stock option awards to directors or non-employees for the three months ended March 31, 2016 and 2015, respectively.

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.

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,
	2016		2015
Research and development	$	8,670	$	18,612
Selling, general and administrative		19,197		56,736
Total share-based compensation expense	$	27,867	$	75,348

At March 31, 2016, 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 $78,000. The period over which the unearned share-based compensation is expected to be recognized is approximately eighteen months.

The following table summarizes the stock options outstanding and the number of shares of Common Stock subject to exercise as of March 31, 2016 and the changes therein during the three months then ended:

	Stock Options			Weighted Average Exercise Price per Share
Outstanding as of December 31, 2015		1,664,573		$	1.73
Granted		---			---
Forfeited/cancelled		(255,002	)	$	2.83
Exercised		---			---
Outstanding as of March 31, 2016		1,409,571		$	1.53

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The following table presents the stock option grants outstanding and exercisable as of March 31, 2016:

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
	807,500	$	0.33		7.0		565,000	$	0.33
	550,000		1.15		6.2		75,000		1.15
	52,071		24.20		1.4		52,071		24.20
	1,409,571	$	1.53		6.5		692,071	$	2.22

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.

For the three months ended March 31, 2016 and 2015, we did not grant any restricted stock awards.

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, June 14, 2012, June 13, 2013, and on June 5, 2014, 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, 400,000 shares, 600,000 shares, and 1,000,000 shares, respectively, to a total of 2,800,000 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, 2016, we had granted options to purchase 2,061,167 shares of Common Stock since the inception of the Equity Incentive Plan, of which 1,409,571 were outstanding at a weighted average exercise price of $1.53 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, 2016, there were 1,320,983 shares that remained available for future grants under our Equity Incentive Plan.

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NOTE 15.

FAIR VALUE MEASUREMENTS

In accordance with FASB 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 promissory 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, 2016 and December 31, 2015.

Description	March 31, 2016		December 31, 2015
Liabilities:
Promissory note – April 2015	$	215,000	$	370,000

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.

NOTE 16.

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 17.

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 originally continued until April 1, 2013. The lease required a minimum monthly lease obligation of $9,330, which was inclusive of monthly operating expenses, until April 1, 2011 and at such time increased to $9,776, which was 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 required a minimum monthly lease obligation of $9,193, which was inclusive of monthly operating expenses, until March 31, 2014 and at such time, increased to $9,379, which was inclusive of monthly operating expenses. On March 17, 2015, we executed a Second Amendment to Lease Agreement (the “Second Amendment”) that renewed and extended our lease until March 31, 2018. The Second Amendment requires a minimum monthly lease obligation of $9,436, which is inclusive of monthly operating expenses.

On December 10, 2010 we entered into a lease agreement for certain office equipment that commenced on February 1, 2011 and continued until February 1, 2015 and required a minimum lease obligation of $744 per month. On January 16, 2015 we entered into a new lease agreement for certain office equipment. The new office equipment lease, that commenced on February 1, 2015 and continues until February 1, 2018, requires a minimum lease obligation of $551 per month.

The future minimum lease payments under the 2015 office lease and the 2015 equipment lease are as follows as of March 31, 2016:

Calendar Years	Future Lease Expense
2016 (Nine months)	$	89,880
2017		119,840
2018		28,858
2019		---
2020		---
Total	$	238,578

Rent expense for our operating leases amounted to $29,960 and $31,165 for the three ended March 31, 2016 and 2015, 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.

Related Party Transactions and Concentration

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.

During 2015, Mr. Kerschbaumer served as a director of Altrazeal Trading GmbH, Altrazeal AG, and Melmed Holding AG (collectively, the “Altrazeal Distributors”) and Mr. Kuehne served as a director of Altrazeal AG. In such capacities, Mr. Kerschbaumer may have been considered, either singularly or collectively, to have had control of, and make investment and business decisions on behalf of the Altrazeal Distributors and Mr. Kuehne may be considered, either singularly of collectively, to have had control of, and make investment and business decisions on behalf of Altrazeal AG.

As a result of the Altrazeal Termination Agreement in December 2015, Altrazeal Trading GmbH and Melmed Holding AG ceased to be a product distributor for the Company.

As a result of the breaches in March and April 2016 by Altrazeal AG in the ELSA, we believe that the ELSA has been cancelled and Altrazeal AG has ceased to be a product distributor for the Company.

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Each of Mr. Kerschbaumer and Mr. Kuehne are managing directors of ORADISC GmbH and in such capacities may be considered, either singularly or collectively, to have control of, and make investment and business decisions on behalf of the ORADISC GmbH. On April 19, 2016, Mr. Kuehne resigned as a managing director of ORADISC GmbH.

For the three months ended March 31, 2016 and 2015, the Company recorded revenues, in approximate numbers, of nil and $282,000, respectively, with the various Altrazeal Distributors, which represented 0% and 96% of our total revenues. As of March 31, 2016 and December 31, 2015, Altrazeal Distributors had an outstanding net accounts receivable, in approximate numbers, of nil and $3,000, respectively, which represented 0% and 3% of our net outstanding accounts receivables.

License Purchase and Termination Agreement

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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 and manage the Company’s cash and financial resources.

As of March 31, 2016, the following table summarizes the Company’s obligation for compensation temporarily deferred by our employees:

Name	2016		2015			2014 – 2011	Total
Kerry P. Gray (1) (2) (3)	$	---	$	275,153	$	150,000	$	425,153
Terrance K. Wallberg		25,897		53,540		---		79,437
Other employees		16,385		54,871		---		71,256
Total	$	42,282	$	383,564	$	150,000	$	575,846

(1)	On November 19, 2015, Mr. Gray resigned as the Company’s President and Chief Executive Officer and on February 18, 2016 resigned as a director for the Company.
(2)	During 2015, Mr. Gray temporarily deferred compensation of $275,153 which consisted of $51,770 earned as salary compensation for his duties as President of the Company, $186,083 for his duties as Chairman of the Executive Committee of the Company’s Board of Directors, and $37,300 as a temporary advance of working capital.
(3)	During 2014, Mr. Gray temporarily deferred compensation of $150,000 which consisted of $62,500 earned as salary compensation for his duties as President of the Company and $87,500 for his duties as Chairman of the Executive Committee of the Company’s Board of Directors. During 2014, Mr. Gray was also repaid $269,986 of temporarily deferred compensation, of which $100,000 was used by Mr. Gray for funding required pursuant to a Securities Purchase Agreement, dated March 14, 2013 (the “March 2013 Offering”). Prior to 2014, over a three year period Mr. Gray temporarily deferred, at various times, aggregate compensation of $582,486 and during the same time period was also repaid $312,500 of temporarily deferred compensation, of which $300,000 was used by Mr. Gray for funding required pursuant to the March 2013 Offering.

As of March 31, 2016, the Company’s obligation for temporarily deferred compensation was $575,846 of which $302,263 was included in accrued liabilities and $273,583 was included in accounts payable, respectively.

As of December 31, 2015, the Company’s obligation for temporarily deferred compensation was $533,564 of which $259,981 was included in accrued liabilities and $273,583 was included in accounts payable, 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, 2016, 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 18.

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; however, one or more events may lead to a formal dispute or proceeding in the future.

