10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

☒	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2017
OR
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to

Commission File No. 001-336180

ULURU Inc.

(Exact name of registrant as specified in its charter)

Nevada	41-2118656
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
4410 Beltway Drive
Addison, Texas	75001
(Address of principal executive offices)	(Zip Code)

(214) 905-5145

(Registrant's telephone number, including area code)

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Securities registered under Section 12(b) of the Exchange Act:

None

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Securities registered under Section 12(g) of the Exchange Act:

Common Stock, $0.001 par value

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(Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ☐    No  ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes  ☐    No  ☒

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  ☒    No  ☐

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  ☒    No  ☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ☐

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 definition of "accelerated filer", "large accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act (Check one):

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act .     [   ]

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

As of June 30, 2017 (the last business day of the most recently completed second fiscal quarter), the aggregate market value of the registrant's voting and non-voting common equity held by non-affiliates of the registrant (without admitting that any person whose shares are not included in the calculation is an affiliate) was approximately $2,494,000 based on the closing price of the registrant's common stock, $0.001 par value per share ("Common Stock") as reported on the OTCQB™ marketplace on such date.

As of March 30, 2018, there were 201,349,431 shares of the registrant's Common Stock, $0.001 par value per share, nil shares of Series A Preferred Stock, $0.001 par value per share, issued and outstanding, and nil shares of Series B Preferred Stock, $0.001 par value per share, issued and outstanding.

Documents Incorporated by Reference

The information required by Part III of this Report, to the extent not set forth herein, is incorporated herein by reference from the registrant's definitive proxy statement relating to the Annual Meeting of Stockholders to be held in 2018, which definitive proxy statement shall be filed with the Securities and Exchange Commission within 120 days after the end of the fiscal year to which this Report relates.

ULURU Inc.
FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 2017
TABLE OF CONTENTS
Item			Page
Part I
	1.	Business		3
	1A.	Risk Factors		13
	1B.	Unresolved Staff Comments		23
	2.	Properties		23
	3.	Legal Proceedings		23
	4.	Mine Safety Disclosures		23
Part II
	5.	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		24
	6.	Selected Financial Data		25
	7.	Management's Discussion and Analysis of Financial Condition and Results of Operations		26
	7A.	Quantitative and Qualitative Disclosures about Market Risk		37
	8.	Financial Statements and Supplementary Data		37
	9.	Changes In and Disagreements With Accountants on Accounting and Financial Disclosure		37
	9A.	Controls and Procedures		37
	9B.	Other Information		38
Part III
	10.	Directors, Executive Officers and Corporate Governance		39
	11.	Executive Compensation		39
	12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		39
	13.	Certain Relationships and Related Transactions and Director Independence		39
	14.	Principal Accountant Fees and Services		39
Part IV
	15.	Exhibits and Financial Statement Schedules		40
		Signatures		41
		Index to Exhibits		42
		Index to Financial Statements		43

Part I

FORWARD-LOOKING INFORMATION IS SUBJECT TO RISK AND UNCERTAINTY

This Annual Report on Form 10-K (including documents incorporated by reference) (this "Report') and other written and oral statements we make 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, results of operations, cash flows, market position, product development, product approvals, sales efforts, expenses, performance or results of current and anticipated products and the outcome of contingencies such as legal proceedings, 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. We have included important factors in the cautionary statements included in this Report, particularly under "Item 1.A Risk Factors", that we believe could cause actual results to differ materially from any forward-looking statement.

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 are estimates and 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.

Altrazeal®, Aphthasol®, Nanoflex®, OraDiscTM, the ULURU logo and other trademarks or service marks of ULURU Inc. appearing in this Report are the property of ULURU Inc.  Solely for convenience, such trademarks and tradenames sometimes appear without any "™" or "®" symbol. However, failure to include such symbols is not intended to suggest, in any way, that we will not assert our rights or the rights of any applicable licensor, to these trademarks and tradenames. This Report contains additional trade names, trademarks and service marks of other companies, which belong to such companies.

ITEM 1. BUSINESS

Company Mission and Strategy

ULURU Inc. (together with our subsidiaries, "We", "ULURU" or the "Company") is a Nevada corporation.

We are a specialty medical technology company committed to developing and commercializing a range of innovative wound care and muco-adhesive film products based on our patented Nanoflex® and OraDisc^TM technologies, with the goal of improving outcomes for patients, health care professionals and payers.

Utilizing these two platform technologies, a number of products were developed of which one is being actively marketed in the wound care market. This product, Altrazeal® Transforming Powder Dressing ("Altrazeal®"), based on our Nanoflex® technology, has the potential to change the way health care providers approach the treatment of wounds.   Altrazeal® is indicated for both exuding acute wounds such as partial thickness burns, donor sites, surgical and traumatic wounds, and also for chronic wounds such as venous leg ulcers, diabetic foot ulcers, and pressure ulcers. Altrazeal® is registered for sale with the United States Food and Drug Administration (the "FDA"), the European Union (the "EU") and a number of other international markets.

Our current strategy is to primarily focus on the commercialization of Altrazeal® and to establish a market leadership position in wound management by developing and commercializing a customer focused portfolio of innovative wound care products.  We will also evaluate the potential for commercialization of the other products as well as explore strategic collaborations to further develop our oral mucoadhesive film technology (OraDisc^TM) for systemic drug delivery and for delivery of actives to the oral cavity.

We will also continue to execute a series of operational plans launched in 2017 to enhance and streamline our business operations and improve efficiency and reduce costs, including production, distribution, and administration costs. We are also undertaking efforts to stimulate sales, enhance marketing, and expedite regulatory approvals for new market entry of Altrazeal®.

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Core Technology Platforms

Nanoflex® Technology

The Nanoflex® technology platform provides the ability to formulate a variety of unique materials through the aggregation of hydrogel-like particles. This concept takes advantage of the inherent biocompatibility of hydrogels. Unlike bulk hydrogels, these aggregates are shape retentive, can be extruded or molded, and offer properties suitable for use in a variety of in-vivo medical devices, and in novel drug delivery systems. The polymers used in our Nanoflex® technology have been extensively researched and commercialized into several major medical products including contact lenses and other FDA-approved implants.  They are generally accepted as safe, non-toxic and biocompatible.

Utilizing our proprietary Nanoflex® technology, we have developed a Nanoflex® Powder platform. Our Nanoflex^® Powder is a novel wound treatment technology used to promote the healing of exuding wounds.  We believe that the scientifically engineered material has qualities not available in other dressings currently available in terms of properties and performance, and can be used in chronic, acute, surgical and traumatic wounds.  It is formulated as a two-polymer blend in a specific ratio.  In the presence of wound exudate, the particles hydrate and aggregate to conform to the contours of the wound bed, transforming into a moist, flexible, moisture-permeable dressing. This dressing formed not only provides an optimal moist wound environment which supports cellular function and tissue repair, but it is also of appropriate pore size to prevent intrusion by exogenous bacteria.  After application to the wound bed, Nanoflex^® Powder exhibits mechanical properties which are similar to soft tissue.  The stable, non-resorbable film flakes off at the edges as the wound heals, like a scab. It can remain in place for an extended period as compared to other dressings if exudate is present and can be removed without additional trauma, leaving no residue in the wound bed.  Nanoflex^® Powder may also have the potential to serve as a drug delivery matrix for antiseptics, and there is potential for its use as a delivery platform for anti-inflammatory drugs such as corticosteroids, pro-angiogenic agents, and other actives such as growth factors to accelerate wound healing.

Mucoadhesive OraDisc^TM Technology

Treatment of oral conditions generally relies upon the use of medications formulated as gels and pastes, which are applied to lesions in the mouth. The duration of effectiveness of these medications is typically short because the applied dose is worn away through the mechanical actions of speaking, eating, and tongue movement, and is washed away by saliva flow. To address these problems, we developed a novel erodible mucoadhesive film product. This technology, known as OraDisc™, comprises a multi-layered film having an adhesive layer, a pre-formed film layer, and a coated backing layer. Depending upon the intended application, a pharmaceutically active compound can be formulated within any of these layers, providing a wide range of potential applications. The disc stays in place eroding over a period of time, so that subsequent removal is unnecessary. The drug delivery rate may be adjusted by altering the rate of erosion of the disc, which is in turn controlled by the composition of the backing layer.

Our adhesive film technology has the potential for multiple applications, including the localized delivery of drug to a mucosal site, use as a transmucosal delivery device for delivering drugs into the systemic circulation, and incorporating the drug in the outer layer for delivery into the oral cavity. The adhesive film will adhere to any wet mucosal surface. Additionally, the adhesive film has been formulated to adhere to the surface of teeth and gums for the delivery of dental health and cosmetic dental actives. Initial drug delivery studies using our adhesive film technology indicate the potential to achieve significantly higher drug exposure and higher blood level concentrations.

OraDisc™ A was initially developed as a drug delivery system to treat canker sores using Amlexanox as the active ingredient, which is the same active ingredient that was used in our Aphthasol® paste which was also developed for the treatment of canker sores but has not been commercialized.

OraDisc™ B was developed for the treatment of oral pain using 15 mg of Benzocaine, the maximum allowable strength that falls under the classification of an OTC monograph product in the United States.

Although we are not currently marketing or selling OraDisc™ A or OraDisc™ B, we intend to explore the viability of commercializing these products in the future through strategic collaborations.

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Marketed Products

We are currently focusing our resources and efforts primarily on the marketing of Altrazeal®.

Altrazeal®

Altrazeal® Transforming Powder Dressing, based on our Nanoflex® technology, has the potential to change the way health care providers approach the treatment of wounds.  The product is indicated for exuding wounds such as partial thickness burns, donor sites, abrasions, non-healing and other surgical wounds, trauma and chronic wounds including diabetic foot ulcers, venous leg ulcers, and pressure ulcers. The powder is used to fill and seal the wound to provide an optimal moist wound healing environment. The wound exudate is controlled through the high moisture vapor transpiration rate ("MVTR") of the material.  Intimate contact at the wound bed supports cellular function and tissue repair. Other characteristics of Altrazeal® that promote healing are oxygen permeability and its ability to prevent the entry of bacteria.  Patient comfort is enhanced with the reduced frequency of dressing changes and the easy application and removal of our wound dressing.  In numerous clinical settings, including venous leg ulcers, arterial ulcers and second-degree burns, significant pain reduction has been reported by patients, enabling increased compliance to therapy and improved clinical outcomes.  The dressing is flexible and adherent and is designed to allow greater range of motion. In addition, the ability of Altrazeal® to manage wound exudates extends the wear time between dressing changes, which offers a significant pharmaco-economic benefit.  This feature is considered an extremely important marketing advantage in countries where there are socialized medical programs.

Altrazeal® is a 510(k)-exempt product and has been registered with the FDA. It has also been granted registrations in a number of international markets, including a CE Mark Certification which enables us to market in all European Union member states and other countries that recognize the CE Mark.

Since the roll-out of Altrazeal®, numerous positive clinical experiences have been documented. The focus of our commercial activities is to introduce Altrazeal® globally both directly and through our network of distribution partners. Due to the efforts of our current and former distribution partners, Altrazeal® has contractual partners in many of the major international territories.

As part of the Company's current turn-around plan, we are continuing to evaluate all of our distribution relationships to ensure that they meet the criteria for advancing the Company's current business plan. We are also evaluating potential launch strategies for the U.S. market.

Patents

We believe that the value of technology both to us and to our potential corporate partners is established and enhanced by our intellectual property positions. Consequently, we have already been issued U.S. and foreign patents for products under development and for new discoveries. Patent applications are filed for our inventions and prospective products with the U.S. Patent and Trademark Office and, when appropriate, with authorities in countries that are a part of the Paris Convention's Patent Cooperation Treaty ("PCT") (most major countries in Western Europe and the Far East) and with other authorities in major markets not covered by the PCT.  However, due to our previous liquidity situation, certain of our patents and patent applications may have lapsed.

With regards to our Nanoflex® technology, two patents have issued in the U.S. and multiple patents have been issued in international countries.  There is a PCT patent application that was filed with multiple pending patent applications and granted patents in various international countries.  The granted patents and patent applications have a variety of potential applications, such as wound management, burn care, dermal fillers, artificial discs and tissue scaffold.

We have one U.S. patent for our OraDisc™ technology.  This oral delivery vehicle potentially overcomes the difficulties encountered in using conventional paste and gel formulations for conditions in the mouth. Utilizing this technology, we anticipate that higher drug concentrations will be achieved at the disease site, increasing the effectiveness of the product.  Our patent covers the delivery of drugs through or into any mucosal surface. The patent covers our ability to control the erosion time of the adhesive film and the subsequent drug release by adjusting the ratio of hydrophobic to hydrophilic polymers in the outer layer of the composite film.

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The United States patents for our technologies and products expire in the years indicated below:

Nanoflex® technology		Year of Expiration
§	Altrazeal® Injectable	2023
§	Altrazeal® wound dressing and biomaterials	2029
OraDisc™ technology
§	Mucoadhesive erodible drug delivery device	2021

Manufacturing and Supply

We currently rely on a limited number of contract manufacturers, monitored by our internal management, to manufacture, package, and finish our products and do not currently have relationships with alternate suppliers. We continue to evaluate all of our contract manufacturers for efficiency, regulatory compliance, and cost-effectiveness.  We believe that there are other contract manufacturers that can satisfy our production requirements, but should it be necessary to change suppliers this could result in a delay in production while they are qualified and validated.

Marketing and Distribution

We do not currently have the resources to market and distribute our products directly through an in-house sales force and distribution network.  As a result, we have entered into agreements to market and distribute our products through distributors.

Revenues per geographic area, along with relative percentages of total revenues, for the years ended December 31, 2017 and 2016 are described in greater detail in Note 4 of the Company's Consolidated Financial Statements for the years ended December 31, 2017 and 2016.

Significant Customers

A significant portion of our revenues are derived from a few major customers.  For the year ended December 31, 2017, three customers had greater than 10% of total revenues and jointly represented 92% of total revenues.  For the year ended December 31, 2016, three customers had greater than 10% of total revenues and jointly represented 88% of total revenues.

Research and Development, Quality Management, and Regulatory Affairs

During the years ended December 31, 2017 and 2016, we expended approximately $240,000 and $445,000, respectively in research and development, regulatory affairs and quality management activities.  The costs incurred for each of the two years are primarily attributable to maintaining our quality management system and with registration of Altrazeal® in new territories.

Government Regulation

Our business is subject to extensive federal, state, local and foreign laws and regulations, including those relating to the protection of the environment, health and safety. Some of the pertinent laws have not been definitively interpreted by the regulatory authorities or the courts, and their provisions are open to a variety of subjective interpretations. In addition, these laws and their interpretations are subject to change, or new laws may be enacted.

Both federal and state governmental agencies continue to subject the healthcare industry to intense regulatory scrutiny, including heightened civil and criminal enforcement efforts. We believe that we have structured our business operations and relationships with our customers to comply with all applicable legal requirements. However, it is possible that governmental entities or other third parties could interpret these laws differently and assert otherwise. We discuss below the statutes and regulations most relevant to our business.

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US Food and Drug Administration regulation of medical devices.

The Federal Food, Drug and Cosmetic Act (the "FDCA") and FDA regulations establish a comprehensive system for the regulation of medical devices intended for human use. Our products include medical devices that are subject to these, as well as other federal, state, local and foreign, laws and regulations. The FDA is responsible for enforcing the laws and regulations governing medical devices in the United States.

The FDA classifies medical devices into one of three classes - Class I, Class II, or Class III depending on their level of risk and the types of controls that are necessary to ensure device safety and effectiveness. The class assignment is a factor in determining the type of premarketing submission or application, if any, that will be required before marketing in the United States.

·  Class I devices present a low risk and are not life-sustaining or life-supporting. The majority of Class I devices are subject only to "general controls" -e.g., prohibition against adulteration and misbranding, registration and listing, good manufacturing practices, labeling, and adverse event reporting. General controls are baseline requirements that apply to all classes of medical devices.

·  Class II devices present a moderate risk and are devices for which general controls alone are not sufficient to provide a reasonable assurance of safety and effectiveness. Devices in Class II are subject to both general controls and "special controls" -e.g., special labeling, compliance with industry standards, and post market surveillance. Unless exempted, Class II devices typically require FDA clearance before marketing, through the premarket notification (510(k) process.)

·  De novo applicationprocess provides a pathway to Class II classification for medical devices for general and special controls provide a reasonable assurance of safety and effectiveness, but for which there is no legally marketed predicate device.

·  Class III devices present the highest risk. These devices generally are life-sustaining, life-supporting, or for a use that is of substantial importance in preventing impairment of human health or present a potential unreasonable risk of illness or injury. Class III devices are devices for which general controls, by themselves, are insufficient and for which there is insufficient information to establish special controls to provide a reasonable assurance of safety and effectiveness. Class III devices are subject to general controls and typically require FDA approval of a premarket approval ("PMA") application before marketing.

Unless it is exempt from premarket review requirements, a medical device must receive marketing authorization from the FDA prior to being commercially marketed, distributed or sold in the United States. The most common pathways for obtaining marketing authorization are 510(k) clearance and PMA.

510(k) Pathway.

The 510(k)-review process compares a new device to a legally marketed device. Through the 510(k) process, the FDA determines whether a new medical device is "substantially equivalent" to a legally marketed device (i.e., predicate device) that is not subject to PMA requirements. "Substantial equivalence" means that the proposed device has the same intended use as the predicate device, and the same or similar technological characteristics, or if there are differences in technological characteristics, the differences do not raise different questions of safety and effectiveness as compared to the predicate, and the information submitted in the 510(k) demonstrates that the proposed device is as safe and effective as the predicate device.

To obtain 510(k) clearance, a company must submit a 510(k)-application containing sufficient information and data to demonstrate that its proposed device is substantially equivalent to a legally marketed predicate device. These data generally include non-clinical performance testing (e.g., software validation, animal testing electrical safety testing), but may also include clinical data. Typically, it takes three to twelve months for the FDA to complete its review of a 510(k) submission; however, it can take significantly longer and clearance is never assured. During its review of a 510(k), the FDA may request additional information, including clinical data, which may significantly prolong the review process. After completing its review of a 510(k), the FDA may issue an order, in the form of a letter, that finds the device to be either (1) substantially equivalent and states that the device can be marketed in the United States, or (2) not substantially equivalent and states that device cannot be marketed in the United States. Depending upon the reasons for the not substantially equivalent finding, the device may need to be approved through the PMA pathway (discussed below) prior to commercialization.

After a device receives 510(k) clearance, any modification that could significantly affect the safety or effectiveness of the device, or that would constitute a major change in its intended use, including significant modifications to any of our products or procedures, requires submission and clearance of a new 510(k). The FDA relies on each manufacturer to make and document this determination initially, but the FDA can review any such decision and can disagree with a manufacturer's determination. We may make minor product enhancements that we believe do not require new 510(k) clearance. If the FDA disagrees with our determination regarding whether a new 510(k) clearance was required for these modifications, we may need to cease marketing and/or recall the modified device. The FDA may also subject us to other enforcement actions, including, but not limited to, issuing a warning letter or untitled letter to us, seizing our products, imposing civil penalties, or initiating criminal prosecution.

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Premarket Approval Pathway.

Unlike the comparative standard of the 510(k) pathway, the PMA approval process requires an independent demonstration of the safety and effectiveness of a device. PMA is the most stringent type of device marketing application required by the FDA. PMA approval is based on a determination by the FDA that the PMA contains sufficient valid scientific evidence to ensure that the device is safe and effective for its intended use(s). A PMA application generally includes extensive information about the device including the results of clinical testing conducted on the device and a detailed description of the manufacturing process.

After a PMA application is accepted for review, the FDA begins an in-depth review of the submitted information. FDA regulations provide 180 days to review the PMA and make a determination; however, the review time is normally longer (e.g., 1-3 years). During this review period, the FDA may request additional information or clarification of information already provided. Also, during the review period, an advisory panel of experts from outside the FDA may be convened to review and evaluate the data supporting the application and provide recommendations to the FDA as to whether the data provide a reasonable assurance that the device is safe and effective for its intended use. In addition, the FDA generally will conduct a preapproval inspection of the manufacturing facility to ensure compliance with QSR, which imposes comprehensive development, testing, control, documentation and other quality assurance requirements for the design and manufacturing of a medical device.

Based on its review, the FDA may (1) issue an order approving the PMA, (2) issue a letter stating the PMA is "approvable" (e.g., minor additional information is needed), (3) issue a letter stating the PMA is "not approvable," or (4) issue an order denying PMA. A company may not market a device subject to PMA review until the FDA issues an order approving the PMA. As part of a PMA approval, the FDA may impose post-approval conditions intended to ensure the continued safety and effectiveness of the device including, among other things, restrictions on labeling, promotion, sale and distribution, and requiring the collection of additional clinical data. Failure to comply with the conditions of approval can result in materially adverse enforcement action, including withdrawal of the approval.

Most modifications to a PMA approved device, including changes to the design, labeling, or manufacturing process, require prior approval before being implemented. Prior approval is obtained through submission of a PMA supplement. The type of information required to support a PMA supplement and the FDA's time for review of a PMA supplement vary depending on the nature of the modification.

Clinical Trials.

Clinical trials of medical devices in the United States are governed by the FDA's Investigational Device Exemption ("IDE") regulation. This regulation places significant responsibility on the sponsor of the clinical study including, but not limited to, choosing qualified investigators, monitoring the trial, submitting required reports, maintaining required records, and assuring investigators obtain informed consent, comply with the study protocol, control the disposition of the investigational device, submit required reports, etc.

Clinical trials of significant risk devices (e.g., implants, devices used in supporting or sustaining human life, devices of substantial importance in diagnosing, curing, mitigating or treating disease or otherwise preventing impairment of human health) require FDA and Institutional Review Board ("IRB"), approval prior to starting the trial. FDA approval is obtained through submission of an IDE application. Clinical trials of non-significant risk ("NSR"), devices (i.e. devices that do not meet the regulatory definition of a significant risk device) only require IRB approval before starting. The clinical trial sponsor is responsible for making the initial determination of whether a clinical study is significant risk or NSR; however, a reviewing IRB and/or FDA may review this decision and disagree with the determination.

An IDE application must be supported by appropriate data, such as performance data, animal and laboratory testing results, showing that it is safe to evaluate the device in humans and that the clinical study protocol is scientifically sound. There is no assurance that submission of an IDE will result in the ability to commence clinical trials. Additionally, after a trial begins, the FDA may place it on hold or terminate it if, among other reasons, it concludes that the clinical subjects are exposed to an unacceptable health risk.

As noted above, the FDA may require a company to collect clinical data on a device in the post market setting.

The collection of such data may be required as a condition of PMA approval. The FDA also has the authority to order, via a letter, a post market surveillance study for certain devices at any time after they have been cleared or approved.

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Continuing FDA regulation.

After a device is placed on the market, regardless of its classification or premarket pathway, numerous additional FDA requirements generally apply. These include, but are not limited to:

·  Establishment registration and device listing requirements;

·  Quality System Regulation ("QSR"), which governs the methods used in, and the facilities and controls used for, the design, manufacture, packaging, labeling, storage, installation, and servicing of finished devices;

·  Labeling requirements, which mandate the inclusion of certain content in device labels and labeling, and generally require the label and package of medical devices to include a unique device identifier ("UDI"), and which also prohibit the promotion of products for uncleared or unapproved, i.e., "off-label," uses;

·  Medical Device Reporting ("MDR"), regulation, which requires that manufacturers and importers report to the FDA if their device may have caused or contributed to a death or serious injury or malfunctioned in a way that would likely cause or contribute to a death or serious injury if it were to recur; and

·  Reports of Corrections and Removals regulation, which requires that manufacturers and importers report to the FDA recalls (i.e., corrections or removals) if undertaken to reduce a risk to health posed by the device or to remedy a violation of the FDCA that may present a risk to health; manufacturers and importers must keep records of recalls that they determine to be not reportable.

The FDA enforces these requirements by inspection and market surveillance. Failure to comply with applicable regulatory requirements can result in enforcement action by the FDA, which may include, but is not limited to, the following sanctions:

·  Untitled letters or warning letters;

·  Fines, injunctions and civil penalties;

·  Recall or seizure of our products;

·  Operating restrictions, partial suspension or total shutdown of production;

·  Refusing our request for 510(k) clearance or premarket approval of new products;

·  Withdrawing 510(k) clearance or premarket approvals that are already granted; and

·  Criminal prosecution.

We are subject to unannounced device inspections by the FDA, as well as other regulatory agencies overseeing the implementation of and compliance with applicable state public health regulations. These inspections may include our suppliers' facilities.

Marketing Approvals Outside the United States.

Sales of medical devices outside the United States are subject to foreign government regulations, which vary substantially from country to country. The time required to obtain approval by a foreign country may be longer or shorter than that required for FDA clearance or approval, and the requirements may differ.  Currently, a substantial portion of our sales are being made in Europe.  Under the European Union Medical Device Directive (the "EU MDD"), medical devices must meet the EU MDD requirements and receive a CE marking certification prior to marketing in the European Union, or EU, which we have received for Altrazeal®. CE marking is the uniform labeling system of products designed to facilitate the supervision and control of the EU concerning manufacturers' compliance with the various regulations and directives of the EU and to clarify the obligations imposed in the various legislative provisions in the EU. Use of a uniform product labeling indicates compliance with all the directives and regulations required for the application of such labeling, and it is effective as a manufacturer's declaration that the product meets the required criteria and technical specifications of the relevant authorities such as health, safety, and environmental protection. CE marking ensures free trade between the EU and European Free Trade Association countries (Switzerland, Iceland, Liechtenstein, and Norway) and permits the enforcement and customs authorities in European countries not to allow the marketing of similar products that do not bear the CE marking sign. Such certification allows, among other things, marking the products (according to various categories) with the CE marking and their sale and marketing in the EU.

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CE marking certification requires a comprehensive quality system program, comprehensive technical documentation and data on the product, which are then reviewed by a Notified Body, or NB. An NB is an organization designated by the national governments of the EU member states to make independent judgments about whether a product complies with the EU MDD requirements and to grant the CE marking if we, and our product, comply with specified terms. After receiving the CE marking, we must pass a review carried out by the competent NB annually, under which it audits our facilities to verify our compliance with the ISO 13485 quality system standard.

Compliance with the ISO 13485 standard, for medical device quality management systems, is required for regulatory purposes. ISO standards are recognized international quality standards that are designed to ensure that we develop and manufacture quality medical devices. Other countries are also instituting regulations regarding medical devices. Compliance with these regulations requires extensive documentation and clinical reports for all our product candidates, revisions to labeling, and other requirements such as facility inspections to comply with the registration requirements.

Many other countries, outside of the United States and Europe, have requirements and regulations similar to those in the United States and/or Europe.  As we attempt to expand our business into each new country, we will be required to comply with any applicable eligibility, registration, quality, reporting and other requirements applicable to the marketing and sale of medical devices in that market.

Other Healthcare Laws and Compliance Requirements.

In the United States, our activities are potentially subject to regulation by various federal, state and local authorities in addition to the FDA, including the CMS, other divisions of the United States Department of Health and Human Services (e.g., the Office of Inspector General), the United States Department of Justice and individual United States Attorney offices within the Department of Justice, and state and local governments. These regulations include:

·  the federal healthcare program anti-kickback law which prohibits, among other things, persons from soliciting, receiving or providing remuneration, directly or indirectly, to induce either the referral of an individual, for an item or service or the purchasing or ordering of a good or service, for which payment may be made under federal healthcare programs such as the Medicare and Medicaid programs;

·  federal false claims laws which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid, or other government reimbursement programs that are false or fraudulent. The government may assert that a claim including items or services resulting from a violation of the federal healthcare program anti-kickback law or related to off-label promotion constitutes a false or fraudulent claim for purposes of the federal false claims laws;

·  the federal Health Insurance Portability and Accountability Act of 1996 which prohibits executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters and which also imposes certain requirements relating to the privacy, security and transmission of individually identifiable health information;

·  the federal transparency requirements under the Health Care Reform Law requires manufacturers of drugs, devices, biologics, and medical supplies to report to the Department of Health and Human Services information related to physician payments and other transfers of value and physician ownership and investment interests;

·  the Federal Physician Payments Sunshine Act within the Patient Protection and Affordable Care Act, and its implementing regulations, require that certain manufacturers of drugs, devices, biological and medical supplies for which payment is available under Medicare, Medicaid or the Children's Health Insurance Program (with certain exceptions) to report information related to certain payments or other transfers of value made or distributed to physicians and teaching hospitals, or to entities or individuals at the request of, or designated on behalf of, the physicians and teaching hospitals and to report annually certain ownership and investment interests held by physicians and their immediate family members; and

·  state law equivalents of each of the above federal laws, such as anti-kickback and false claims laws, which may apply to items or services reimbursed by any third-party payer, including commercial insurers, and state laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and often are not preempted by federal laws, thus complicating compliance efforts.

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In addition, we may be subject to data privacy and security regulation by both the federal government and the states in which we conduct our business. The Health Insurance Portability and Accountability Act, or HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, or HITECH, and its implementing regulations, imposes certain requirements relating to the privacy, security and transmission of individually identifiable health information. Among other things, HITECH makes HIPAA's privacy and security standards directly applicable to "business associates"—independent contractors or agents of covered entities that receive or obtain protected health information in connection with providing a service on behalf of a covered entity. HITECH also created four new tiers of civil monetary penalties, amended HIPAA to make civil and criminal penalties directly applicable to business associates and possibly other persons, and gave state attorneys general new authority to file civil actions for damages or injunctions in federal courts to enforce the federal HIPAA laws and seek attorneys' fees and costs associated with pursuing federal civil actions. In addition, state laws govern the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.

Post-Marketing Regulations.

Following approval of a new product, a company and the approved product are subject to continuing regulation by the FDA and other federal and state regulatory authorities, including, among other things, monitoring and recordkeeping activities, reporting to applicable regulatory authorities of adverse experiences with the product, providing the regulatory authorities with updated safety and efficacy information, product sampling and distribution requirements, and complying with promotion and advertising requirements, which include, among others, standards for direct-to-consumer advertising, restrictions on promoting for uses or in patient populations not described in the product's approved labeling (known as "off-label use"), limitations on industry-sponsored scientific and educational activities, and requirements for promotional activities involving the internet. Although physicians may prescribe legally available products for off-label uses, manufacturers may not market or promote such off label uses. Modifications or enhancements to the products or labeling or changes of site of manufacture are often subject to the approval of the FDA and other regulators, which may or may not be received or may result in a lengthy review process.

Other Regulatory Matters.