In late March 2016, we provided Altrazeal AG with a notice identifying certain breaches in the Exclusive License and Supply Agreement, dated September 30, 2013 (the “ELSA”). On or about March 24, 2016, we learned that Altrazeal AG had commenced an insolvency proceeding in Switzerland and immediately sent an additional notice of termination referencing the insolvency. On or about April 18, 2016, we have learned that the insolvency petition filed by Altrazeal AG in Switzerland has been accepted by the court and an administrator is to be appointed. As a result of the breaches by Altrazeal AG in the ELSA, we believe that the ELSA has been cancelled. As a result of the accepted insolvency petition, we believe that our ownership interest in Altrazeal AG is deemed to be worthless and certain net accounts receivables with Altrazeal AG are uncollectible.

NOTE 19.

SUBSEQUENT EVENTS

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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 Annual Report on Form 10-K for the year ended December 31, 2015, referred to as our 2015 Form 10-K, which has been previously filed with the Securities and Exchange Commission on March 30, 2016, 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 involves risks and uncertainties. Our actual results could differ materially from those anticipated by such forward-looking information due to competitive factors and other risks discussed in our 2015 Form 10-K under “Risks Associated with our Business”.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This quarterly report on Form 10-Q (including documents incorporated by reference) (this “Report”) 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 that they use words such as “should”, “expect”, “anticipate”, “estimate”, “target”, “may”, “project”, “guidance”, “will”, “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 are likely to relate to, among other things, the Company’s goals, plans and projections regarding its financial position, statements indicating that the Company has cash and cash equivalents sufficient to fund our operations in the future, statements regarding expected cash flows, market position, product development, product approvals, increases in revenue, expense levels, performance or results of current and anticipated products and the outcome of contingencies such as legal proceedings, acquisitions, 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.

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. We undertake no obligation to release publicly any revisions to forward-looking statements as a result of new information, future events or otherwise.

Business Overview

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

Our strategy is twofold:

§	Establish a market leadership position in wound management by developing and commercializing a customer focused portfolio of innovative wound care products based on our Nanoflex® technology to treat the various phases of wound healing; and
§	Develop our oral mucoadhesive film technology (OraDiscTM) for systemic drug delivery and for delivery of actives to the oral cavity.

Utilizing our technologies, three of our products have been approved for marketing in various global markets. In addition, additional products may be developed utilizing our patented Nanoflex® and OraDiscTM 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 in September 2008, the product is indicated for both exuding acute wounds such as partial thickness burns, donor sites, non-healing surgical wounds, and trauma and for chronic wounds such as venous leg ulcers, diabetic foot ulcers, and pressure ulcers;
§	Aphthasol® is a drug approved by the FDA for the treatment of canker sores; and
§	OraDisc™ A was developed as an improved drug delivery system for the treatment of canker sores.

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Recently, we have developed a series of operational plans to enhance and streamline the business:

§	We have embarked on a plan to consolidate operations of disparate affiliates to remove inefficiency and align interests;
§	We completed the acquisition of the European, Middle East and Australian marketing and distribution rights for Altrazeal® from Altrazeal Trading GmbH and its affiliates;
§	As a result of a breach by Altrazeal AG of its obligations under our licensing agreement, we currently do not have a direct distributor acting on our behalf in the territories previously covered by the AG Agreement, which included Africa (markets not already licensed), Latin America, Georgia, Turkmenistan, Ukraine, the Commonwealth of Independent States, Jordan, Syria, Asia and the Pacific (excluding China, Hong Kong, Macau, Taiwan, South Korea, Japan, Australia, and New Zealand). We now have the opportunity to potentially form direct relationships with sub-distributors in the territories previously covered by the AG Agreement for the purpose of accepting orders directly from, and fulfilling orders directly to, such sub-distributors.
§	We have determined that creating a product roadmap with line extensions is necessary to respond to market interest in Altrazeal®;
§	As a result of a breach by ORADISC GmbH of its obligations under our licensing agreement, the Company has regained control of all of the OraDisc™ rights and has the opportunity to develop and commercialize products utilizing our OraDisc™ film technology itself or together with other partners;
§	We have implemented a plan to restructure our operations to improve efficiency and reduce cost, including production, distribution, and administration costs;
§	We are undertaking efforts to stimulate sales and enhance marketing; and
§	We have developed a new plan to streamline regulatory activity to expedite new market entry.

Recent Developments

Common Stock Transaction

March 2016 Offering

On March 29, 2016, we entered into a Stock Purchase Agreement with fifteen investors for the offer and sale of 25,245,442 shares of Common Stock and warrants to purchase an additional 25,245,442 shares of Common Stock at a purchase price of $0.0713 per unit, with each unit consisting of one share and one warrant to purchase Common Stock, for an aggregate purchase price of $1,800,000 (the “March 2016 Offering). The issue price of the shares being sold was based on a 10% discount to the average closing price between March 7, 2016 and March 11, 2016 and the warrant exercise price was based on a 10% premium to the same average closing price. The warrants have an exercise price of $0.0871 per share and a five-year term. The warrants also include cashless exercise provisions and a “full ratchet” anti-dilution provision under which the exercise price of such warrants resets to any lower sales price at which the Company offers or sells Common Stock or Common Stock equivalents for one year (subject to standard exceptions).

Purchasers in the March 2016 Offering included Michael I. Sacks ($1,000,000), the father of Bradley J. Sacks, the Chairman of our Board of Directors, Centric Capital Ventures, LLC ($19,000), an investment entity controlled by Bradley J. Sacks, Terrance K. Wallberg ($50,000), our Vice President and Chief Financial Officer, and Daniel G. Moro ($10,000), our Vice President of Polymer Drug Delivery.

Debt Financing Transaction

April 2015 Note

The April 2015 Note bears interest at the rate of 10.0% per annum, with monthly installment payments of $45,000 commencing on the date that is 120 calendar days after the issuance date of the April 2015 Note. At our option, subject to certain volume, price and other conditions, the monthly installments may be paid in whole, or in part, in cash or in Common Stock. If the monthly installments are 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. At our option, the outstanding principal balance of the April 2015 Note, or a portion thereof, may be prepaid in cash at 120% of the amount elected to be prepaid.

As of March 31, 2016, the principle balance due on the April 2015 note is $215,000. It is our intention at this time to remit in cash the monthly installments that are due over the remaining term of the April 2015 note.

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Product Distribution

One of our primary international distributors, Altrazeal AG, breached certain material terms and conditions of our license and supply agreement with them including provisions related to timely payment of amounts owed. Given the uncertainty of collecting payment for any product shipments to territories previously controlled by Altrazeal AG, the Company felt it prudent to delay product shipments to these territories until such time as credit can be established with a new licensee or direct relationships can be formed with existing sub-distributors.

As a result, pending orders for Altrazeal® totaling approximately $86,000 were placed on credit hold and were not shipped during the first quarter of 2016. The Company had previously disclosed that Altrazeal AG had initiated insolvency proceedings and recently announced that, given the various breaches in the license and supply agreement between the parties, the agreement was cancelled. As a result, the rights for Altrazeal in all markets previously serviced by Altrazeal AG have reverted back to the Company.

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, 2016 and 2015

Total Revenues

Revenues were approximately $109,000 for the three months ended March 31, 2016, as compared to revenues of approximately $295,000 for the three months ended March 31, 2015, and were comprised of, in approximate amounts, licensing fees of $101,000 from Altrazeal® and OraDisc™ licensing agreements and product sales of $8,000 for Altrazeal®.

The decrease of $186,000 in revenues is primarily attributable to a decrease of approximately $272,000 in Altrazeal® product sales as one of our international distributors, Altrazeal AG, breached material terms and conditions of the Exclusive License and Supply Agreement, dated September 30, 2013 between the Company and Altrazeal AG (as amended, the “ELSA”), including provisions related to timely payment of amounts owed. Given the uncertainty of collecting payment for any product shipments to territories previously controlled by Altrazeal AG, we felt it prudent to delay product shipments to these territories until such time as credit can be established with a new licensee or direct relationships can be formed with existing sub-distributors. The revenue decrease was partially offset by the recognition of unamortized licensing fees of approximately $86,000 related to the cancellation of the ELSA.