Manufacturing, sales, promotion and other activities following product approval are also subject to regulation by numerous regulatory authorities in addition to the FDA, including, in the United States, the Centers for Medicare & Medicaid Services ("CMS"), other divisions of the Department of Health and Human Services, the Drug Enforcement Administration, the Consumer Product Safety Commission, the Federal Trade Commission, the Occupational Safety & Health Administration, the Environmental Protection Agency, and state and local governments. Sales, marketing and scientific/educational programs must also comply with federal and state fraud and abuse laws. Pricing and rebate programs must comply with the Medicaid rebate requirements of the US Omnibus Budget Reconciliation Act of 1990. If products are made available to authorized users of the Federal Supply Schedule of the General Services Administration, additional laws and requirements apply. Manufacturing, sales, promotion and other activities are also potentially subject to federal and state consumer protection and unfair completion laws.

The distribution of medical device products is subject to additional requirements and regulations, including extensive record-keeping, licensing, storage and security requirements intended to prevent the unauthorized sale of medical device products.

Competition

The industry that we compete in is characterized by intense competition, rapid product development and technological change.  Competition in the industry is generally based upon quality, efficacy, price, accessibility and service.  Competition is intense among manufacturers of prescription pharmaceuticals, medical devices, and other product areas where we may develop and market products in the future.  Most of our potential competitors in the wound care market such as Smith & Nephew plc, Acelity L.P. Inc., ConvaTec Inc., 3M Company, and Molnlycke Health Care are large, well established medical device or healthcare companies with considerably greater financial, marketing, sales and technical resources than are available to us. Additionally, many of our potential competitors have research and development capabilities that may allow such competitors to develop new or improved products that may compete with our product lines.  Our potential products could be rendered obsolete or made uneconomical by the development of new products to treat the conditions to be addressed by our developments, technological advances affecting the cost of production, or marketing or pricing actions by one or more of our potential competitors.  Our business, financial condition and results of operation could be materially adversely affected by any one or more of such developments.  We cannot assure you that we will be able to compete successfully against current or future competitors or that competition will not have a materially adverse effect on our business, financial condition and results of operations.  We are aware of certain developmental projects for products to treat or prevent certain diseases targeted by us.  The existence of these potential products or other products or treatments of which we are not aware, or products or treatments that may be developed in the future, may adversely affect the marketability of products developed by us.

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In the area of wound management, which is the focus of our development activities, a number of companies are developing or evaluating new technology approaches.  We expect that technological developments will occur at a rapid rate and that competition is likely to intensify as various alternative technologies achieve similar, if not identical or superior, advantages.

Wound care products developed from our Nanoflex® technology, including Altrazeal®, will compete with numerous well-established products including technologies for hydrogels, films, alginates, foams and others wound care technologies that may be marketed by Smith & Nephew plc, Acelity L.P. Inc., ConvaTec Inc., 3M Company, and Molnlycke Health Care.

Any products developed from OraDisc™ erodible film technology, for the controlled release of pharmaceutical actives, will compete with numerous alternative drug delivery technologies including fast release film technology, transdermal drug delivery, and other mucoadhesive film technologies.

Even if our products are fully developed and receive the required regulatory approval, of which there can be no assurance, we believe that our products require extensive sales efforts directed both at the medical professional and the consumer and can only compete successfully if marketed by companies with relevant expertise.

Employees

As of December 31, 2017, we had two full-time employees in general and administration.  In addition, we use contract consultants for business development, quality control and quality assurance, clinical administration, regulatory affairs, and office administration.  Our employees are not represented by a labor union and are not covered by a collective bargaining agreement.  At times, we may complement our internal expertise with external scientific consultants, university research laboratories and contract manufacturing organizations that specialize in various aspects of drug development including clinical development, regulatory affairs, toxicology, preclinical testing and process scale-up.

Organizational History

We were incorporated on September 17, 1987 under the laws of the State of Nevada, originally under the name Casinos of the World, Inc.  From April 1993 to January 2002, the Company changed its name on four separate occasions, with Oxford Ventures, Inc. being the Company's name on January 30, 2002.

On March 29, 2006, we effected a 400:1 reverse stock split and, at the same time, authorized a decrease in authorized shares of Common Stock from 400,000,000 shares to 200,000,000 shares, and authorized up to 20,000 shares of Preferred Stock.

On March 31, 2006, a subsidiary of the Company, which had acquired, among other things, the net assets of the Nanoflex® and Mucoadhesive OraDisc™ technologies from Access Pharmaceuticals, Inc., merged with and into ULURU Inc., a Delaware corporation ("ULURU Delaware"), and ULURU Delaware became a wholly-owned subsidiary of the Company.  On March 31, 2006, we changed our name from "Oxford Ventures, Inc." to "ULURU Inc."  On the same date, we moved our executive offices to Addison, Texas.

On June 29, 2011, we effected a 15:1 reverse stock split.

On September 13, 2011, we filed a certificate of designation creating the Series A Preferred Stock, all of which have been redeemed.

On March 23, 2017, we filed a certificate of designation creating 1,250 shares of Series B Preferred Stock which were issued on March 31, 2017 to Velocitas I LLC ("Velo LLC"), an entity controlled by Velocitas Partners, LLC ("Velocitas").On August 1, 2017, all 1,250 outstanding shares of Series B Convertible Preferred Stock held by Velo LLC automatically converted in exchange for 125,000,000 shares of Common Stock as a result of the approval by the stockholders at the 2017 Annual Meeting of Stockholders held on July 25, 2017, and the filing in July 2017, of an amendment increasing our authorized shares of Common Stock from 200,000,000 shares to 750,000,000 shares.  As of the date of this filing, all shares of Series B Preferred Stock have been redeemed.

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Corporate Information

Our principal executive offices are located at 4410 Beltway Drive, Addison, Texas 75001.  Our telephone number is (214) 905-5145.

Available Information

Our internet address is www.uluruinc.com.  We are not including the information contained on our website as part of, or incorporating it by reference into, this annual report on Form 10-K.  We make available free of charge through our website our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, as soon as reasonably practicable after we electronically file such materials with the Securities and Exchange Commission.

ITEM 1A. RISK FACTORS

You should carefully consider the following risk factors before you decide to invest in our Company and our business because these risk factors may have a significant impact on our business, operating results, financial condition, and cash flows. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our business operations. If any of the following risks actually occurs, our business, financial condition and results of operations could be materially and adversely affected.

Risks Related to Our Operations

We do not have significant operating revenue and we may never have sufficient revenue to be profitable.

Our ability to achieve significant revenue or profitability depends upon our ability to successfully commercialize existing products, particularly Altrazeal®.  Historically, none of our existing products have had significant sales, and all of our products compete in a competitive marketplace.  We may not generate significant revenues or profits from the sale of Altrazeal® or other products in the future. If we are unable to generate significant revenues over the long term, we will not be profitable and may need to discontinue our operations.

We are dependent upon financings to fund our operations and may be unable to continue as a going concern.

Historically, we have not generated sufficient cash flows from operations to meet the cash requirements of our operations and other commitments without raising funds through the sale of debt and equity securities.  Our ability to continue as a going concern will depend, in large part, on our ability to obtain additional financing and generate positive cash flow from operations, neither of which is certain.  If we are unable to achieve these goals, our business would be jeopardized and we may not be able to continue operations.  A going concern qualification could impair our ability to finance operations through the sale of debt or equity securities.

A failure to obtain additional capital when and as needed could jeopardize our operations and the cost of capital may be high.

In the event that we need to raise capital in the future, due to our limited revenue and negative working capital, we may be unable to obtain the necessary financing on terms acceptable to us, or at all.  If we are unable to raise capital when needed, we would be unable to continue our operations.  Even if we are able to raise capital, we may raise capital by selling equity securities, which will be dilutive to existing stockholders.  If we incur additional indebtedness, costs of financing may be extremely high, and we will be subject to default risks associated with such indebtedness, which may harm our ability to continue our operations.

We have pledged substantially all of our assets as security for indebtedness from Velocitas, and if we default, Velocitas will have all remedies typically available to a secured creditor.

In connection with our issuance of $1,000,000 in promissory notes to Velocitas, we signed a security agreement under which we and our subsidiaries have pledged all of our assets as security for the obligations under the notes and security agreement.  If we default on any such note or the related security agreement, Velocitas will have available to it all remedies typically available to a secured creditor.  This may include foreclosing on and auctioning all of our assets and credit bidding at such auction. Any default under our notes to Velocitas would harm, and likely force us to discontinue, our business.

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Sales of our products are dependent in part upon the efforts of commercial partners and other third parties over which we have no or little control.

The right to market and sell our key products in many key markets has been licensed to third parties.  This presents certain risks, including the following:

§	our commercial partners and licensees may not place the same priority on sales of our products as we do, may fail to honor contractual commitments, may not have the expertise, financial strength, marketing ability or other characteristics necessary to effectively market our products, may dedicate only limited resources to, and/or may abandon, marketing of a product for reasons, including reasons such as a shift in corporate focus, unrelated to our products' merits;
§	our commercial partners may be in the early stages of development and may not have sufficient liquidity to effectively obtain approvals for and market our products consistent with contractual commitments or our expectations;
§	we may have disputes with our commercial partners, which may inhibit development, lead to an abandonment of our arrangements, lead to a protracted dispute or have other negative consequences;
§	our commercial partners may fail to honor the terms of our agreements with them, with respect to payment, compliance with law or other terms, which may lead to liquidity issues, reputational harm with end customers and other issues; and
§	even if the commercialization and marketing of products is successful, our revenue share may be limited and may not exceed our associated development and operating costs.

If we are unable to establish effective sales, marketing and distribution capabilities, or to enter into agreements with third parties to do so, we will be unable to successfully commercialize Altrazeal® and other products.

If we are unable to establish the capabilities to sell, market, and distribute Altrazeal® and other products by entering into agreements with others, or to maintain such capabilities in countries where we have already commenced commercial sales, we will be unable to successfully sell Altrazeal® and other related products.  In that event, we will be unable to generate significant revenues. We may be unable to enter into and maintain any marketing or distribution agreements with third-parties on acceptable terms, if at all. Even if we enter into marketing and distribution agreements with third parties on acceptable terms, such agreements may contain terms that are disadvantageous to us and licensees under such agreements may not expend sufficient resources to effectively market our products.  In addition, parties to such agreements may fail to perform their obligations under such agreements, which may lead to costly and distracting disputes and periods of uncertainty. We may not be successful in commercializing Altrazeal® and other products.

We may be unable to successfully develop, market, or commercialize our products or our product candidates without establishing new relationships and maintaining current relationships.

We do not have the resources to hire a dedicated in-house sales and distribution force for our products.  As a result, our strategy for the development and commercialization of our potential products requires us to enter into various arrangements with corporations, collaborators, licensees and others in order to develop, produce and market our products. Our business depends upon our ability to enter into agreements for the development, production, marketing and sale of our products on reasonable terms, which we may be unable to do.  Even if we enter into such agreements, we are subject to the risk that the counterparty to the agreement will not fulfill their obligations under such agreements. Our ability to successfully commercialize and market our products and product candidates will be harmed if our existing relationships are terminated, we are unable to enter into new relationships or our partners fail to fulfill their obligations under the agreements.

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We are dependent upon contract manufacturers to safely and timely manufacture our products.

We have limited experience in the manufacture of medical devices and pharmaceutical products in commercial quantities.  As a result, we have established, and in the future intend to establish, arrangements with contract manufacturers to manufacture, package, label, and deliver our medical devices and pharmaceutical products.  Our business will suffer if there are delays or difficulties in establishing relationships with manufacturers to manufacture, package, label, and deliver our products or if the prices charged by such manufacturers are higher than anticipated.  Moreover, contract manufacturers that we may use must adhere to current Good Manufacturing Practices, as required by FDA and other regulatory agencies.  If any such manufacturers fail to comply with FDA requirements and similar requirements of other nations, the manufacturers may be unable to manufacture our products.  In addition, such manufacturers may fail to manufacture our products in accordance with specifications, or the manufacturing specifications may fail to produce products that comply with functional, technical, cosmetic or other requirements.  In addition, third party manufacturers may fail to meet delivery timelines, which may cause problems in our customer or distributor relationships and potentially lead to defaults or an obligation to pay damages.  If we are unable to obtain or retain third party manufacturing on commercially acceptable terms, we may not be able to commercialize our products as planned.  Our dependence upon third parties for the manufacture of our products may harm our ability to generate significant revenues or acceptable profit margins and our ability to develop and deliver such compliant products on a timely and competitive basis.

We may incur substantial product liability expenses due to manufacturing or design defects, or the use or misuse of our products.

Our business exposes us to potential liability risks that are inherent in the testing, manufacturing and marketing of medical devices and pharmaceutical products. We may face liability to our distributors and customers if our products are not manufactured as per specifications or if such specifications cause the products to spoil, become unsafe or fail to function as marketed. We may also face substantial liability for damages if our products produce adverse side effects or defects are identified with any of our products that harm patients and other users.  Any such failures or defects may lead to a breakdown in our relationships with distributors and purchasers, leading to a substantial decline in or collapse of our market.  In addition, if any judgments or liabilities are material in size, we may be unable to satisfy such liabilities. Any product liability could harm our operations, and a large judgment could force us to discontinue our operations.

We may incur significant liabilities if we fail to comply with stringent environmental regulations.

Our development processes involve the controlled use of hazardous materials.  We are subject to a variety of federal, state and local governmental laws and regulations related to the use, manufacture, storage, handling, and disposal of such material and certain waste products.  If we experience an accident with hazardous materials or otherwise mishandle them, we could be held liable for any damages.  Any such liability could exceed our resources and force us to discontinue operations.

Additional federal, state, foreign and local laws and regulations affecting our operations may be adopted in the future, including laws related to climate change.  We may incur substantial costs to comply with these laws or regulations.  Additionally, we may incur substantial fines or penalties if we violate any of these laws or regulations.

Our ability to successfully commercialize our drug or device candidates could substantially depend upon the availability of reimbursement for the costs of the resulting drugs or devices and related treatments.

The successful commercialization of, and the interest of potential collaborative partners to invest in the commercialization of our drug or device candidates, may depend substantially upon our completing such processes as necessary to qualify our products for reimbursements and reimbursement prices being at acceptable levels.  Our products are not qualified for reimbursement in many of the markets into which we hope to sell.   To the extent our products our qualified, the amount of such reimbursement in the United States or elsewhere may be too low or may decrease in the future or may be unavailable for any drugs or devices that we are currently marketing or may develop in the future.  Limited reimbursement for the cost of any drugs or devices that we develop will reduce the demand for, or may reduce the price of such drugs or devices, which would hamper our ability to obtain collaborative partners to commercialize our drugs or devices, or to obtain a sufficient financial return on our own manufacture and commercialization of any future drugs or devices.

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Intense competition may limit our ability to successfully develop and market commercial products.

The pharmaceutical and medical device industries are intensely competitive and subject to rapid and significant technological and regulatory change. Our competitors in the United States and elsewhere are numerous and include, among others, major multinational pharmaceutical, device, and chemical companies.

In the area of wound management and burn care, which is the primary focus of our commercialization and development activities, a number of companies are developing or evaluating new technology approaches.  Significantly larger companies compete in this marketplace including Smith & Nephew plc, Acelity L.P. Inc., ConvaTec Inc., 3M Company, Molnlycke Health Care, and numerous other companies.  We expect that technological developments will occur at a rapid rate and that competition is likely to intensify as various alternative technologies achieve similar if not identical or superior advantages.

In the area of erodible film technology, any products developed from our OraDisc™ erodible film technology, for the controlled release of pharmaceutical actives, will compete with numerous alternative drug delivery technologies including fast release film technology, transdermal drug delivery, and other mucoadhesive film technologies developed by BioDelivery Sciences International, Inc., Church & Dwight, Inc., Johnson & Johnson Consumer Products, Inc., Pfizer Consumer Healthcare, and Aspen Pharmacare Holdings Limited.