Costs and Expenses

Cost of Goods Sold

Cost of goods sold for the three months ended March 31, 2016 and 2015 were approximately $1,000 and $102,000, respectively, and were comprised entirely of costs associated with Altrazeal®.

Research and Development

Research and development expenses totaled approximately $136,000 for the three months ended March 31, 2016, including $9,000 in share-based compensation, compared to approximately $204,000 for the three months ended March 31, 2015, which included $18,000 in share-based compensation. The decrease of approximately $68,000 in research and development expenses was primarily due to, in approximate numbers, a decrease of $60,000 direct research costs primarily related to consulting costs and product registration costs, a decrease of $25,000 in scientific compensation related wage reductions by existing staff and lower share-based compensation. These expense decreases were partially offset by an increase of $17,000 in regulatory consulting costs as the prior-year included a one-time credit adjustment of $14,000.

The direct research and development expenses for the three months ended March 31, 2016 and 2015 were, in approximate numbers, as follows:

	Three Months Ended March 31,
Technology	2016		2015
Wound care & nanoparticle	$	13,000	$	72,000
OraDisc™		4,000		3,000
Aphthasol® & other technologies		---		1,000
Total	$	17,000	$	76,000

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Selling, General and Administrative

Selling, general and administrative expenses totaled approximately $319,000 for the three months ended March 31, 2016, including $19,000 in share-based compensation, compared to approximately $446,000 for the three months ended March 31, 2015, which included $57,000 in share-based compensation. The decrease of approximately $127,000 in selling, general and administrative expenses was primarily due to, in approximate numbers, a decrease of $90,000 in directors fees that is composed of a decrease of $37,000 in share-based compensation and a decrease of $53,000 in cash compensation, a decrease of $38,000 in compensation as our Interim President and Chief Executive Officer receives less monthly compensation than our prior President and Chief Executive Officer, a decrease of $15,000 in legal costs due to settlement of a licensing agreement dispute, a decrease of $14,000 in legal fees related to our patents, a decrease of $6,000 in accounting fees related to our annual audit, and a decrease of $2,000 in other miscellaneous expenses. These expense decreases were partially offset by, in approximate numbers, an increase of $25,000 in commission costs relating to a product license as the prior year included a one-time credit adjustment and an increase of $13,000 in bad debt expense accruals.

Amortization of Intangible Assets

Amortization of intangible assets expense totaled approximately $199,000 for the three months ended March 31, 2016 as compared to approximately $117,000 for the three months ended March 31, 2015. The expense for each period consists primarily of amortization associated with our acquired patents and licensing rights. The increase of approximately $82,000 is attributable to the acquisition of licensing rights that occurred in December 2015. There were no additional purchases of patents or licensing rights during the three months ended March 31, 2016 and 2015, respectively.

Depreciation

Depreciation expense totaled approximately $33,000 for the three months ended March 31, 2016 as compared to approximately $58,000 for the three months ended March 31, 2015. The decrease of approximately $25,000 is attributable to certain equipment being fully depreciated.

Interest and Miscellaneous Income

Interest and miscellaneous income totaled approximately $20 for the three months ended March 31, 2016 as compared to approximately $140 for the three months ended March 31, 2015.

Interest Expense

Interest expense totaled approximately $47,000 for the three months ended March 31, 2016 as compared to approximately $13,000 for the three months ended March 31, 2015. Interest expense typically includes 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 debt. The increase of approximately $34,000 in interest expense is primarily attributable to the April 2015 Note with Inter-Mountain.

Foreign Currency Transaction Gain (Loss)

Foreign currency transaction gain totaled approximately $4,000 for the three months ended March 31, 2016 as compared to a foreign currency transaction loss of approximately $93,000 for the three months ended March 31, 2015. The improvement of approximately $97,000 is related to an increase in the Euro exchange rate experienced during 2016 and the pricing of Altrazeal® to our international distributors being denominated in Euros.

Accommodation fee due on promissory note

Accommodation fee due on promissory note was $25,000 for the three months ended March 31, 2016 as compared to nil for the three months ended March 31, 2015. The fee is based on a January 2016 Waiver Agreement with Inter-Mountain. The Waiver Agreement relates to the April 2015 Note and our failure to make the installment payment under the April 2015 Note due in November 2015 on a timely basis. Under the terms of the Waiver Agreement, we agreed to remit the November 2015 installment payment of $45,000 in cash and to pay Inter-Mountain an accommodation fee of $25,000, with the accommodation fee being added to the outstanding loan balance.

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LIQUIDITY AND CAPITAL RESOURCES

We have funded our operations primarily through the public and private sales of convertible notes and Common Stock. Product sales, royalty payments, licensing fees and milestone payments from our corporate alliances have also provided, and are expected in the future to provide, funding for operations.

On March 29, 2016, we entered into a Stock Purchase Agreement for the offer and sale of 25,245,442 shares of Common Stock and warrants to purchase an additional 25,245,442 shares of Common Stock at a purchase price of $0.0713 per unit consisting of one share and one warrant to purchase Common Stock, for an aggregate purchase price of $1,800,000 (the “March 2016 Offering). The issue price of the shares being sold was based on a 10% discount to the average closing price between March 7, 2016 and March 11, 2016 and the warrant exercise price was based on a 10% premium to the same average closing price. The warrants have an exercise price of $0.0871 per share and a five-year term. The warrants also include cashless exercise provisions and a “full ratchet” anti-dilution provision under which the exercise price of such warrants resets to any lower sales price at which the Company offers or sells Common Stock or Common Stock equivalents for one year (subject to standard exceptions).

As of the date of this Report, the March 2016 Offering has resulted in gross proceeds of $1,800,000, of which $1,439,000 was received in March 2016 and $361,000 was received in April 2016. As part of the offering expenses, we paid to a European placement agent a referral fee of $26,000 which is equal to 10% of the gross proceeds, provided that the investors referred by such placement agent were not U.S. Persons and were solicited outside the United States. Purchasers in the March 2016 Offering include Michael I. Sacks ($1,000,000), the father of Bradley J. Sacks, the Chairman of our Board of Directors, Centric Capital Ventures, LLC ($19,000), an investment entity controlled by Bradley J. Sacks, Terrance K. Wallberg ($50,000), our Vice President and Chief Financial Officer, and Daniel G. Moro ($10,000), our Vice President of Polymer Drug Delivery.

Our principal source of liquidity is cash and cash equivalents. As of March 31, 2016, our cash and cash equivalents were approximately $1,203,000 which is an increase of approximately $1,023,000 as compared to our cash and cash equivalents at December 31, 2015 of approximately $180,000. Our working capital (current assets less current liabilities) was approximately $(620,000) at March 31, 2016 as compared to our working capital at December 31, 2015 of approximately $(1,614,000).

Based on our liquidity as of March 31, 2016, we believe that our liquidity will be sufficient to fund operations through the third quarter of 2016. In order to continue to advance our business plan and outstanding obligations, we need to raise additional capital.

Consolidated Cash Flow Data
	Three Months Ended March 31,
Net Cash Provided by (Used in)	2016			2015
Operating activities	$	(226,000	)	$	(551,000	)
Investing activities		---			---
Financing activities		1,249,000			11,000
Net increase (decrease) in cash and cash equivalents	$	1,023,000		$	(540,000	)

Operating Activities

For the three months ended March 31, 2016, net cash used in operating activities was approximately $226,000. The principal components of net cash used for the three months ended March 31, 2016 were, in approximate numbers, our net loss of $646,000, a decrease of $101,000 in deferred revenues due to amortization of revenues, and an increase of $6,000 in inventory Our net loss for the three months ended March 31, 2016 included substantial non-cash charges of approximately $345,000 in the form of share-based compensation, amortization of patents and licensing rights, depreciation, amortization of debt discount, amortization of deferred financings costs, interest due on promissory notes settled with Common Stock, consulting services settled in Common Stock, and an accommodation fee due on the promissory note. The aforementioned net cash used for the three months ended March 31, 2016 was partially offset by, in approximate numbers, an increase of $144,000 in accounts payable due to timing of vendor payments, an increase of $22,000 in accrued liabilities due to temporary compensation deferrals, and a decrease of $16,000 in prepaid expenses related to insurance and listing fees.

For the three months ended March 31, 2015, net cash used in operating activities was approximately $551,000. The principal components of net cash used for the three months ended March 31, 2015 were, in approximate numbers, our net loss of $738,000, a decrease of $15,000 in deferred revenues due to amortization of revenues, a decrease of $14,000 in accrued liabilities related to insurance, an increase of $180,000 in accounts receivable related to higher international product sales, and an increase of $40,000 in inventory Our net loss for the three months ended March 31, 2015 included substantial non-cash charges of approximately $251,000 in the form of share-based compensation, amortization of patents, and depreciation. The aforementioned net cash used for the three months ended March 31, 2015 was partially offset by, in approximate numbers, an increase of $126,000 in accounts payable due to timing of vendor payments and a decrease of $59,000 in prepaid expenses related to insurance and listing fees.

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Investing Activities

There were no investing activities for the three months ended March 31, 2016 and 2015, respectively.

Financing Activities

Net cash provided by financing activities for the three months ended March 31, 2016 was approximately $1,249,000 and was comprised of, in approximate numbers, the net proceeds of $1,398,000 from the March 2016 Offering, offering costs of $14,000 associated with the acquisition of licensing rights that occurred in December 2015, and the repayment of $135,000 in principle due on the promissory note with Inter-Mountain.

Net cash provided by financing activities for the three months ended March 31, 2015 was approximately $11,000 and was comprised of an adjustment of offering costs associated with our sale of preferred stock in 2011.

Liquidity

As of March 31, 2016, we had cash and cash equivalents of $1,203,000.

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 2016 and beyond, such as the speed and degree of market acceptance, the impact of competition, the effectiveness of the sales and marketing efforts of our distributors and sub-distributors, and the outcome of our current efforts to develop, receive approval for, and successfully launch our near-term product candidates.

As of March 31, 2016, our net working capital (current assets less current liabilities) was approximately $(620,000). Based on our liquidity as of March 31, 2016, we believe that our liquidity will be sufficient to fund operations through the third quarter of 2016.

In order to continue to advance our business plan and outstanding obligations, we will need to raise additional capital in the foreseeable future to fund our operations and to potentially expand our business. We expect to seek additional funding through public and/or private offerings of debt and equity securities. We may also seek capital from other sources, including contribution by others to joint ventures, or collaborative arrangements or licensing for the development, testing, manufacturing and marketing of products under development. Subsequent to the March 2016 Offering, we have no agreements with respect to our potential receipt of additional capital.

Historically, we have been able to raise capital as needed to fund our operations at a base level, but we have generally not raised capital sufficient to fund unexpected occurrences, to cover projected expenses over the long term or to fund extensive research, marketing and development. As of the date of this report, we have not commenced discussions with respect to any future offerings. As a result, there is a risk that we will not be able to obtain capital as needed later in 2016. In addition, we will need to continue to seek capital from the market over the long term. To the extent we raise capital, it generally will be on terms that are dilutive to shareholders and may require the issuance of warrants or similar incentives, the agreement to restrictive covenants and/or the pledge of our assets as securities for debt financings.

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

§	our ability to successfully commercialize our wound management 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;
§	our ability to collect outstanding receivables;
§	the costs involved in filing, prosecuting and enforcing patent claims;
§	competing technological developments;
§	the trading volume and price of our capital stock;
§	the actions of parties whose consents, waivers or prompt responses are required for approval of a financing (such as parties with rights of first refusal or consent rights);
§	our general financial situation, including the amount of our indebtedness; and
§	the cost of manufacturing and production scale-up.

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Contractual Obligations

The following table summarizes our outstanding contractual cash obligations as of March 31, 2016, which is composed of the principle due under the April 2015 Note, a lease agreement for office and laboratory space in Addison, Texas and a lease agreement for office equipment. 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
April 2015 Note	$	215,000	$	215,000	$	---	$	---	$	---
Operating leases	$	238,578	$	119,840	$	118,738	$	---	$	---
Total contractual cash obligations	$	453,578	$	334,840	$	118,738	$	---	$	---

Capital Expenditures

For the three months ended March 31, 2016 and 2015, our expenditures for property, equipment, and leasehold improvements were zero, respectively. At this time, we believe that our capital expenditures for 2016 will be approximately $50,000 and consist of equipment related to the manufacture of our products.

Off-Balance Sheet Arrangements

As of March 31, 2016, 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.

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. as our banking institution. At March 31, 2016 and December 31, 2015 our cash and cash equivalents totaled approximately $1,203,000 and $180,000, 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, 2016 and at December 31, 2015. As of March 31, 2016, one customer, being one of our international distributors, exceeded the 5% threshold, with 97%. At December 31, 2015, one customer, being one of our international distributors, exceeded the 5% threshold with 92%. Historically, we have relied primarily on a group of affiliated entities for the distributions of our products. At least one of these entities, Altrazeal AG, is insolvent, and we believe that related distributors may also be insolvent. The weak financial position of these distributors has historical led to issues collecting accounts receivable. Going forward, we are routinely assessing the financial strength of our most significant customers and monitoring the amounts owed to us, taking appropriate action when necessary. As a result, we believe that our prospective accounts receivable credit risk exposure is limited.

Concentrations of Foreign Currency Risk

Currently, a portion of our revenues and all of our expenses are denominated in U.S. dollars. We are 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.

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, 2015 as filed with the Securities and Exchange Commission on March 30, 2016. We had no significant changes in our critical accounting policies since our last annual report.

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ITEM 3.

Quantitative and Qualitative Disclosures About Market Risk.

This item is not applicable to smaller reporting companies.

ITEM 4.

Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Based on their evaluation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the end of the period covered by this quarterly report, our chief executive officer and chief financial officer have concluded that our disclosure controls and procedures are designed to ensure 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 SEC's rules and forms and is accumulated and communicated to the Company's management, as appropriate, to allow timely decisions regarding required disclosure, and are operating in an effective manner.

Changes in Internal Controls Over Financial Reporting

During the fiscal quarter ended March 31, 2016, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1.

Legal Proceedings.

In late March 2016, we provided Altrazeal AG with a notice identifying certain breaches in the ELSA. On or about March 24, 2016, we learned that Altrazeal AG had commenced an insolvency proceeding in Switzerland and immediately sent an additional notice of termination referencing the insolvency. On or about April 18, 2016, we learned that the insolvency petition filed by Altrazeal AG in Switzerland has been accepted by the court and an administrator is to be appointed. As a result of the breaches by Altrazeal AG in the ELSA, the ELSA has been terminated in accordance with its terms. As a result of the accepted insolvency petition, we believe that our ownership interest in Altrazeal AG is deemed to be worthless and certain net accounts receivables with Altrazeal AG are uncollectible.