These competitors have and employ greater financial and other resources, including larger research and development, marketing and manufacturing organizations.  As a result, our competitors may successfully develop technologies and drugs that are more effective or less costly than any that we are developing or which would render our technology and future products obsolete and noncompetitive.

In addition, most of our competitors have greater experience than we do in conducting preclinical and clinical trials and may obtain FDA and other regulatory approvals for product candidates more rapidly than we do.  Companies that complete clinical trials obtain required regulatory agency approvals and commence commercial sale of their products before their competitors may achieve a significant competitive advantage.  Products resulting from our development efforts or from our joint efforts with collaborative partners therefore may not be commercially competitive with our competitors' existing products or products under development.

The market may not accept any medical device or pharmaceutical products that we successfully develop.

The drugs and devices that we are attempting to develop may compete with a number of well-established drugs and devices manufactured and marketed by major companies.  The degree of market acceptance of any drugs or devices developed by us will depend on a number of factors, including the establishment and demonstration of the clinical efficacy and safety of our product candidates, the potential advantage of our product candidates over existing therapies and the reimbursement policies of government and third-party payers, and the effectiveness of our marketing efforts and those of our partners.  Physicians, patients or the medical community in general may not accept or use any drugs or devices that we may develop independently or with our collaborative partners and if they do not, our business could suffer.

Our future financial results could be adversely impacted by asset impairments or other charges.

Accounting Standards Codification ("ASC") Topic 350-30, Intangibles Other than Goodwill requires that we test goodwill and other intangible assets determined to have indefinite lives for impairment on an annual, or on an interim basis if certain events occur or circumstances change that would reduce the fair value of a reporting unit below its carrying value or if the fair value of intangible assets with indefinite lives falls below their carrying value. In addition, under ASC Topic 350-30, long-lived assets with finite lives are tested for impairment whenever events or changes in circumstances indicate that its carrying value may not be recoverable. A significant decrease in the fair value of a long-lived asset, an adverse change in the extent or manner in which a long-lived asset is being used or in its physical condition or an expectation that a long-lived asset will be sold or disposed of significantly before the end of its previously estimated life are among several of the factors that could result in an impairment charge.

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We evaluate intangible assets determined to have indefinite lives for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. These events or circumstances could include a significant change in the business climate, legal factors, operating performance indicators, competition, sales or disposition of a significant portion of the business, or other factors such as a decline in our market value below our book value for an extended period of time.

We evaluate the estimated lives of all intangible assets on an annual basis, to determine if events and circumstances continue to support an indefinite useful life or the remaining useful life, as applicable, or if a revision in the remaining period of amortization is required. The amount of any such annual or interim impairment charge could be significant and could have a material adverse effect on reported financial results for the period in which the charge is taken.

Failure to achieve and maintain effective internal controls could have a material adverse effect on our business.

Effective internal controls are necessary for us to provide reliable financial reports.  If we cannot provide reliable financial reports, we may be subject to legal actions by stockholders, regulators or other parties. All internal control systems, no matter how well designed, have inherent limitations. These inherent limitations include the realities that judgments in decision-making can be faulty, and breakdowns can occur because of simple error or mistake. Therefore, even those systems determined to be effective can only provide reasonable assurance with respect to financial preparation and presentation.

Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2017.  Based on this assessment, management believes that during the year ended December 31, 2017 we did not maintain an effective control environment as a result of the lack of segregation of duties. Any failure to implement required new or improved controls, or difficulties encountered in their implementation, could harm our operating results or cause us to fail to meet our reporting obligations. Failure to achieve and maintain an effective internal control environment could also cause investors to lose confidence in our reported financial information, which could have a material adverse effect on our stock price and lead to disruptions, litigation and liabilities.

Our business is subject to complex corporate governance, public disclosure, and accounting requirements and regulations that could adversely affect our business and financial results and condition.

We are subject to changing rules and regulations of various federal and state governmental authorities. These entities, including the Public Company Accounting Oversight Board and the Securities and Exchange Commission (the "SEC"), have issued a significant number of complex requirements and regulations over the course of the last several years and continue to develop additional requirements and regulations in response to laws enacted by Congress, including the Sarbanes-Oxley Act of 2002 and, most recently, the Dodd-Frank Wall Street Reform and Protection Act, or the Dodd-Frank Act.  Our efforts to comply with these requirements and regulations have resulted in, and are likely to continue to result in, an increase in expenses and a diversion of management's time from other business activities.  We also may incur liability if we fail to comply with such laws.

Our business could suffer if we lose the services of, or fail to attract, key personnel.

We are highly dependent upon the efforts of our senior management team, all of which are employed on an at-will basis.  In February 2017, Helmut Kerschbaumer, our then Interim President and Chief Executive Officer resigned.  Our new Chief Executive Officer, Vaidehi Shah, is not party to an employment agreement and may terminate her employment at any time.  Also, she is involved in other businesses or enterprises.  The loss of services from Ms. Shah or one or more other members of our senior management or scientific team could delay or prevent the achievement of our development or product commercialization objectives, harm marketing and distribution, harm capital raising and otherwise harm out business. We do not maintain any "key-man" insurance policies on any of our senior management and we do not intend to obtain such insurance.  In addition, due to the specialized scientific nature of our business, we are highly dependent upon our ability to attract and retain qualified scientific and technical personnel.  There is intense competition among major pharmaceutical and medical device companies, specialized biotechnology firms and universities and other research institutions for qualified personnel in the areas of our activities and we may be unsuccessful in attracting and retaining these personnel.

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Our Chief Executive Officer is affiliated with Velocitas which may lead to certain risks.

In February 2017, our Board of Directors appointed Vaidehi Shah to serve as Chief Executive Officer.  Ms. Shah also serves as the Chairman of the Board of Directors for the Company.  She also serves as a managing member of Velocitas Partners, LLC and as managing director of Velocitas GmbH, an entity wholly owned by Velocitas Partners, LLC.  Velocitas GmbH is an international medical technology licensing and distribution company and was previously involved in the distribution of Altrazeal®.  Concurrent with the second closing, we appointed other representatives of Velocitas Partners, LLC to the Board of Directors and to executive roles within the Company and also acquired from Velocitas all the Altrazeal® related distribution agreements.  The role of Ms. Shah's and other Velocitas appointees with other business activities may interfere with their decision making as an officer and director of the Company.  In addition, Ms. Shah devotes a portion of her time to other business endeavors. As a result, she may not be effective as she would be if she were working only for the Company.

Significant disruptions of information technology systems or breaches of information security could adversely affect our business.

We rely to a large extent upon information technology systems to operate our business. In the ordinary course of our business, we collect, store and transmit confidential information, including intellectual property, proprietary business information and personally identifiable information, and it is critical that we do so in a secure manner to maintain the confidentiality and integrity of such confidential information. We have also outsourced elements of our information technology infrastructure, and as a result we are managing independent vendor relationships with third parties who may or could have access to our confidential information. The size and complexity of our information technology systems, and those of third-party vendors with whom we contract, make such systems potentially vulnerable both to service interruptions and to security breaches from inadvertent or intentional actions. We may be susceptible to third-party attacks on our information security systems, which attacks are of ever increasing levels of sophistication and are made by groups and individuals with a wide range of motives and expertise. Service interruptions or security breaches could result in significant financial, legal, business or reputational harm.

Fluctuation in foreign currency exchange rates may adversely affect our financial statements and our ability to realize projected sales.

Although our financial statements are denominated in U.S. dollars, a significant portion of our revenues are realized in Euros.  Our revenues are affected by movement of the U.S. dollar against the Euro.  Fluctuations in exchange rates between the U.S. dollar and the Euro may also affect the reported value of our unconsolidated subsidiaries, as well as our cash flows.  Currently, we do not employ forward contracts or other financial instruments to mitigate foreign currency risk.

Certain international markets accounting for a signficiant portion of our current revenues are subject to financial and geopolitical instability.

In recent years, our strategy had been to focus on international markets as a result of which certain markets from the Middle East, Europe, and other emerging markets account for a significant portion of our current revenues.  Continuing worldwide economic and geopolitical instability could result in slower than expected revenue growth and collection issues

Risks Related to Development, Clinical Testing and Regulatory Approval

We may be unable to obtain government approvals required to market our products and, even if we do, that approval may subsequently be withdrawn or limited.

Government regulation affects the manufacturing and marketing of pharmaceutical and medical device products. Government regulations may delay marketing of our potential drugs or potential medical devices for a considerable or indefinite period of time, impose costly procedural requirements upon our activities and furnish a competitive advantage to larger companies or companies more experienced in regulatory affairs. Delays in obtaining governmental regulatory approval could prohibit us from marketing our products in affected markets. Our drug or device candidates may not receive FDA or other regulatory approvals on a timely basis or at all.  Even if our drug or device candidates receive marketing approval in the U.S. and other markets, our sales may be harmed by the absence of, or limits on, reimbursement by insurance companies, government health organizations and others in those markets.

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Moreover, if regulatory approval of a drug or device candidate is granted, such approval may impose limitations on the indicated use for which such drug or device may be marketed. Even if we obtain initial regulatory approvals for our drug or device candidates, our drugs or devices and our manufacturing facilities would be subject to continual review and periodic inspection, and later discovery of previously unknown problems with a drug, or device, manufacturer or facility may result in restrictions on the marketing or manufacture of such drug or device, including withdrawal of the drug or device from the market. The FDA and other regulatory authorities stringently apply regulatory standards, and failure to comply with regulatory standards can, among other things, result in fines, denial or withdrawal of regulatory approvals, product recalls or seizures, operating restrictions and criminal prosecution.

Trends toward managed health care and downward price pressure on medical products and services may limit our ability to profitably sell any drugs or devices that we develop.

Lower prices for health care products may result from:

§	Third-party payers' increasing challenges to the prices charged for medical products and services;
§	The trend toward managed health care in the Unites States and the concurrent growth of group purchasing organizations and similar organizations that can control or significantly influence the purchase of healthcare services and products;
§	The existence of government-managed health care or insurance programs in Europe and other nations, in which government agencies or committees have broad powers to approve or disapprove reimbursement and leverage to influence pricing; and
§	The Affordable Care Act (or any successor act adopted in the coming years) and other proposals to reform healthcare or reduce government insurance programs.

The cost containment measures that healthcare providers are instituting, including practice protocols and guidelines and clinical pathways, and the effect of any healthcare reform, could limit our ability to profitably sell any drugs or devices that we may successfully develop.  Moreover, any future legislation or regulation, if any, relating to the healthcare industry or third-party coverage and reimbursement, may cause our business to suffer.

We may not successfully commercialize our product candidates.

Our product candidates are subject to the risks of failure inherent in the development of pharmaceuticals and medical devices based on new technologies.  Our failure to develop safe, commercially viable products would severely limit our ability to become profitable or to achieve significant revenues.  We may be unable to successfully commercialize our product candidates because:

§	some or all of our product candidates may be found to be unsafe or ineffective or otherwise fail to meet applicable regulatory standards or receive necessary regulatory clearances;
§	our product candidates, if safe and effective, may be too difficult to develop into commercially viable products;
§	we have limited financial resources for future product development;
§	it may be difficult to manufacture or market our product candidates on a large scale;
§	given our limited market presence, we may be unable, directly or indirectly through licensees, to effectively market and distribute our products or establish a strong brand;
§	proprietary rights of third parties may preclude us from marketing our product candidates; and
§	third parties may market superior or equivalent products.

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The uncertainty associated with preclinical and clinical testing may affect our ability to successfully commercialize new products.

Before we can obtain regulatory approvals for the commercial sale of our potential products, the product candidates may be subject to extensive preclinical and clinical trials to demonstrate their safety and efficacy in humans. In this regard, for example, adverse side effects can occur during the clinical testing of a new drug on humans which may delay ultimate FDA or other agency approval or even lead us to terminate our efforts to develop the product for commercial use. Companies in the pharmaceutical and medical device industry have suffered significant setbacks in advanced clinical trials, even after demonstrating promising results in earlier trials. The failure to adequately demonstrate the safety and efficacy of a product candidate under development could delay or prevent regulatory approval of the product candidate. A delay or failure to receive regulatory approval for any of our product candidates could prevent us from successfully commercializing such candidates, and we could incur substantial additional expenses in our attempts to further develop such candidates and obtain future regulatory approval.

Risks from the improper conduct of employees, agents or contractors or collaborators could adversely affect our business or reputation.

We cannot ensure that our compliance controls, policies, and procedures will in every instance protect us from acts committed by our employees, agents, contractors, or collaborators that would violate the laws or regulations of the jurisdictions in which we operate, including without limitation, healthcare, employment, foreign corrupt practices, environmental, competition, and privacy laws. Such improper actions could subject us to civil or criminal investigations, monetary and injunctive penalties and could adversely impact our ability to conduct business, results of operations, and reputation.

Risks Related to Our Intellectual Property

We may not be successful in protecting our intellectual property and proprietary rights.

Our success depends, in part, on our ability to obtain U.S. and foreign patent protection for our drug and device candidates and processes, preserve our trade secrets and operate our business without infringing the proprietary rights of third parties.  Legal standards relating to the validity of patents covering pharmaceutical and medical device inventions and the scope of claims made under such patents are still developing.  We cannot assure you that any existing or future patents issued to, or licensed by, us will not subsequently be challenged, infringed upon, invalidated or circumvented by others.   As a result, although we, together with our subsidiaries, are the owner of U.S. patents and U.S. patent applications now pending, and international patents and international patent applications, we cannot assure you that any additional patents will issue from any of the patent applications owned by us.  In addition, as a result of liquidity shortages, we have allowed certain patents and patent applications to lapse.  Furthermore, any rights that we may have under issued patents may not provide us with significant protection against competitive products or otherwise be commercially valuable.  Patent we have been granted for our Nanoflex® technology begin to expire in 2023 and for our OraDisc™ technology begin to expire in 2021.  As such patents expire, it will be easier for our competitors to imitate the functionality and methods of our patented inventions.

In addition, patents may have been granted to third parties or may be granted covering products or processes that are necessary or useful to the development of our product candidates.  If our product candidates or processes are found to infringe upon the patents or otherwise impermissibly utilize the intellectual property of others, our development, manufacture and sale of such product candidates could be severely restricted or prohibited. In such event, we may be required to obtain licenses from third parties to utilize the patents or proprietary rights of others.  We cannot assure you that we will be able to obtain such licenses on acceptable terms, if at all.  If we become involved in litigation regarding our intellectual property rights or the intellectual property rights of others, the potential cost of such litigation, regardless of the strength of our legal position, and the potential damages that we could be required to pay could be substantial and harm our ability to continue as a going concern.  If we do not have sufficient working capital, we may not be able to successfully enforce or defend our patent rights.

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Risks Related to Our Common Stock

Our stockholders may experience substantial dilution in the value of their investment if we issue additional shares of our capital stock.

Our charter allows us to issue up to 750,000,000 shares of our Common Stock and to issue and designate the rights of, without stockholder approval, up to 20,000 shares of preferred stock. In the event we issue additional shares of our capital stock, dilution to our stockholders could result. In addition, if we issue and designate a new class of preferred stock, these securities may provide for rights, preferences or privileges senior to those of holders of our Common Stock.

Rights of first offer held, or allegedly held, by shareholder may perpetuate concentration of ownership and lead to issuances of stock at lower prices than would occur absent the existence of such rights.

We have granted Velocitas and other persons a right of first offer, or preemptive right, permitting such persons to acquire a percentage of any securities offered by the Company (subject to certain standard exceptions) reflective of their percentage ownership in the Company.   This right of first offer, if exercised, will permit these existing key affiliates of the Company to maintain their percentage ownership in the Company.  In addition, the existence of this right of first offer may discourage third parties from investing in or negotiating with the Company, as a majority of the securities the third-party investors intends to purchase may instead be acquired pursuant to the right of first offer. If third party interest or demand in our securities is limited, the price at which we can sell our securities may be lower than it otherwise would be.

In addition, representatives of IPMD GmbH ("IPMD") have alleged that IPMD has a right of first offer based upon a 2012 purchase agreement, to be exercised within 30 days of written notice, to take over all, or part, of any equity-based financing made by the Company.  In addition, IPMD asserts that this same 2012 purchase agreement provides it with an ongoing right to designate two directors.  We dispute the scope and other aspects of the right of first offer and the asserted right to designate directors.  In light of uncertainty as to who controls IPMD and internal issues at IPMD, we do not expect to be able to resolve the disputes with IPMD in the immediate future.  The rights claimed by IPMD may delay or harm our ability to close future offerings and may lead to disputes with respect to the governance of the Company.  In particular, the scope of the right of first offer as asserted by IPMD may limit the ability of the Company to close any offering on a short-term basis.  These alleged rights could also lead to litigation in the future.

Sales of our common stock could lower our stock price.

Trading in our Common Stock is limited, and daily trading volumes are low.  As a result, the market price for our Common Stock can be harmed by the sale of even a moderate number of shares of our Common Stock.  As a result of this limited market, stockholders may have difficulty in obtaining liquidity for their shares of Common Stock, and any liquidity they obtain may be at a low stock price.

Future sales of our common stock by us may depress the market price of our common stock and cause stockholders to experience dilution.

The market price of our Common Stock could decline as a result of sales of substantial amounts of our Common Stock directly in the public market or in private placements under circumstances in which such shares can be resold into the market.  We may issue additional shares of Common Stock through one or more equity transactions in the future to satisfy our capital and operating needs; however, such transactions will be subject to market conditions and may include sales at a discount from our market prices and require issuance of warrants to purchase Common Stock.  Sales of equity securities by a company at a discount from market price are often associated with a decrease in the market price of the Common Stock and will dilute the percentage interest owned by existing stockholders.

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We do not expect to pay dividends in the foreseeable future.

We do not anticipate paying cash dividends on our Common Stock in the foreseeable future. Any payment of cash dividends will depend on our financial condition, results of operations, capital requirements and other factors and will be at the discretion of our board of directors.  Accordingly, you will have to rely on appreciation in the price of our Common Stock, if any, to earn a return on your investment in our Common Stock. Furthermore, we may in the future become subject to contractual restrictions on, or prohibitions against, the payment of dividends.

An investment in our common stock may be less attractive because it is not listed on a national stock exchange.

Our Common Stock is quoted on the OTCQB™ marketplace, operated by the OTC Markets Group.  The OTCQB is a market tier for over-the-counter-traded companies that are registered and reporting with the SEC.  The OTCQB is viewed by most investors as a less desirable, and less liquid, marketplace than a national stock exchange.  As a result, an investor may find it more difficult to purchase, dispose of or obtain accurate quotations as to the value of our Common Stock.

Our common stock is a "low-priced stock" and subject to regulations that limits or restricts the potential market for our stock.

Shares of our Common Stock are "low-priced" or "penny stock," resulting in increased risks to our investors and certain requirements being imposed on some brokers who execute transactions in our Common Stock.  In general, a low-priced stock is an equity security that:

§	Is priced under five dollars;
§	Is not traded on a national stock exchange, such as NASDAQ or the NYSE;
§	Is issued by a company that has less than $5 million in net tangible assets (if it has been in business less than three years) or has less than $2 million in net tangible assets (if it has been in business for at least three years); and
§	Is issued by a company that has average revenues of less than $6 million for the past three years.

We believe that our Common Stock is presently a "penny stock." At any time, our Common Stock qualifies as a penny stock, the following requirements, among others, will generally apply:

§	Certain broker-dealers who recommend penny stock to persons other than established customers and accredited investors must make a special written suitability determination for the purchaser and receive the purchaser's written agreement to a transaction prior to sale.
§	Prior to executing any transaction involving a penny stock, certain broker-dealers must deliver to certain purchasers a disclosure schedule explaining the risks involved in owning penny stock, the broker-dealer's duties to the customer, a toll-free telephone number for inquiries about the broker-dealer's disciplinary history and the customer's rights and remedies in case of fraud or abuse in the sale.
§	In connection with the execution of any transaction involving a penny stock, certain broker-dealers must deliver to certain purchasers the following:
	·bid and offer price quotes and volume information;
	·the broker-dealer's compensation for the trade;
	·the compensation received by certain salespersons for the trade;
	·monthly accounts statements; and
	§a written statement of the customer's financial situation and investment goals.

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Provisions of our charter documents could discourage an acquisition of our Company that would benefit our stockholders and may have the effect of entrenching, and making it difficult to remove, management.

Provisions of our Articles of Incorporation and Bylaws may make it more difficult for a third party to acquire control of our Company, even if a change in control would benefit our stockholders.  In particular, shares of our preferred stock may be issued in the future without further stockholder approval and upon such terms and conditions, and having such rights, privileges and preferences, as our Board of Directors may determine, including for example, rights to convert into our Common Stock.  The rights of the holders of our Common Stock will be subject to, and may be adversely affected by, the rights of the holders of any of our preferred stock that may be issued in the future.  The issuance of our preferred stock, while providing desirable flexibility in connection with possible acquisitions and other corporate purposes, could have the effect of making it more difficult for a third party to acquire control of us.  This could limit the price that certain investors might be willing to pay in the future for shares of our Common Stock and the likelihood of an acquisition.

In addition, our Bylaws include a requirement that shareholders who wish to nominate any candidates for director, or propose any business for a meeting of stockholders, provide our Company with advanced written notice of the nomination or the proposal, accompanied by specified information.    In general, such notice must be delivered not less than 60 days nor more than 90 days prior to the first anniversary of the preceding year's annual meeting of stockholders; provided, however, that in the event that the date of the annual meeting is advanced more than 30 days prior to such anniversary date or delayed more than 60 days after such anniversary date, then to be timely such notice must be received by the Company no later than the later of 70 days prior to the date of the meeting or the 10th day following the day on which public announcement of the date of the meeting was made.  These requirements are in addition to any requirements set forth in rules adopted by the SEC.   The advanced notice requirement may limit the ability of any shareholder to influence the Company by nominating a director or making a proposal, and the requirement's existence may result in decreased interest in our capital stock.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

As of December 31, 2017, we did not own any real property.

On December 15, 2017, we entered into a Termination of Lease Agreement whereby we cancelled our then existing lease for office and laboratory space and concurrently entered into a new lease agreement (the "Office Lease") that will continue until December 2019.  The Office Lease encompasses approximately 2,500 rentable square feet and requires a minimum monthly lease obligation of $2,721, which is inclusive of monthly operating expenses.

On January 25, 2018, we entered into a lease agreement for storage and warehouse space in Carrollton, Texas.  The lease commenced on January 24, 2018 and will continue until December 2019.  The lease requires a minimum monthly lease obligation of $1,564, which is inclusive of monthly operating expenses.

We believe that our existing leased facilities are suitable for the conduct of our business and adequate to meet our growth requirements.

ITEM 3. 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.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

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Part II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market for Common Equity

On April 2, 2012, our Common Stock began quotation and trading on the OTCQB™ marketplace, operated by the OTC Markets Group, under the symbol "ULUR".

From July 26, 2007 to April 1, 2012 our Common Stock was traded on the exchange currently known as the NYSE MKT NYSE Amex, LLC exchange under the symbol "ULU".  From March 31, 2006 to July 25, 2007 our Common Stock was quoted on the OTC Bulletin Board under the symbol "ULUR.OB".

The following table sets forth, on a quarterly basis, the high and low per share closing prices of our Common Stock as reported on the OTCQB™ marketplace in each calendar quarter from January 1, 2016 through December 31, 2017.

Year Ended December 31, 2017	High		Low
First Quarter	$	0.15	$	0.04
Second Quarter	$	0.08	$	0.05
Third Quarter	$	0.08	$	0.04
Fourth Quarter	$	0.05	$	0.03
Year Ended December 31, 2016
First Quarter	$	0.21	$	0.07
Second Quarter	$	0.14	$	0.07
Third Quarter	$	0.08	$	0.03
Fourth Quarter	$	0.09	$	0.03

Holders of Common Stock

As of March 30, 2018, there were approximately 83 shareholders of record holding our Common Stock based upon the records of our transfer agent, which do not include beneficial owners of Common Stock whose shares are held in the names of various securities brokers, dealers, and registered clearing agencies.  We believe the number of actual shareholders of our Common Stock exceeds the number of registered shareholders.  As of March 30, 2018, there were 750,000,000 shares of Common Stock authorized and 201,349,431 shares of Common Stock issued and outstanding.

The last sales price of our Common Stock on March 29, 2018 was $0.035 per share as quoted and traded on the OTCQB™ marketplace.

Dividend Policy

To date, we have not declared or paid any cash dividends on our preferred stock or Common Stock and we do not anticipate paying any cash dividends on them in the foreseeable future.  The payment of dividends, if any, in the future is within the discretion of our Board of Directors and will depend on our earnings, capital requirements, and financial condition and other relevant facts.  We currently intend to retain all future earnings, if any, to finance the development and growth of our business.

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Securities Authorized for Issuance Under Equity Compensation Plans

In March 2006, our board of directors (the "Board") adopted and our stockholders approved our 2006 Equity Incentive Plan (the "Incentive Plan"), which initially provided for the issuance of up to 133,333 shares of our Common Stock pursuant to stock options 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 15, 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 December 31, 2017, we had granted options to purchase 2,061,167 shares of Common Stock since the inception of the Equity Incentive Plan, of which 150,736 were outstanding at a weighted average exercise price of $4.26 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 29, 2016, the Incentive Plan expired by its terms, and no additional awards may be granted thereunder.  The expiration of the Incentive Plan does not affect outstanding awards.

On March 28, 2018, our Board of Directors adopted and approved our 2018 Equity Incentive Plan which initially provides for the issuance of up to 20,000,000 shares of our Common Stock pursuant to stock options and other equity awards.

The following table sets forth the outstanding stock options or rights that have been authorized under equity compensation plans as of December 31, 2017.

Plan Category	Number of securities tobe issued upon exerciseof outstanding options,warrants and rights		Weighted-averageexercise price ofoutstanding options,warrants and rights		Number of securitiesremaining available forfuture issuance underequity compensationplans (excludingsecurities reflected incolumn (a))
	(a)		(b)		(c)
Equity compensation plans approved by security holders
2006 Equity Incentive Plan		150,736	$	4.26		-0-
Equity compensation plans not approved by security holders		-0-		n/a		-0-
Total		150,736	$	4.26		-0-

ITEM 6. SELECTED FINANCIAL DATA

Smaller reporting companies are not required to provide the information required by this Item.

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and other information in this Report contains forward-looking statements that are subject to significant risks and uncertainties. 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, results of operations, cash flows, market position, product development, product approvals, sales efforts, expenses, performance or results of current and anticipated products and the outcome of contingencies such as legal proceedings, 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. We have included important factors in the cautionary statements included in this Report, particularly under "Item 1.A Risk Factors", that we believe could cause actual results to differ materially from any forward-looking statement.

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 are estimates and 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

We are a specialty medical technology company committed to developing and commercializing a range of innovative wound care and muco-adhesive film products based on our patented Nanoflex® and OraDisc^TM technologies, with the goal of improving outcomes for patients, health care professionals and payers.

Utilizing these two platform technologies, a number of products were developed of which one is being actively marketed in the wound care market. This product, Altrazeal® Transforming Powder Dressing ("Altrazeal®"), based on our Nanoflex® technology, has the potential to change the way health care providers approach wound treatment.   Altrazeal® is indicated for both exuding acute wounds such as partial thickness burns, donor sites, surgical and traumatic wounds, and for chronic wounds such as venous leg ulcers, diabetic foot ulcers, and pressure ulcers. Altrazeal® is registered for sale with the FDA, the EU, and a number of other international markets.

Our current strategy is to primarily focus on the commercialization of Altrazeal® and to establish a market leadership position in wound management by developing and commercializing a customer focused portfolio of innovative wound care products.  We will also evaluate the potential for commercialization of the other products as well as explore strategic collaborations to further develop our oral mucoadhesive film technology (OraDisc^TM) for systemic drug delivery and for delivery of actives to the oral cavity.

During 2017, we were successful in improving the sales of Altrazeal®, particularly in international markets.  We were also able to achieve significant savings in our operating expense structure, which was highlighted by the settlement of certain liabilities at a level below the original indebtedness. In addition to recruiting new talent to stimulate revenue growth during 2017, we also engaged a new regulatory team during the year that reviewed and enhanced our existing quality management systems.

In 2018, we intend to continue to execute a series of operational plans originally launched in 2017 to enhance and streamline our business. This includes undertaking efforts to stimulate sales, enhance marketing, and expedite regulatory approvals for new market entry of Altrazeal® as well as to improve operational efficiencies and reduce costs. While we continue to focus on growing our international revenue base in 2018, we have also decided to initiate sales and marketing efforts in the United States.  In preparation for this, we have been reaching out to a number of potential customers to identify and validate potential marketing strategies for Altrazeal® that will reposition its entry into certain market segments and certain medical indications that may enable faster adoption and market penetration. We have also established a scientific advisory board with pre-eminent domestic and international experts in the advanced wound care field as well as launched a new website and other marketing collaterals for Altrazeal® in preparation of a global product relaunch.

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Recent Developments

Operations

On February 27, 2017, the Company appointed Vaidehi Shah to serve as the Company's Chief Executive Officer.  Effective as of April 1, 2017 the Company engaged Velocitas GmbH to provide operational support services in the fields of regulatory administration, finance, international customer account management, manufacturing, supply chain logistics and other services required by the Company.  Starting in April 2017, our new team initiated a number of business activities with the aim of reassessing Altrazeal®'s marketing strategy to accelerate sales as well as improving the Company's operations to create a strong organizational foundation going forward.  These activities include (i) showcasing Altrazeal® to new physicians, hospitals, clinics, and marketing partners to evaluate potential strategies for the domestic market, (ii) recruiting and increasing staff responsible for oversight of international sales and marketing, (iii) engaging third-party experts to assess and oversee the Company's quality management system and regulatory affairs, (iv) reviewing manufacturing and operational processes to increase cost efficiencies, and (v) negotiating and settling pending financial liabilities.

Debt Financing and Preferred Stock Offering – March 2017

On February 27, 2017, the Company entered into a Note, Warrant and Preferred Stock Purchase Agreement (the "Purchase Agreement") with Velocitas Partners, LLC ("Velocitas") and Velocitas I LLC ("Velo LLC"), an entity controlled by Velocitas, under which the Company received gross proceeds of $6,000,000, in two closing with the initial closing occurring on February 27, 2017 and the second closing occurring on March 31, 2017 (the "March 2017 Offering").

The first closing, which occurred on February 27, 2017, included the purchase by Velocitas at face value of a $500,000 Secured Convertible Note dated February 27, 2017 (the "Initial Note"), with the Initial Note accruing interest at 12.5% per annum and having a term of two years (subject to acceleration under certain circumstances).  The second closing, which occurred on March 31, 2017, included the purchase by Velocitas at face value of an additional $500,000 Secured Convertible Note (the "Second Note") with the Second Note accruing interest at 12.5% per annum and having a term of two years (subject to acceleration under certain circumstances), and Velo LLC purchasing 1,250 shares of Series B Convertible Preferred Stock of the Company for gross proceeds of $5,000,000, at an as-converted-to-Common Stock purchase price of $0.04 per share.