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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 30, 2016.

ITEM 2.

Unregistered Sales of Equity Securities and Use of Proceeds.

None, other than as previously reported.

ITEM 3.

Defaults Upon Senior Securities.

None.

ITEM 4.

Mine Safety Disclosures.

Not applicable.

ITEM 5.

Other Information.

None.

ITEM 6.

Exhibits.

Exhibit Number		Description
3.1		Restated Articles of Incorporation dated November 5, 2007. (1)
3.2		Amended and Restated Bylaws dated December 5, 2008. (2)
4.1		Form of Warrant dated March 30, 2016 by and between ULURU Inc. and the purchasers’ party thereto. (3)
10.1		Waiver Agreement dated January 11, 2016 by and between ULURU Inc. and Inter-Mountain Capital Corp. (4)
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 Form 8-K filed on November 6, 2007.
(2)		Incorporated by reference to the Company’s Form 8-K filed on December 11, 2008.
(3)		Incorporated by reference to the Company’s Form 8-K filed on March 30, 2016.
(4)		Incorporated by reference to the Company’s Form 8-K filed on January 12, 2016.
	*	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.

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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 16, 2016	By:	/s/ Helmut Kerschbaumer
		Helmut Kerschbaumer
		Interim Chief Executive Officer and President
		(Principal Executive Officer)


Date: May 16, 2016	By:	/s/ Terrance K. Wallberg
		Terrance K. Wallberg
		Chief Financial Officer and Vice President
		(Principal Financial and Accounting Officer)

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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.

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.


(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.


(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.

Document and Entity Information - shares	3 Months Ended
Document and Entity Information - shares	Mar. 31, 2016	May. 16, 2016
Entity Information [Line Items]
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
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q1
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2016
Common Stock [Member]
Entity Information [Line Items]
Entity Common Stock, Shares Outstanding		62,974,431
Series A Preferred Stock [Member]
Entity Information [Line Items]
Entity Common Stock, Shares Outstanding		0

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($)	Mar. 31, 2016	Dec. 31, 2015
Current Assets
Cash and cash equivalents	$ 1,202,691	$ 180,000
Accounts receivable, net	91,921	89,378
Accounts receivable - related party, net	0	2,805
Inventory	537,364	531,421
Prepaid expenses and deferred charges	107,110	123,201
Total Current Assets	1,939,086	926,805
Property, Equipment and Leasehold Improvements, net	224,252	257,417
Other Assets
Intangible asset - patents, net	2,602,078	2,720,541
Intangible asset - licensing rights, net	3,426,062	3,506,235
Investment in unconsolidated subsidiary	0	0
Deposits	18,069	18,069
Total Other Assets	6,046,209	6,244,845
TOTAL ASSETS	8,209,547	7,429,067
Current Liabilities
Accounts payable	1,924,145	1,780,197
Accrued liabilities	423,628	402,214
Promissory notes payable, net of unamortized debt discount and debt issuance costs, current portion	182,441	315,058
Deferred revenue, current portion	29,202	42,934
Total Current Liabilities	2,559,416	2,540,403
Long Term Liabilities
Deferred revenue, net of current portion	597,743	685,287
Total Long Term Liabilities	597,743	685,287
TOTAL LIABILITIES	$ 3,157,159	$ 3,225,690
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock - $0.001 par value; 20,000 shares authorized; Preferred Stock Series A, 1,000 shares designated; no shares issued and outstanding at March 31, 2016 and December 31, 2015, respectively	$ 0	$ 0
Common Stock - $0.001 par value; 200,000,000 shares authorized; 62,974,431 and 36,834,933 shares issued and outstanding at March 31, 2016 and December 31, 2015, respectively	62,975	36,835
Additional paid-in capital	62,257,129	60,426,915
Subscription receivable	(361,000)	0
Accumulated (deficit)	(56,906,716)	(56,260,373)
TOTAL STOCKHOLDERS' EQUITY	5,052,388	4,203,377
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 8,209,547	$ 7,429,067

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares	Mar. 31, 2016	Dec. 31, 2015
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)	62,974,431	36,834,933
Common stock, shares outstanding (in shares)	62,974,431	36,834,933
Series A Preferred Stock [Member]
STOCKHOLDERS' EQUITY
Shares designated to Series A (in shares)	1,000	1,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Revenues
License fees	$ 101,276	$ 14,539
Royalty income	0	0
Product sales, net	7,516	280,109
Total Revenues	108,792	294,648
Costs and Expenses
Cost of goods sold	924	101,530
Research and development	136,159	204,159
Selling, general and administrative	318,801	446,157
Amortization of intangible assets	198,636	117,161
Depreciation	33,165	58,309
Total Costs and Expenses	687,685	927,316
Operating (Loss)	(578,893)	(632,668)
Other Income (Expense)
Interest and miscellaneous income	22	142
Interest expense	(46,758)	(12,969)
Equity in earnings (loss) of unconsolidated subsidiary	0	0
Foreign currency transaction gain (loss)	4,286	(92,778)
Accommodation fee due on promissory note	(25,000)	0
(Loss) Before Income Taxes	(646,343)	(738,273)
Income taxes	0	0
Net (Loss)	$ (646,343)	$ (738,273)
Basic and diluted net (loss) per common share (in dollars per share)	$ (0.02)	$ (0.03)
Weighted average number of common shares outstanding (in shares)	37,658,932	24,458,018

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
OPERATING ACTIVITIES :
Net loss	$ (646,343)	$ (738,273)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of intangible assets	198,636	117,161
Depreciation	33,165	58,309
Share-based compensation for stock and options issued to employees	11,854	12,928
Share-based compensation for options issued to non-employees	16,013	62,420
Equity in earnings (loss) of unconsolidated subsidiary	0	0
Amortization of debt discount on promissory note	13,015	0
Amortization of deferred financing costs	9,368	0
Common stock issued for services	36,000	0
Common stock issued for interest due on promissory note	2,239	0
Accommodation fee due on promissory note	25,000	0
Change in operating assets and liabilities:
Accounts receivable	262	(180,100)
Inventory	(5,943)	(40,147)
Prepaid expenses and deferred charges	16,091	59,235
Accounts payable	143,948	126,157
Accrued liabilities	21,414	(13,740)
Deferred revenue	(101,276)	(14,539)
Total	419,786	187,684
Net Cash Used in Operating Activities	(226,557)	(550,589)
INVESTING ACTIVITIES :
Net Cash Used in Investing Activities	0	0
FINANCING ACTIVITIES :
Proceeds from sale of common stock and warrants, net	1,398,426	0
Offering costs associated with acquisition of licensing rights in 2015	(14,178)	0
Offering cost adjustment - preferred stock sale in 2011	0	10,509
Repayment of principle due on promissory note	(135,000)	0
Net Cash Provided by Financing Activities	1,249,248	10,509
Net Increase (Decrease) in Cash	1,022,691	(540,080)
Cash, beginning of period	180,000	550,458
Cash, end of period	1,202,691	10,378
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Cash paid for interest	7,577	852
Non-cash investing and financing activities:
Issuance of common stock for principle due on promissory note	$ 45,000	$ 0

COMPANY OVERVIEW AND BASIS OF PRESENTATION (Policies)	3 Months Ended
COMPANY OVERVIEW AND BASIS OF PRESENTATION (Policies)	Mar. 31, 2016
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, 2016 and the results of its operations for the three months ended March 31, 2016 and 2015 and cash flows for the three months ended March 31, 2016 and 2015 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, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016. 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, 2015, as filed with the Securities and Exchange Commission on March 30, 2016, including the risk factors set forth therein.
Liquidity and Going Concern	Liquidity and Going Concern The report of our independent registered public accounting firm for the fiscal year ended December 31, 2015, contained an explanatory paragraph to reflect its significant doubt about our ability to continue as a going concern as a result of our history of losses and our liquidity position, as discussed herein and in this Form 10-Q. Based on our liquidity as of March 31, 2016, the expected level of operating expenses, and the projected sales of our existing products combined with other revenues, we believe that we will be able to meet our working capital and capital expenditure requirements through the third quarter of 2016. However, we cannot be sure that our anticipated revenue growth will be realized or that we will generate significant positive cash flow from operations. Moreover, we may not be able to raise sufficient additional capital on acceptable terms, or at all, to continue operations beyond the third quarter of 2016. Therefore, we are unable to assert that our financial position is sufficient to fund operations beyond the third quarter of 2016, and as a result, there is substantial doubt about our ability to continue as a going concern beyond the third quarter of 2016. In order to continue to advance our business plan and outstanding obligations after the third quarter of 2016, we need to raise additional capital.