The Initial Note and the Second Note are convertible into shares of Common Stock at a conversion price of $0.04 per share, subject to equitable adjustments, with mandatory conversion of all unpaid principal and interest required on the second anniversary of each such note, unless an event of default has occurred and is continuing.  The Initial Note and the Second Note are secured by all of the assets of the Company and its subsidiaries pursuant to a Security Agreement executed at the initial closing.

The Series B Convertible Preferred Stock that was issued in connection with the second closing provided, among other things that it would automatically convert into Common Stock when the number of authorized shares of Common Stock was increased within 190 days of the second closing as necessary to permit all outstanding convertible or exercisable securities (including the Series B Convertible Preferred Stock) to convert to Common Stock. Following stockholder approval of an amendment to our articles of incorporation increasing the number of authorized shares of Common Stock from 200,000,000 shares to 750,000,000 shares, the Company filed on July 26, 2017 with the State of Nevada an amendment to its articles of incorporation implementing such increase.  This resulted in the conversion of all 1,250 outstanding shares of Series B Convertible Preferred Stock held by Velo LLC into 125,000,000 shares of Common Stock.

As a condition of the March 2017 Offering, the Company issued to Velocitas at the second closing a warrant to purchase up to 57,055,057 shares of Common Stock (the "Warrant").  The Warrant has an exercise price of $0.04 per share, a 10-year term and is subject to cashless exercise. In addition, at the second closing, the Company acquired the Altrazeal distributor agreements Velocitas had with its sub-distributors in exchange for the issuance of 13,375,000 shares of Common Stock.

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In addition, the Company, Velocitas, Velo LLC, and certain affiliates signed a Voting Agreement (the "Voting Agreement") pursuant to which the parties agreed to set the size of the Board of Directors at six directors, and agreed to vote for the election to the Board of Directors of four persons designated by Velocitas (initially to be Anish Shah, Oksana Tiedt, Vaidehi Shah and Arindam Bose), one director designated by Bradley J. Sacks and one additional director designated by a major investor or by the Board of Directors.  In addition, the parties to the Voting Agreement had agreed to vote in favor of a proposal to amend the Company's articles of incorporation to increase the authorized shares as required to permit the conversion of the Series B Convertible Preferred Stock.

In addition, the Company, Velocitas, Velo LLC, and certain affiliates entered into an Investor Rights Agreement (the "Investor Rights Agreement") that provides the parties thereto with demand Form S-3 and piggy back registration rights, Rule 144 information rights, and rights of first offer (or preemptive rights) in connection with future sales of securities by the Company (subject to standard exceptions).  The Investor Rights Agreement includes indemnification obligations associated with the registration rights.  Michael I. Sacks and Bradley Sacks and affiliates are parties to the Investor Rights Agreement, in part in exchange for the termination by certain of such persons and The Punch Trust of a Registration Rights Agreement dated as of January 31, 2014.

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, contract research, licensing fees and milestone payments from our corporate alliances have also provided, and are expected in the future to provide, funding for operations.

Our principal source of liquidity is cash and cash equivalents.  As of December 31, 2017, our cash and cash equivalents were $3,711,000 which is an increase of approximately $3,674,000 as compared to our cash and cash equivalents at December 31, 2016 of approximately $37,000.  Our working capital (current assets less current liabilities) was approximately $3,123,000 at December 31, 2017 as compared to our working capital at December 31, 2016 of approximately $(1,614,000).

Consolidated Cash Flow Data
	Year Ended December 31,
Net Cash Provided by (Used in)	2017			2016
Operating activities	$	(2,201,000	)	$	(1,557,000	)
Investing activities		(4,000	)		2,000
Financing activities		5,879,000			1,412,000
Net increase in cash and cash equivalents	$	3,674,000		$	( 143,000	)

Operating Activities

For the year ended December 31, 2017, net cash used in operating activities was approximately $2,201,000.  The principal components of net cash used for the year ended December 31, 2017 were, in approximate numbers, our net loss of $1,936,000, a decrease of $814,000 in accounts payable due to timing of vendor payments and the settlement of certain accounts payable liabilities, a decrease of $151,000 in accrued liabilities due to payment of temporary compensation deferrals, a decrease of $16,000 in deferred revenues due to amortization of revenues, an increase of $194,000 in accounts receivable due to timing of customer remittances, and an increase of $35,000 in prepaid expenses related to insurance policy renewals.  Our net loss for the year ended December 31, 2017 included substantial non-cash charges of approximately $784,000 in the form of share-based compensation, amortization of patents and licensing rights, depreciation, amortization of debt discount, and amortization of debt issuance costs.  The aforementioned net cash used for the year ended December 31, 2017 was partially offset by, in approximate numbers, an increase of $99,000 in accrued interest and a decrease of $62,000 in inventories.

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For the year ended December 31, 2016, net cash used in operating activities was approximately $1,557,000.  The principal components of net cash used for the year ended December 31, 2016 were, in approximate numbers, our net loss of $4,454,000, a decrease of $324,000 in deferred revenues due to amortization of revenues, a decrease of $51,000 in accrued liabilities due to repayment of temporary compensation deferrals, an increase of $28,000 in inventory, and an increase of $12,000 in prepaid expenses related to insurance, listing fees, and consulting.  Our net loss for the year ended December 31, 2016 included substantial non-cash charges of approximately $3,033,000 in the form of share-based compensation, amortization of patents and licensing rights, depreciation, amortization of debt discount, amortization of debt issuance costs, and an impairment charge on intangible assets.  The aforementioned net cash used for the year ended December 31, 2016 was partially offset by, in approximate numbers, an increase of $247,000 in accounts payable due to timing of vendor payments, an increase of $2,000 in accrued interest, and a decrease of $30,000 in accounts receivable.

Investing Activities

Net cash used in investing activities for the year ended December 31, 2017 was approximately $4,000 was approximately $4,000 and relates to the purchase of computer equipment.

Net cash provided by investing activities for the year ended December 31, 2016 was approximately $2,000 and included $4,000 from the sale of equipment which was partially offset by the purchase of computer equipment for $2,000.

Financing Activities

Net cash provided by financing activities for the year ended December 31, 2017 was approximately $5,879,000 and was composed of, in approximate numbers, the net proceeds of $5,899,000 from the March 2017 Offering and the net proceeds of $120,000 from certain short-term promissory notes issued to Velocitas and Kirkwood.  The aforementioned net cash provided for the year ended December 31, 2017 was partially offset by the repayment of $140,000 of short-term promissory notes issued to Velocitas and Kirkwood.

Net cash provided by financing activities for the year ended December 31, 2016 was approximately $1,412,000 and was composed of, in approximate numbers, the net proceeds of $1,732,000 from the March 2016 Offering and the net proceeds of $20,000 from the issuance of a promissory note.  These increases in net cash from financing activities were partially offset by the repayment of $318,000 in principle due on the promissory note with Inter-Mountain and offering costs of $22,000 incurred in 2016 that are associated with the acquisition of licensing rights by the Company in December 2015.

Liquidity

As of December 31, 2017, we had cash and cash equivalents of approximately $3,711,000.

We expect to use our cash, cash equivalents, and investments on working capital, for general corporate purposes, on property and equipment, and for the payment of contractual obligations.  Our long-term liquidity will depend to a great extent on our ability to fully commercialize our Altrazeal® wound care product; 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 2018 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 December 31, 2017, our net working capital (current assets less current liabilities) was approximately $3,123,000 and we believe that our liquidity will be sufficient to fund operations beyond 2018.

In the event that we need to raise capital in the future, due to our limited revenue we may be unable to obtain the necessary financing on terms acceptable to us, or at all.  If we are unable to raise capital when needed, we would be unable to continue our operations.  Even if we are able to raise capital, we may raise capital by selling equity securities, which will be dilutive to existing stockholders.  If we incur additional indebtedness, costs of financing may be extremely high, and we will be subject to default risks associated with such indebtedness, which may harm our ability to continue our operations.  We have no commitments with respect to additional capital.

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

§	our ability to successfully commercialize our wound management product and the market acceptance of this product;
§	our ability to establish and maintain collaborative arrangements with business partners for the development and commercialization of certain product opportunities;
§	scientific progress in our development programs;
§	the marketing and sales efforts of our distributors and sub-distributors;
§	the costs involved in filing, prosecuting and enforcing patent claims and our maintenance of patent rights;
§	the cost of manufacturing and production scale-up;
§	competing product 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); and
§	our general financial situation, including our revenues, liquidity, capitalization and other factors.

Contractual Obligations

The following table summarizes our outstanding contractual cash obligations as of December 31, 2017, which is composed of a lease agreement for office and laboratory space in Addison, Texas, a lease agreement for storage and warehouse space in Carrollton, 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 Cash Obligations	Total		Less Than 1 Year		1-2 Years		3-5 Years		After 5 Years
Operating leases	$	101,458	$	50,399	$	51,059	$	---	$	---
Total contractual cash obligations	$	101,458	$	50,399	$	51,059	$	---	$	---

Capital Expenditures

For the years ended December 31, 2017 and 2016, our expenditures for property, equipment, and leasehold improvements were, in approximate numbers, $4,000 and $2,000, respectively.  Such expenditures in 2017 and 2016 relate primarily to the purchase of computer equipment for our administrative office.

Off-Balance Sheet Arrangements

As of December 31, 2017, we did not have any off-balance sheet arrangements.

Impact of Inflation

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

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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.  During 2017, we utilized Bank of America, N.A. and South State Bank as our banking institutions.  During 2016, we utilized only Bank of America, N.A. as our banking institution.  At December 31, 2017 and December 31, 2016 our cash and cash equivalents totaled approximately $3,711,000 and $37,000, 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 December 31, 2017 and at December 31, 2016.  As of December 31, 2017, three customers, of which two are our international distributors, exceeded the 5% threshold, jointly with 99%.  One customer, being one of our international distributors, exceeded the 5% threshold at December 31, 2016, with 95%.  To reduce risk, we routinely assess the financial strength of our most significant customers and monitor the amounts owed to us, taking appropriate action when necessary.  As a result, we believe that accounts receivable credit risk exposure is limited.  We maintain an allowance for doubtful accounts, but historically have not experienced any significant losses related to an individual customer or group of customers.

Concentrations of Foreign Currency Risk

Currently, a portion of our revenues and majority 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.

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 affected for the foreseeable future by several factors, including the timing and amount of payments received pursuant to our current and future collaborations, the timing of shipments to our international marketing partners, 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.

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Comparison of the year ended December 31, 2017 and 2016

Total Revenues

Revenues totaled approximately $717,000 for the year ended December 31, 2017, as compared to revenues of approximately $443,000 for the year ended December 31, 2016, and were comprised of, in approximate numbers, licensing fees of $6,000 from OraDisc™ licensing agreements and product sales of approximately $711,000 for Altrazeal®.

The year ended December 31, 2017 revenues represent an overall increase of approximately $274,000 versus the comparative year ended December 31, 2016.  The increase in revenues is primarily attributable to an increase of approximately $633,000 in international sales of Altrazeal®.  The revenue increase was partially offset by a decrease of approximately $359,000 in licensing fees due to the one-time recognition in 2016 of unamortized licensing fees related to the cancellation by the Company of licensing agreements with three distributors; Altrazeal AG, KunWha Pharmaceutical Co., and Jiangxi Aiqilin Pharmaceuticals Group.  The recognition of unamortized licensing fees was based upon the cancellation of the distribution agreements and that there were no further performance obligations that were required by the Company under each distribution agreement.

Costs and Expenses

Cost of Goods Sold

Cost of goods sold totaled approximately $230,000 for the year ended December 31, 2017 and was composed of, in approximate numbers, $225,000 from the sale of our Altrazeal® products and $5,000 from the write-off of obsolete raw materials.  Cost of goods sold totaled approximately $28,000 for the year ended December 31, 2016 and was composed entirely of costs from the sale of our Altrazeal®.

Research and Development

Research and development expenses totaled approximately $240,000 for the year ended December 31, 2017, including nil in share-based compensation, as compared to approximately $445,000 for the year ended December 31, 2016, which included $8,000 in share-based compensation.  The decrease of approximately $205,000 in research and development expenses was primarily due to, in approximate numbers, a decrease of $56,000 in direct research costs for Altrazeal® primarily related to consulting costs and product registration costs, a decrease of $201,000 in scientific compensation related to wage reductions by existing staff, lower head count, and lower share-based compensation, and a decrease of $11,000 in miscellaneous operating costs.  These expense decreases were partially offset by an increase of approximately $63,000 in regulatory consulting costs.

The direct research and development expenses for the years ended December 31, 2017 and 2016 were, in approximate numbers, as follows:

	Year Ended December 31,
Technology	2017			2016
Wound care & Nanoflex®	$	( 3,000	)	$	49,000
OraDisc™		18,000			22,000
Other technologies		1,000			1,000
Total	$	16,000		$	72,000

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Selling, General and Administrative

Selling, general and administrative expenses totaled approximately $1,478,000 for the year ended December 31, 2017, including $8,000 in share-based compensation, as compared to approximately $1,309,000 for the year ended December 31, 2016, which included $12,000 in share-based compensation.  The increase of approximately $169,000 in selling, general and administrative expenses was primarily due to, in approximate numbers, an increase of $131,000 in operating costs for product sales and marketing, an increase of $68,000 in compensation related to an increase in head count, an increase of $42,000 in bad debt expense as the prior year included a non-recurring credit adjustment, an increase of $39,000 in royalty expenses associated with product sales, an increase of $39,000 in costs associated with our office relocation, and an increase of $11,000 in costs relating to the annual meeting of stockholders held in July 2017.  These expense increases were partially offset by, in approximate numbers, a decrease of $69,000 in legal expenses, a decrease of $68,000 in investor relations consulting, and a decrease of $24,000 in insurance costs.

Amortization of Intangible Assets

Amortization expense of intangible assets totaled approximately $431,000 for the year ended December 31, 2017 as compared to approximately $802,000 for the year ended December 31, 2016.  The expense for each period consists of amortization associated with our acquired patents and acquired licensing rights.  The decrease of approximately $371,000 in amortization expense is attributable to the impairment in 2016 of two patents; "Amlexanox (OraDisc™ A)" and "OraDisc™".  We purchased additional licensing rights of approximately $869,000 from Velocitas during the year ended December 31, 2017.

Depreciation

Depreciation expense totaled approximately $77,000 for the year ended December 31, 2017 as compared to approximately $133,000 for the year ended December 31, 2016.  The decrease of approximately $56,000 in depreciation expense is attributable to certain equipment being fully depreciated.

Impairment of Intangible Asset - Patents

We performed an evaluation of our intangible assets for purposes of determining possible impairment as of December 31, 2017.  There was no impairment charge for the year ended December 31, 2017.  We previously performed an evaluation of our intangible assets for purposes of determining possible impairment as of December 31, 2016.  Upon completion of the evaluation, the fair value of our intangible patent assets exceeded the recorded remaining book value except for the valuation of two patents; "Amlexanox (OraDisc™ A)" and "OraDisc™".  We recognized an impairment charge of approximately $2,027,000 for the year ended December 31, 2016.

Interest Expense

Interest expense totaled approximately $421,000 for the year ended December 31, 2017 as compared to approximately $137,000 for the year ended December 31, 2016.  Interest expense is comprised of financing costs for our insurance policies, interest costs related to regulatory fees, and interest costs and amortization of debt discount and financing costs related to our outstanding debt.  The increase of approximately $284,000 in interest expense is primarily attributable to costs associated with the two convertible promissory notes with Velocitas from the March 2017 Offering.

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Foreign Currency Transaction (Loss)

Foreign currency transaction loss totaled approximately $5,000 for the year ended December 31, 2017 as compared to a foreign currency transaction gain of approximately $4,000 for the year ended December 31, 2016.  The decrease of approximately $9,000 is related to fluctuations in the Euro exchange rate experienced during 2017 and the pricing of Altrazeal® product sales to our international distributors being denominated in Euros.

Gain on Settlement of Liabilities

Gain on settlement of liabilities totaled approximately $228,000 for the year ended December 31, 2017 as compared to nil for the year ended December 31, 2016.  During 2017, the Company was able settle certain liabilities for less than the original obligation recognized by the Company.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Management's Discussion and Analysis of Financial Condition and Results of Operations set forth herein are based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP") for 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.

We set forth below those material accounting policies that we believe are the most critical to an investor's understanding of our financial results and condition and which require complex management judgment.

Revenue Recognition

We recognize revenue in accordance with generally accepted accounting principles as outlined in the ASC Topic 605, Revenue Recognition ("ASC Topic 605"), which requires that four basic criteria be met before revenue can be recognized: (i) persuasive evidence of an arrangement exists; (ii) the price is fixed or determinable; (iii) collectability is reasonably assured; and (iv) product delivery has occurred or services have been rendered.  We recognize revenue as products are shipped based on terms when title passes to customers.  We negotiate credit terms on a customer-by-customer basis and products are shipped at an agreed upon price.  All product returns must be pre-approved.

We also generate revenue from license agreements and research collaborations and recognize this revenue when earned. In accordance with ASC Topic 605-25, Revenue Recognition - Multiple Element Arrangements, for deliverables which contain multiple deliverables, we separate the deliverables into separate accounting units if they meet the following criteria: i) the delivered items have a stand-alone value to the customer; ii) the fair value of any undelivered items can be reliably determined; and iii) if the arrangement includes a general right of return, delivery of the undelivered items is probable and substantially controlled by the seller. Deliverables that do not meet these criteria are combined with one or more other deliverables into one accounting unit.  Revenue from each accounting unit is recognized based on the applicable accounting literature, primarily ASC Topic 605.

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We analyze the rate of historical returns when evaluating the adequacy of the allowance for sales returns.  At December 31, 2017 and 2016, this reserve was nil as we have not experienced historically any product returns.  If the historical data we use to calculate these estimates does not properly reflect future returns, revenue could be overstated.

Allowance for Doubtful Accounts

We maintain allowances for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. This allowance is regularly evaluated by us for adequacy by taking into consideration factors such as past experience, credit quality of the customer base, age of the receivable balances, both individually and in the aggregate, and current economic conditions that may affect a customer's ability to pay.  If the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required.  Actual write-off of receivables may differ from estimates due to changes in customer and economic circumstances.

Inventory

We state our inventory at the lower of cost (first-in, first-out method) or market.  The estimated value of excess, obsolete and slow-moving inventory as well as inventory with a carrying value in excess of its net realizable value is established by us on a quarterly basis through review of inventory on hand and assessment of future demand, anticipated release of new products into the market, historical experience and product expiration.  Our stated value of inventory could be materially different if demand for our products decreased because of competitive conditions or market acceptance, or if products become obsolete because of advancements in the industry.

Accrued Expenses

As part of the process of preparing financial statements, we are required to estimate accrued expenses.  This process involves identifying services which have been performed on our behalf and estimating the level of service performed and the associated cost incurred for such service as of each balance sheet date in our financial statements.

In accruing service fees, we estimate the time period over which services will be provided and the level of effort in each period.  If the actual timing of the provision of services or the level of effort varies from the estimate, we will adjust the accrual accordingly.  The majority of our service providers invoice us monthly in arrears for services performed.  In the event that we do not identify costs that have begun to be incurred or we underestimate or overestimate the level of services performed or the costs of such services, our actual expenses could differ from such estimates.  The date, on which some services commence, the level of services performed on or before a given date and the cost of such services are often subjective determinations. We make judgments based upon facts and circumstances known to us in accordance with GAAP.

Share-based Compensation – Employee Share based Awards

We primarily grant qualified stock options for a fixed number of shares to employees with an exercise price equal to the market value of the shares at the date of grant.  Under the fair value recognition provisions of ASC Topic 718, Stock Compensation ("ASC Topic 718"), and ASC Topic 505, Equity ("ASC Topic 505"), share based compensation cost is based on the value of the portion of share-based awards that is ultimately expected to vest during the period.

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We selected the Black-Scholes option pricing model as the most appropriate method for determining the estimated fair value for share-based awards.  The Black-Scholes model requires the use of assumptions which determine the fair value of the share-based awards.  Determining the fair value of share-based awards at the grant date requires judgment, including estimating the expected term of stock options, the expected volatility of our stock, and expected dividends. In accordance with ASC Topic 718 and ASC Topic 505, we are required to estimate forfeitures at the grant date and recognize compensation costs for only those awards that are expected to vest.  Judgment is required in estimating the amount of share-based awards that are expected to be forfeited.

If factors change and we employ different assumptions in the application of ASC Topic 718 and ASC Topic 505 in future periods, the compensation expense that we record may differ significantly from what we have recorded in the current period.  Therefore, we believe it is important for investors to be aware of the high degree of subjectivity involved when using option pricing models to estimate share-based compensation under ASC Topic 718 and ASC Topic 505.  There is risk that our estimates of the fair values of our share-based compensation awards on the grant dates may differ from the actual values realized upon the exercise, expiration, early termination or forfeiture of those share-based payments in the future.  Certain share-based payments, such as employee stock options, may expire worthless or otherwise result in zero intrinsic value as compared to the fair values originally estimated on the grant date and reported in our financial statements.  Alternatively, value may be realized from these instruments that are significantly in excess of the fair values originally estimated on the grant date and reported in our financial statements.  Although the fair value of employee share-based awards is determined in accordance with ASC Topic 718 and ASC Topic 505 using an option pricing model, that value may not be indicative of the fair value observed in a willing buyer/willing seller market transaction.

Share based Compensation – Non-Employee Share based Awards

We occasionally grant stock option awards to our consultants and directors.  Such grants are accounted for pursuant to ASC Topic 505 and, accordingly, we recognize compensation expense equal to the fair value of such awards and amortize such expense over the performance period.  We estimate the fair value of each award using the Black-Scholes model.  The unvested equity instruments are revalued on each subsequent reporting date until performance is complete, with an adjustment recognized for any changes in their fair value.  We amortize expense related to non-employee stock options in accordance with ASC Topic 718.

Income Taxes

The carrying value of our net deferred tax assets assumes that we will be able to generate sufficient taxable income in the United States based on estimates and assumptions. We record a valuation allowance to reduce the carrying value of our net deferred tax asset to the amount that is more likely than not to be realized.  In the event we were to determine that we would be able to realize our deferred tax assets in the future, an adjustment to the deferred tax asset would increase net income in the period such determination is made.  On a quarterly basis, we evaluate the realizability of our deferred tax assets and assess the requirement for a valuation allowance.

Asset Valuations and Review for Potential Impairment

We review our fixed assets and intangible assets at least annually or whenever events or changes in circumstances indicate that its carrying amount may not be recoverable.  This review requires that we make assumptions regarding the value of these assets and the changes in circumstances that would affect the carrying value of these assets.  If such analysis indicates that a possible impairment may exist, we are then required to estimate the fair value of the asset and, as deemed appropriate, expense all or a portion of the asset.  The determination of fair value includes numerous uncertainties, such as the impact of competition on future value.  We believe that we have made reasonable estimates and judgments in determining whether our long-term assets have been impaired; however, if there is a material change in the assumptions used in our determination of fair value or if there is a material change in economic conditions or circumstances influencing fair value, we could be required to recognize certain impairment charges in the future.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

This item is not applicable to smaller reporting companies.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The information required by this Item is included in our Financial Statements and Supplementary Data listed in Item 15 of Part IV of this annual report on Form 10-K.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the design and operation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934 ("Exchange Act"), as of December 31, 2017. Based on this evaluation, our principal executive officer and principal financial officer concluded that as of December 31, 2017, our disclosure controls and procedures were not effective, at a reasonable assurance level, to ensure that information we are required to disclose in the reports we file or submit under the Exchange Act is (a) recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and is (b) accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure for the reasons described below under "Management's Annual Report on Internal Control Over Financial Reporting" below.

Changes in Internal Control Over Financial Reporting

The Company's Board of Directors previously had an Audit Committee, a Compensation Committee, and a Nominating and Governance Committees.  Following the closing of the March 2017 Offering with Velocitas Partners LLC and Velocitas I LLC, all of our directors are appointees, and affiliates of, Velocitas Partners or Bradley J. Sacks under the Voting Agreement.  None of our directors is independent for Audit Committee purposes, and only Bradley J. Sacks and Arindam Bose would satisfy the general independence requirements of the Nasdaq Stock Market. Although the Company anticipates appointing independent directors in the future, during the rebuilding phase in which the Company finds itself, the Company is not in a position to attract qualified industry and other independent directors. In light of the absence of independent directors to staff the Audit Committee, and limited number of independent directors to staff the other committees, the Board determined in 2017 to dissolve its committees, revoke its committee charters and have the Board as a whole perform the functions previously performed by the Audit Committee, Compensation Committee and Nominating and Corporate Governance Committees.  The Board believes it is appropriate for the Company not to have a standing Audit, Compensation or Nominating Committee, or a charter for any such committee, in light of the fact that the Company is majority-controlled by affiliates of Velocitas Partners and the Board's belief that expending the capital to expand the Board to include fully independent directors would be an inappropriate use of capital at this stage when the Company has limited revenue and resources to commercialize its existing products.

During the fiscal quarter ended December 31, 2017, 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.

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Management's Annual Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended.  The Company's internal control over financial reporting are to be designed 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 and includes those policies and procedures that:

§	Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;
§	Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and
§	Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Because of inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.  All internal control systems, no matter how well designed, have inherent limitations.  Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2017.  In making this assessment, our management used the criteria set forth in the Internal Control-Integrated Framework (2013 Framework) issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO").  Based on this assessment, management believes that during the year ended December 31, 2017 the Company did not maintain an effective control environment as a result of the lack of segregation of duties.

This annual report does not include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting.  Management's report was not subject to attestation by the Company's registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit smaller reporting companies to provide only management's report in this annual report.

ITEM 9B. OTHER INFORMATION

None.

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Part III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information required by this Item is incorporated herein by reference from our definitive proxy statement, to be filed pursuant to Regulation 14A, related to our 2018 Annual Meeting of Stockholders (our "2018 Proxy Statement").

ITEM 11. EXECUTIVE COMPENSATION

The information required by this Item is incorporated herein by reference from our 2018 Proxy Statement.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information required by this Item is incorporated herein by reference from our 2018 Proxy Statement.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

The information required by this Item is incorporated herein by reference from our 2018 Proxy Statement.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required by this Item is incorporated herein by reference from our 2018 Proxy Statement.

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Part IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a)	The following documents are filed as part of this report:
	1.	Financial Statements
			Report of Independent Registered Public Accounting Firm – Montgomery Coscia Greilich, LLP
			Consolidated Balance Sheets as of December 31, 2017 and 2016
			Consolidated Statements of Operations for the years ended December 31, 2017 and 2016
			Consolidated Statements of Stockholders' Equity for the years ended December 31, 2017 and 2016
			Consolidated Statements of Cash Flows for the years ended December 31, 2017 and 2016
			Notes to Consolidated Financial Statements
	2.	Financial Statement Schedules
			All other schedules are omitted because they are not applicable or because the required information is shown in the consolidated financial statements or the notes thereto.
	3.	List of Exhibits
			The exhibits which are filed with this report or which are incorporated herein by reference are set forth in the Exhibit Index hereto. In reviewing the agreements included as exhibits to this annual report on Form 10-K, you are advised that they are included to provide you with information regarding their terms and are not intended to provide any other factual or disclosure information about the Company or the other parties to the agreements.  The agreements contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the other parties to the applicable agreement and:
			§	should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate;
			§	have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement;
			§	may apply standards of materiality in a way that is different from what may be viewed as material to you or other investors; and
			§	were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments.

Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time.

- 40 -

SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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: March 30, 2018	By	/s/ Vaidehi Shah
		Vaidehi Shah
		Chief Executive Officer
		Principal Executive Officer
Date: March 30, 2018	By	/s/ Terrance K. Wallberg
		Terrance K. Wallberg
		Chief Financial Officer
		Principal Accounting Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Date: March 30, 2018	/s/ Vaidehi Shah
	Vaidehi Shah, Director
Date: March 30, 2018	/s/ Anish Shah
	Anish Shah, Director
Date: March 30, 2018	/s/ Arindam Bose
	Arindam Bose, Director
Date: March 30, 2018	/s/ Bradley J. Sacks
	Bradley J. Sacks, Director
Date: March 30, 2018	/s/ Oksana Tiedt
	Oksana Tiedt, Director