SEGMENT INFORMATION (Details)	3 Months Ended
SEGMENT INFORMATION (Details)	Mar. 31, 2016 USD ($) Segment Market	Mar. 31, 2015 USD ($)
SEGMENT INFORMATION [Abstract]
Number of business segments \| Segment	1
Number of international markets \| Market	16
Revenues per geographic area [Abstract]
Total Revenues	$ 108,792	$ 294,648
Total revenue, percentage	100.00%	100.00%
Reportable Geographical Components [Member] \| Domestic [Member]
Revenues per geographic area [Abstract]
Total Revenues	$ 7,516	$ 6,802
Total revenue, percentage	7.00%	2.00%
Reportable Geographical Components [Member] \| International [Member]
Revenues per geographic area [Abstract]
Total Revenues	$ 101,276	$ 287,846
Total revenue, percentage	93.00%	98.00%

SEGMENT INFORMATION, Reporting Segment (Details)	3 Months Ended
SEGMENT INFORMATION, Reporting Segment (Details)	Mar. 31, 2016	Mar. 31, 2015
Revenue, Major Customer [Line Items]
Concentration risk, percentage	100.00%	100.00%
Revenue [Member] \| Customer Concentration Risk [Member]
Revenue, Major Customer [Line Items]
Concentration risk, percentage	87.00%	94.00%
Revenue [Member] \| Customer Concentration Risk [Member] \| Customer A [Member] \| Altrazeal [Member]
Revenue, Major Customer [Line Items]
Concentration risk, percentage	87.00%	1.00%
Revenue [Member] \| Customer Concentration Risk [Member] \| Customer B [Member] \| Altrazeal [Member]
Revenue, Major Customer [Line Items]
Concentration risk, percentage	0.00%	93.00%

INVENTORY (Details) - USD ($)	Mar. 31, 2016	Dec. 31, 2015
Components of inventory [Abstract]
Raw materials	$ 38,439	$ 38,037
Work-in-progress	444,358	485,123
Finished goods	54,567	8,261
Total	$ 537,364	$ 531,421

PROPERTY, EQUIPMENT and LEASEHOLD IMPROVEMENTS (Details) - USD ($)	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Dec. 31, 2015
Property, equipment and leasehold improvements, net [Abstract]
Property, equipment and leasehold improvements, gross	$ 2,283,596		$ 2,283,596
Less: accumulated depreciation and amortization	(2,059,344)		(2,026,179)
Property, equipment and leasehold improvements, net	224,252		257,417
Depreciation expense	33,165	$ 58,309
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	1,604,894		1,604,894
Computers, Office Equipment, and Furniture [Member]
Property, equipment and leasehold improvements, net [Abstract]
Property, equipment and leasehold improvements, gross	153,865		153,865
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

INTANGIBLE ASSETS (Details) - USD ($)	3 Months Ended
INTANGIBLE ASSETS (Details) - USD ($)	Mar. 31, 2016	Mar. 31, 2015	Dec. 31, 2015
Finite-Lived Intangible Assets [Line Items]
Intangible assets, net	$ 2,602,078		$ 2,720,541
Amortization expense	198,636	$ 117,161
Patents [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross	9,625,938		9,625,938
Less: accumulated amortization	(7,023,860)		(6,905,397)
Intangible assets, net	2,602,078		2,720,541
Amortization expense	118,463	$ 117,161
Future aggregate amortization expense for intangible assets [Abstract]
2016 (Nine months)	357,987
2017	475,148
2018	475,148
2019	475,148
2020	476,450
2021 & Beyond	342,197
Total	2,602,078
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

INTANGIBLE ASSETS, Licensing Rights (Details)		3 Months Ended
INTANGIBLE ASSETS, Licensing Rights (Details)	Dec. 24, 2015 EUR (€) € / shares shares	Mar. 31, 2016 USD ($) shares	Mar. 31, 2015 USD ($)	Dec. 31, 2015 USD ($) shares	Dec. 24, 2015 $ / shares	Dec. 24, 2015 EUR (€) shares
Finite-Lived Intangible Assets [Line Items]
Issuance of common stock (in shares) \| shares		62,974,431		36,834,933
Amortization expense		$ 198,636	$ 117,161
Licensing Agreements [Member]
Finite-Lived Intangible Assets [Line Items]
European Union, Australia, New Zealand, Middle East (excluding Jordan and Syria), North Africa, Albania, Bosnia, Croatia, Kosovo, Macedonia, Montenegro, and Serbia		3,512,506		$ 3,512,506
Less: accumulated amortization		(86,444)		(6,271)
Total		3,426,062		3,506,235
Amortization expense		80,173	$ 0
Future aggregate amortization expense for intangible assets [Abstract]
2016 (Nine months)		244,975
2017		325,148
2018		325,148
2019		325,148
2020		325,148
2021 & Beyond		1,880,495
Total		$ 3,426,062		$ 3,506,235
Altrazeal Trading GmbH [Member] \| Licensing Agreements [Member]
Finite-Lived Intangible Assets [Line Items]
Percentage of ownership interest						25.00%
Transfer fee \| €	€ 1,570,271
Issuance of common stock (in shares) \| shares						4,441,606
Aggregate shares of common stock issued upon exercise of warrants (in shares) \| shares						444,161
Exercise price of warrants (in dollars per share) \| $ / shares					$ 0.68
Term of warrants	1 year
Deduction in inventory payment (in dollars per share) \| € / shares	€ 4.20
Number of days for closing registration statement	20 days
Common stock reissued (in shares) \| shares	2,500,000
Altrazeal Trading GmbH [Member] \| Licensing Agreements [Member] \| Maximum [Member]
Finite-Lived Intangible Assets [Line Items]
Inventory payment \| €						€ 88,834
IPMD GmbH [Member] \| Licensing Agreements [Member]
Finite-Lived Intangible Assets [Line Items]
Transfer fee \| €	€ 703,500
Issuance of common stock (in shares) \| shares						2,095,241
Aggregate shares of common stock issued upon exercise of warrants (in shares) \| shares						209,525
Exercise price of warrants (in dollars per share) \| $ / shares					$ 0.68
Term of warrants	1 year

INVESTMENTS IN UNCONSOLIDATED ENTITIES (Details) - USD ($)		3 Months Ended		12 Months Ended
	Oct. 31, 2012	Mar. 31, 2016	Mar. 31, 2015	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Statement of operations [Abstract]
Gains losses on equity method investments		$ 0	$ 0
Minimum [Member]
Schedule of Equity Method Investments [Line Items]
Percentage of noncontrolling interest		20.00%
Maximum [Member]
Schedule of Equity Method Investments [Line Items]
Percentage of noncontrolling interest		50.00%
Altrazeal Trading Ltd. [Member]
Schedule of Equity Method Investments [Line Items]
Non-dilutable ownership interest							25.00%
Altrazeal Trading GmbH [Member]
Schedule of Equity Method Investments [Line Items]
Non-dilutable ownership interest					25.00%
Altrazeal AG [Member]
Schedule of Equity Method Investments [Line Items]
Non-dilutable ownership interest					25.00%
ORADISC GmbH [Member]
Schedule of Equity Method Investments [Line Items]
Non-dilutable ownership interest							25.00%
Unrecorded profit (loss)					$ (22,826)
Time period granted to utilize OraDisc erodible film technology	24 months
OraDisc erodible film technology, expiry date		Dec. 31, 2015
Balance sheet [Abstract]
Total assets					237,726	$ 305,069
Total liabilities					286,643	302,572
Total stockholders' (deficit)/equity					(48,917)	2,497
Statement of operations [Abstract]
Revenues					0	0
Net (loss)					(47,450)	(34,671)
Gains losses on equity method investments		$ 0		$ 0	$ 0	$ 0

ACCRUED LIABILITIES (Details) - USD ($)	Mar. 31, 2016	Dec. 31, 2015
Accrued liabilities [Abstract]
Accrued compensation/benefits	$ 394,117	$ 329,131
Accrued insurance payable	27,032	73,074
Accrued property taxes	2,475	0
Product rebates/returns	4	9
Total accrued liabilities	$ 423,628	$ 402,214

EQUITY TRANSACTIONS (Details)		1 Months Ended		3 Months Ended
EQUITY TRANSACTIONS (Details)	Mar. 29, 2016 USD ($) Investor $ / shares shares	Apr. 30, 2016 USD ($)	Mar. 31, 2016 USD ($) $ / shares	Mar. 31, 2016 USD ($) $ / shares shares
Class of Stock [Line Items]
Common stock issued during period (in shares) \| shares				26,139,498
March 2016 Offering [Member]
Class of Stock [Line Items]
Number of investors entered into stock purchase \| Investor	15
Common stock issued during period (in shares) \| shares	25,245,442
Aggregate shares of common stock issued upon exercise of warrants (in shares) \| shares	25,245,442
Purchase price (in dollars per share) \| $ / shares	$ 0.0713
Proceeds from issuance or sale of equity	$ 1,800,000
Percentage of discount on average closing price for share issue price	10.00%
Percentage of premium on average closing price for warrant exercise price	10.00%
Exercise price of warrants (in dollars per share) \| $ / shares	$ 0.0871		$ 0.0871	$ 0.0871
Term of warrants	5 years
Proceeds from offering			$ 1,439,000	$ 1,800,000
Referral fee paid to european placement agent				$ 26,000
Percentage of referral fee to european placement agent				10.00%
March 2016 Offering [Member] \| Subsequent Event [Member]
Class of Stock [Line Items]
Proceeds from offering		$ 361,000
March 2016 Offering [Member] \| Michael I. Sacks [Member]
Class of Stock [Line Items]
Proceeds from offering				$ 1,000,000
March 2016 Offering [Member] \| Bradley J. Sacks [Member]
Class of Stock [Line Items]
Proceeds from offering				19,000
March 2016 Offering [Member] \| Terrance K. Wallberg [Member]
Class of Stock [Line Items]
Proceeds from offering				50,000
March 2016 Offering [Member] \| Daniel G. Moro [Member]
Class of Stock [Line Items]
Proceeds from offering				$ 10,000

STOCKHOLDERS' EQUITY (Details) - shares	3 Months Ended
STOCKHOLDERS' EQUITY (Details) - shares	Mar. 31, 2016	Dec. 31, 2015
Common Stock [Abstract]
Common stock, shares issued (in shares)	62,974,431	36,834,933
Common stock, shares outstanding (in shares)	62,974,431	36,834,933
Common stock issued during period (in shares)	26,139,498
Number of shares of common stock issued for investors (in shares)	25,245,442
Inter-Mountain [Member]
Common Stock [Abstract]
Common stock issued for the cashless conversion of a warrant (in shares)	200,000
April 2015 Note [Member] \| Inter-Mountain [Member]
Common Stock [Abstract]
Number shares of common stock issued for installment payments (in shares)	694,056
Series A Preferred Stock [Member]
Preferred Stock [Abstract]
Preferred stock, shares issued (in shares)	0
Preferred stock, shares outstanding (in shares)	0

STOCKHOLDERS' EQUITY, Warrants (Details)	3 Months Ended
STOCKHOLDERS' EQUITY, Warrants (Details)	Mar. 31, 2016 $ / shares shares	Mar. 31, 2016 $ / shares shares	Mar. 29, 2016 $ / shares
Warrants and Number of Shares of Common Stock Subject to Exercise [Roll Forward]
Balance (in shares)	1,774,193
Warrants issued (in shares)	25,245,442
Warrants exercised (in shares)	0
Warrants cancelled (in shares)	0
Balance (in shares)	27,019,635
Warrants, Weighted-Average Exercise Price [Abstract]
Balance (in dollars per share) \| $ / shares	0.77
Warrants issued (in dollars per share) \| $ / shares	0.09
Warrants exercised (in dollars per share) \| $ / shares	0
Warrants cancelled (in dollars per share) \| $ / shares	0
Balance (in dollars per share) \| $ / shares	0.13
Warrant shares subject to expiration [Abstract]
Number of Warrant Shares of Common Stock Subject to Expiration (in shares)	1,774,193	27,019,635
March 2016 Offering [Member]
Warrant shares subject to expiration [Abstract]
Exercise price of warrants (in dollars per share) \| $ / shares		$ 0.0871	$ 0.0871
June 13, 2016 [Member]
Warrants and Number of Shares of Common Stock Subject to Exercise [Roll Forward]
Balance (in shares)	35,000
Warrant shares subject to expiration [Abstract]
Number of Warrant Shares of Common Stock Subject to Expiration (in shares)	35,000	35,000
July 16, 2016 [Member]
Warrants and Number of Shares of Common Stock Subject to Exercise [Roll Forward]
Balance (in shares)	116,667
Warrant shares subject to expiration [Abstract]
Number of Warrant Shares of Common Stock Subject to Expiration (in shares)	116,667	116,667
July 28, 2016 [Member]
Warrants and Number of Shares of Common Stock Subject to Exercise [Roll Forward]
Balance (in shares)	34,722
Warrant shares subject to expiration [Abstract]
Number of Warrant Shares of Common Stock Subject to Expiration (in shares)	34,722	34,722
December 24, 2016 [Member]
Warrants and Number of Shares of Common Stock Subject to Exercise [Roll Forward]
Balance (in shares)	653,686
Warrant shares subject to expiration [Abstract]
Number of Warrant Shares of Common Stock Subject to Expiration (in shares)	653,686	653,686
March 14, 2018 [Member]
Warrants and Number of Shares of Common Stock Subject to Exercise [Roll Forward]
Balance (in shares)	660,000
Warrant shares subject to expiration [Abstract]
Number of Warrant Shares of Common Stock Subject to Expiration (in shares)	660,000	660,000
January 15, 2019 [Member]
Warrants and Number of Shares of Common Stock Subject to Exercise [Roll Forward]
Balance (in shares)	80,000
Warrant shares subject to expiration [Abstract]
Number of Warrant Shares of Common Stock Subject to Expiration (in shares)	80,000	80,000
April 30, 2020 [Member]
Warrants and Number of Shares of Common Stock Subject to Exercise [Roll Forward]
Balance (in shares)	194,118
Warrant shares subject to expiration [Abstract]
Number of Warrant Shares of Common Stock Subject to Expiration (in shares)	194,118	194,118
March 30, 2021 [Member]
Warrants and Number of Shares of Common Stock Subject to Exercise [Roll Forward]
Balance (in shares)	25,245,442
Warrant shares subject to expiration [Abstract]
Number of Warrant Shares of Common Stock Subject to Expiration (in shares)	25,245,442	25,245,442

SHARE BASED COMPENSATION (Details) - USD ($)							3 Months Ended
SHARE BASED COMPENSATION (Details) - USD ($)	Jun. 05, 2014	Jun. 13, 2013	Jun. 14, 2012	Jun. 15, 2010	Dec. 17, 2009	May. 08, 2007	Mar. 31, 2016	Mar. 31, 2015	Mar. 31, 2006
Stock Options [Member]
Options, Outstanding [Roll Forward]
Outstanding, beginning of period (in shares)							1,664,573
Granted (in shares)							0
Forfeited/cancelled (in shares)							(255,002)
Exercised (in shares)							0
Outstanding, end of period (in shares)							1,409,571
Outstanding, Weighted Average Exercise Price [Roll Forward]
Outstanding, beginning of period (in dollars per share)							$ 1.73
Granted (in dollars per share)							0
Forfeited/cancelled (in dollars per share)							2.83
Exercised (in dollars per share)							0
Outstanding, end of period (in dollars per share)							$ 1.53
Nonvested Awards, unearned share-based compensation [Abstract]
Unearned share-based compensation expense							$ 78,000
Unearned share-based compensation, recognition period							18 months
Stock Options [Member] \| Maximum [Member]
Additional disclosures [Abstract]
Contractual term							10 years
Restricted Stock [Member]
Additional disclosures [Abstract]
Granted (in shares)							0	0
Restricted Stock [Member] \| Minimum [Member]
Additional disclosures [Abstract]
Vesting period							2 years
Restricted Stock [Member] \| Maximum [Member]
Additional disclosures [Abstract]
Vesting period							5 years
2006 Equity Incentive Plan [Member]
Additional disclosures [Abstract]
Number of shares authorized (in shares)							2,800,000		133,333
Number of additional shares authorized (in shares)	1,000,000	600,000	400,000	200,000	200,000	266,667
Number of shares available for grant (in shares)							1,320,983
2006 Equity Incentive Plan [Member] \| Stock Options [Member]
Additional disclosures [Abstract]
Number of options granted to date (in shares)							2,061,167
2006 Equity Incentive Plan [Member] \| Stock Options [Member] \| Minimum [Member]
Additional disclosures [Abstract]
Vesting period							1 year
2006 Equity Incentive Plan [Member] \| Stock Options [Member] \| Maximum [Member]
Additional disclosures [Abstract]
Vesting period							4 years
2006 Equity Incentive Plan [Member] \| Restricted Stock [Member]
Additional disclosures [Abstract]
Number of restricted shares granted to date (in shares)							68,616
2006 Equity Incentive Plan [Member] \| Restricted Stock [Member] \| Minimum [Member]
Additional disclosures [Abstract]
Vesting period							6 months
2006 Equity Incentive Plan [Member] \| Restricted Stock [Member] \| Maximum [Member]
Additional disclosures [Abstract]
Vesting period							5 years

SHARE BASED COMPENSATION, Allocated Compensation expense (Details) - Stock Options [Member] - USD ($)	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based compensation expense	$ 27,867	$ 75,348
Research and Development [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based compensation expense	8,670	18,612
Selling, General and Administrative [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based compensation expense	$ 19,197	$ 56,736

SHARE BASED COMPENSATION, Stock options grant outstanding and exercisable (Details)	3 Months Ended
	Mar. 31, 2016 $ / shares shares
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Stock Options Outstanding (in shares) \| shares	1,409,571
Options Outstanding, Weighted Average Exercise Price per Share (in dollars per share) \| $ / shares	$ 1.53
Options Outstanding, Weighted Average Remaining Contractual Life in Years	6 years 6 months
Stock Options Exercisable (in shares) \| shares	692,071
Options Exercisable, Weighted Average Exercise Price per Share (in dollars per share) \| $ / shares	$ 2.22
Exercise Price Range 1 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Stock Options Outstanding (in shares) \| shares	807,500
Options Outstanding, Weighted Average Exercise Price per Share (in dollars per share) \| $ / shares	$ 0.33
Options Outstanding, Weighted Average Remaining Contractual Life in Years	7 years
Stock Options Exercisable (in shares) \| shares	565,000
Options Exercisable, Weighted Average Exercise Price per Share (in dollars per share) \| $ / shares	$ 0.33
Exercise Price Range 2 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Stock Options Outstanding (in shares) \| shares	550,000
Options Outstanding, Weighted Average Exercise Price per Share (in dollars per share) \| $ / shares	$ 1.15
Options Outstanding, Weighted Average Remaining Contractual Life in Years	6 years 2 months 12 days
Stock Options Exercisable (in shares) \| shares	75,000
Options Exercisable, Weighted Average Exercise Price per Share (in dollars per share) \| $ / shares	$ 1.15
Exercise Price Range 3 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Stock Options Outstanding (in shares) \| shares	52,071
Options Outstanding, Weighted Average Exercise Price per Share (in dollars per share) \| $ / shares	$ 24.20
Options Outstanding, Weighted Average Remaining Contractual Life in Years	1 year 4 months 24 days
Stock Options Exercisable (in shares) \| shares	52,071
Options Exercisable, Weighted Average Exercise Price per Share (in dollars per share) \| $ / shares	$ 24.20

FAIR VALUE MEASUREMENTS (Details) - USD ($)	Mar. 31, 2016	Dec. 31, 2015
Promissory Note April 2015 [Member]
Liabilities [Abstract]
Convertible note payable	$ 215,000	$ 370,000

LEGAL PROCEEDINGS (Details)		3 Months Ended
LEGAL PROCEEDINGS (Details)	Oct. 31, 2012	Mar. 31, 2016
LEGAL PROCEEDINGS [Abstract]
Maximum percentage of material proceedings/interest		5.00%
ORADISC GmbH [Member]
Schedule of Equity Method Investments [Line Items]
Time period granted to utilize OraDisc erodible film technology	24 months
OraDisc erodible film technology, expiry date		Dec. 31, 2015

SUBSEQUENT EVENTS (Details)		1 Months Ended		3 Months Ended
SUBSEQUENT EVENTS (Details)	Mar. 29, 2016 USD ($) Investor $ / shares shares	Apr. 30, 2016 USD ($)	Mar. 31, 2016 USD ($)	Mar. 31, 2016 USD ($) shares
Subsequent Event [Line Items]
Common stock issued during period (in shares) \| shares				26,139,498
March 2016 Offering [Member]
Subsequent Event [Line Items]
Number of investors entered into stock purchase \| Investor	15
Common stock issued during period (in shares) \| shares	25,245,442
Aggregate shares of common stock issued upon exercise of warrants (in shares) \| shares	25,245,442
Purchase price (in dollars per share) \| $ / shares	$ 0.0713
Proceeds from issuance or sale of equity \| $	$ 1,800,000
Proceeds from offering \| $			$ 1,439,000	$ 1,800,000
March 2016 Offering [Member] \| Subsequent Event [Member]
Subsequent Event [Line Items]
Proceeds from offering \| $		$ 361,000