- 41 -

INDEX TO EXHIBITS

Exhibit Number		Description of Document
3.1		Restated Articles of Incorporation, including Certificate of Designation of Series B Preferred Stock and certificate of amendment dated July 26, 2017. (4)
3.2		Amended and Restated Bylaws dated December 5, 2008. (5)
4.1		Common Stock Purchase Warrant dated March 14, 2013 by and between ULURU Inc. and Kerry P. Gray. (13)
4.2		Common Stock Purchase Warrant dated March 14, 2013 by and between ULURU Inc. and Terrance K. Wallberg. (13)
4.3		Common Stock Purchase Warrant dated March 6, 2014 by and between ULURU Inc. and San Diego Torrey Hills Capital, Inc. (16)
4.4		Warrant to Purchase Shares of Common Stock dated April 14, 2015 by and between ULURU Inc. and Inter-Mountain Capital Corp. (19)
4.5		Form of Warrant dated March 30, 2016 by and between ULURU Inc. and the purchasers' party thereto. (26)
4.6		Common Stock Purchase Warrant dated March 31, 2017 by and between ULURU Inc. and Velocitas Partners, LLC. (28)
10.1		License Agreement dated October 12, 2005 by and between ULURU Delaware Inc. and Access Pharmaceuticals, Inc. (2)
10.2.1		Lease Agreement dated January 31, 2006 by and between ULURU Delaware Inc. and Addison Park Ltd. (2)
10.2.2		Amendment to Lease Agreement dated February 22, 2013 by and ULURU Delaware Inc. and Addison Park Ltd. (16)
10.2.3		Second Amendment to Lease Agreement dated March 17, 2015 by and ULURU Delaware Inc. and Addison Park Ltd. (18)
10.3		License Agreement dated August 14, 1998 by and between ULURU Delaware Inc. and Strakan Ltd. (2)
10.4	*	ULURU Inc. 2006 Equity Incentive Plan. (1)
10.4.1	*	First Amendment to the ULURU Inc. 2006 Equity Incentive Plan dated May 8, 2007. (3)
10.4.2	*	Second Amendment to the ULURU Inc. 2006 Equity Incentive Plan dated December 17, 2009. (7)
10.4.3	*	Third Amendment to the ULURU Inc. 2006 Equity Incentive Plan dated June 10, 2010. (8)
10.4.4	*	Fourth Amendment to the ULURU Inc. 2006 Equity Incentive Plan dated June 14, 2012. (11)
10.4.5	*	Fifth Amendment to the ULURU Inc. 2006 Equity Incentive Plan dated June 13, 2013. (14)
10.4.6	*	Sixth Amendment to the ULURU Inc. 2006 Equity Incentive Plan dated June 5, 2014. (17)
10.5	*	ULURU Inc. 2018 Equity Incentive Plan. (32)
10.5.1	*	Form of Award Agreement – Incentive Stock Option. (32)
10.5.2	*	Form of Award Agreement – NonStatutory Stock Option . (32)
10.6		License and Supply Agreement dated November 17, 2008 by and between ULURU Inc. and Meda AB. (5)
10.7	*	Indemnification Agreement dated July 13, 2009 by and between ULURU Inc. and Terrance K. Wallberg. (6)
10.8		Acquisition and Licensing Agreement dated June 25, 2010 by and between ULURU Inc., Strakan International Limited and Zindaclin Limited. (9)
10.9		Waiver Agreement dated January 11, 2016 by and between ULURU Inc. and Inter-Mountain Capital Corp. (25)
10.10		Securities Purchase Agreement dated April 14, 2015 by and between ULURU Inc. and Inter-Mountain Capital Corp. (19)
10.11		Registration Rights Agreement dated April 14, 2015 by and between ULURU Inc. and Inter-Mountain Capital Corp. (19)
10.12	*	Indemnification Agreement dated July 27, 2015 by and between ULURU Inc. and Bradley J. Sacks. (20)
10.13		License Purchase and Termination Agreement, dated December 24, 2015, by and between ULURU Inc., Altrazeal Trading GmbH, and IPMD GmbH. (24)
10.14		Note, Warrant and Preferred Stock Purchase Agreement, dated February 27, 2017 by and between ULURU Inc. and Velocitas Partners, LLC. (27)
10.15		Secured Convertible Promissory Note, dated February 27, 2017 in favor of Velocitas Partners, LLC. (27)
10.16		Security Agreement, dated February 27, 2017 among ULURU Inc., the subsidiaries of the ULURU Inc. and Velocitas Partners, LLC. (27)
10.17		Voting Agreement, dated February 27, 2017 among ULURU Inc., Velocitas Partners, LLC and certain parties thereto. (27)
10.18		Investor Rights Agreement, dated February 27, 2017 among ULURU Inc., Velocitas Partners, LLC and certain parties thereto. (27)
10.19		Backstop Agreement, dated February 27, 2017 among ULURU Inc., Bradley J. Sacks and Velocitas Partners, LLC. (27)
10.20	*	Indemnification Agreement dated February 27, 2017 by and between ULURU Inc. and Vaidehi Shah. (29)
10.21	*	Indemnification Agreement dated March 31, 2017 by and between ULURU Inc. and Arindam Bose. (29)
10.22	*	Indemnification Agreement dated March 31, 2017 by and between ULURU Inc. and Anish Shah. (29)
10.23	*	Indemnification Agreement dated March 31, 2017 by and between ULURU Inc. and Oksana Tiedt. (29)
10.24		Secured Convertible Promissory Note, dated March 31, 2017 in favor of Velocitas Partners, LLC. (28)
10.25	*	Consulting Agreement dated April 1, 2017 by and between ULURU Delaware Inc. and Velocitas GmbH. (30)
10.26		Lease Agreement dated December 15, 2017 by and between ULURU Delaware Inc. and Addison Park Ltd. (31)
21.1	**	Subsidiaries of ULURU Inc.
23.1	**	Consent of Montgomery Coscia Greilich, LLP.
31.1	**	Certification Pursuant to Rule 13a-14 and 15d-14 under the Securities Exchange Act of 1934, as Amended.
31.2	**	Certification Pursuant to Rule 13a-14 and 15d-14 under the Securities Exchange Act of 1934, as Amended.
32.1	**	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	**	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	***	The following financial statements are from ULURU Inc.'s Annual Report on Form 10-K for the year ended December 31, 2017, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets; (ii) Consolidated Statements of Operations; (iii) Consolidated Statements of Cash Flows; and (iv) Notes to Consolidated Financial Statements.
-----------------------------------------
(1)		Incorporated by reference to the Company's Definitive Schedule 14C filed on March 1, 2006.
(2)		Incorporated by reference to the Company's Form 8-K filed on March 31, 2006.
(3)		Incorporated by reference to the Company's Form S-8 Registration Statement filed on May 30, 2007.
(4)		Incorporated by reference to the Company's Form 10-Q filed on August 14, 2017.
(5)		Incorporated by reference to the Company's Form 10-K filed on March 30, 2009.
(6)		Incorporated by reference to the Company's Form 8-K filed on July 14, 2009.
(7)		Incorporated by reference to the Company's Form S-8 Registration Statement filed on January 28, 2010.
(8)		Incorporated by reference to the Company's Form S-8 Registration Statement filed on July 16, 2010.
(9)		Incorporated by reference to the Company's Form 10-Q filed on August 16, 2010.
(10)		Incorporated by reference to the Company's Form 10-K filed on March 30, 2012.
(11)		Incorporated by reference to the Company's Form S-8 Registration Statement filed on June 28, 2012.
(12)		Incorporated by reference to the Company's Form 10-Q filed on November 14, 2012.
(13)		Incorporated by reference to the Company's Form 8-K filed on March 15, 2013.
(14)		Incorporated by reference to the Company's Form S-8 Registration Statement filed on June 28, 2013.
(15)		Incorporated by reference to the Company's Form 10-Q filed on November 14, 2013.
(16)		Incorporated by reference to the Company's Form 10-Q filed on May 15, 2014.
(17)		Incorporated by reference to the Company's Form S-8 Registration Statement filed on June 16, 2014.
(18)		Incorporated by reference to the Company's Form 10-K filed on April 1, 2015.
(19)		Incorporated by reference to the Company's Form 8-K filed on April 17, 2015.
(20)		Incorporated by reference to the Company's Form 10-Q filed on August 14, 2015.
(21)		Incorporated by reference to the Company's Form 8-K filed on September 11, 2015.
(22)		Incorporated by reference to the Company's Form 8-K/A filed on September 25, 2015.
(23)		Incorporated by reference to the Company's Form 10-Q filed on November 16, 2015.
(24)		Incorporated by reference to the Company's Form 8-K filed on December 28, 2015.
(25)		Incorporated by reference to the Company's Form 8-K filed on January 12, 2016.
(26)		Incorporated by reference to the Company's Form 8-K filed on March 30, 2016.
(27)		Incorporated by reference to the Company's Form 8-K filed on March 1, 2017.
(28)		Incorporated by reference to the Company's Form 8-K filed on April 3, 2017.
(29)		Incorporated by reference to the Company's Form 10-K filed on April 17, 2017.
(30)		Incorporated by reference to the Company's Form 10-Q filed on August 14, 2017.
(31)		Incorporated by reference to the Company's Form 8-K filed on December 20, 2017.
(32)		Incorporated by reference to the Company's Form S-8 Registration Statement filed on March 28, 2018.
	*	Management contract or compensation plan arrangements.
	**	Filed herewith.
	***	Pursuant to Rule 406T of Regulation S-T, the XBRL-related information in Exhibit 101 to this Annual Report on Form 10-K 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.

- 42 -

INDEX TO FINANCIAL STATEMENTS
	Page
Financial Statements
Report of Independent Registered Public Accounting Firm – Montgomery Coscia Greilich, LLP		F – 1
Consolidated Balance Sheets as of December 31, 2017 and 2016		F – 2
Consolidated Statements of Operations for the years ended December 31, 2017 and 2016		F – 3
Consolidated Statements of Stockholders' Equity for the years ended December 31, 2017 and 2016		F – 4
Consolidated Statements of Cash Flows for the years ended December 31, 2017 and 2016		F – 5
Notes to Consolidated Financial Statements		F – 6

- 43 -

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders

ULURU Inc.

Addison, Texas

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of ULURU Inc. (the "Company") as of December 31, 2017 and 2016, and the related consolidated statements of operations, stockholders' equity, and cash flows for the years then ended and the related notes to the consolidated financial statements. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. 

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Montgomery, Coscia & Greilich, L.L.P.

We have served as the Company's auditor since 2017

Plano, Texas

March 30, 2018

F - 1

ULURU Inc. CONSOLIDATED BALANCE SHEETS

	December 31,
	2017			2016
ASSETS
Current Assets
Cash and cash equivalents	$	3,710,882		$	36,615
Accounts receivable, net		256,123			61,788
Inventory		497,461			559,600
Prepaid expenses and deferred charges		170,686			135,394
Total Current Assets		4,635,152			793,397
Property, Equipment and Leasehold Improvements, net		53,723			126,741
Other Assets
Intangible asset - patents, net		179,737			216,781
Intangible asset - licensing rights, net		3,656,636			3,181,087
Deposits		18,069			18,069
Total Other Assets		3,854,442			3,415,937
TOTAL ASSETS	$	8,543,317		$	4,336,075
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable	$	1,213,246		$	2,026,671
Accrued liabilities		163,969			315,300
Accrued interest		99,658			53
Promissory note payable, current portion		---			20,000
Deferred revenue, current portion		35,761			45,764
Total Current Liabilities		1,512,634			2,407,788
Long Term Liabilities
Convertible notes payable, net of unamortized debt discount and debt issuance costs		570,189			---
Deferred revenue, net of current portion		352,698			358,462
Total Long Term Liabilities		922,887			358,462
TOTAL LIABILITIES		2,435,521			2,766,250
COMMITMENTS AND CONTINGENCIES		---			---
STOCKHOLDERS' EQUITY
Preferred Stock – $0.001 par value; 20,000 shares authorized;
Series A Preferred Stock, 1,000 shares designated; no shares issued and outstanding at December 31, 2017 and December 31, 2016, respectively		---			---
Series B Preferred Stock, 1,250 shares designated; no shares issued and outstanding at December 31, 2017 and December 31, 2016, respectively		---			---
Common Stock – $ 0.001 par value; 750,000,000 shares authorized;
201,349,431 and 62,974,431 shares issued and outstanding at December 31, 2017 and December 31, 2016, respectively		201,349			62,974
Additional paid-in capital		68,556,734			62,220,850
Accumulated (deficit)		(62,650,287	)		(60,713,999	)
TOTAL STOCKHOLDERS' EQUITY		6,107,796			1,569,825
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	8,543,317		$	4,336,075
The accompanying notes are an integral part of these consolidated financial statements.

F - 2

ULURU Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS

	Years Ended December 31,
	2017			2016
Revenues
License fees	$	5,764		$	363,995
Product sales, net		711,393			78,570
Total Revenues		717,157			442,565
Costs and Expenses
Cost of product sold		229,692			27,668
Research and development		239,948			445,404
Selling, general and administrative		1,478,018			1,308,759
Amortization		430,870			801,598
Depreciation		76,519			132,841
Impairment of intangible asset – patent		---			2,027,310
Total Costs and Expenses		2,455,047			4,743,580
Operating (Loss)		(1,737,890	)		(4,301,015	)
Other Income (Expense)
Interest and miscellaneous income		47			836
Interest expense		(421,291	)		(136,851	)
Foreign currency transaction gain (loss)		(5,447	)		4,279
Gain on settlement of liabilities		228,293			---
Gain on sale of equipment		---			4,125
Accommodation fee due on promissory note		---			(25,000	)
(Loss) Before Income Taxes		(1,936,288	)		(4,453,626	)
Income taxes		---			---
Net (Loss)	$	(1,936,288	)	$	(4,453,626	)
Basic and diluted net (loss) per common share	$	(0.02	)	$	(0.08	)
Weighted average number of common shares outstanding		125,485,390			56,680,140
The accompanying notes are an integral part of these consolidated financial statements.

F - 3

	ULURU Inc.
	CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
							Years Ended December 31, 2017 and 2016
	Preferred Stock						Common Stock				Additional Paid-in			Accumulated			Stockholders'
	Share Issued			Amount			Shares Issued		Amount		Capital			(Deficit)			Equity
Balance as of December 31, 2015		---		$	---			36,834,933	$	36,835	$	60,426,915		$	(56,260,373	)	$	4,203,377
Offering costs associated with issuance of common stock and warrants		---			---			---		---		(21,950	)		---			(21,950	)
Issuance of common stock and warrants in a private placement; net of fund raising costs ($67,663)		---			---			25,245,442		25,245		1,707,092			---			1,732,337
Issuance of common stock for principle and interest due on promissory note		---			---			694,056		694		53,019			---			53,713
Issuance of common stock for services		---			---			200,000		200		35,800			---			36,000
Share-based compensation of employees		---			---			---		---		19,974			---			19,974
Share-based compensation of non-employees		---			---			---		---		---			---			---
Net (loss)		---			---			---		---		---			(4,453,626	)		(4,453,626	)
Balance as of December 31, 2016		---		$	---			62,974,431	$	62,974	$	62,220,850		$	(60,713,999	)	$	1,569,825
Issuance of common stock for acquisition of licensing rights		---			---			13,375,000		13,375		856,000			---			869,375
		---
Issuance of warrant to purchase common stock in connection with convertible promissory notes		---			---			---		---		681,300			---			681,300
		---
Issuance of Series B preferred stock in private placement, net of fund raising costs ($84,339)		1,250			1			---		---		4,915,660			---			4,915,661
Issuance of common stock in redemption of Series B preferred stock		(1,250	)		(1	)		125,000,000		125,000		(124,999	)		---			---
Share-based compensation of employees		---			---			---		---		7,923			---			7,923
Share-based compensation of non-employees		---			---			---		---		---			---			---
Net (loss)		---			---			---		---		---			(1,936,288	)		(1,936,288	)
Balance as of December 31, 2017		---		$	---			201,349,431	$	201,349	$	68,556,734		$	(62,650,287	)	$	6,107,796
	The accompanying notes are an integral part of these consolidated financial statements.

F - 4

ULURU Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Years Ended December 31,
	2017			2016
OPERATING ACTIVITIES:
Net (loss)	$	(1,936,288	)	$	(4,453,626	)
Adjustments to reconcile net (loss) to net cash used in operating activities:
Amortization of intangible assets		430,870			801,598
Depreciation		76,519			132,841
Share-based compensation for stock and options issued to employees		7,923			19,974
Share-based compensation for options issued to non-employees		---			---
Amortization of debt discount on promissory note		262,344			32,015
Amortization of debt issuance costs		6,053			22,927
Gain on sale of equipment		---			(4,125	)
Impairment of intangible asset – patents		---			2,027,310
Change in operating assets and liabilities:
Accounts receivable		(194,335	)		30,395
Inventory		62,139			(28,179	)
Prepaid expenses and deferred charges		(35,292	)		(12,193	)
Accounts payable		(813,425	)		246,474
Accrued liabilities		(151,331	)		(50,914	)
Accrued interest		99,605			2,292
Deferred revenue		(15,767	)		(323,995	)
Total		(264,697	)		2,896,420
Net Cash Used in Operating Activities		(2,200,985	)		(1,557,206	)
INVESTING ACTIVITIES:
Purchase of property and equipment		(3,501	)		(2,165	)
Proceeds from sale of equipment		---			4,125
Net Cash Used in / Provided by Investing Activities		(3,501	)		1,960
FINANCING ACTIVITIES:
Proceeds from sale of common stock and warrants, net		---			1,732,337
Proceeds from sale of Series B preferred stock, net		4,915,661			---
Proceeds from issuance of convertible promissory note and warrant, net		983,092			---
Proceeds from issuance of promissory notes		120,000			20,000
Repayment of principle due on promissory notes		(140,000	)		---
Repayment of principle due on promissory note		---			(318,526	)
Offering costs associated with issuance of common stock and warrants		---			(21,950	)
Net Cash Provided by Financing Activities		5,878,753			1,411,861
Net Increase / (Decrease) in Cash		3,674,267			(143,385	)
Cash,  beginning of year		36,615			180,000
Cash,  end of year	$	3,710,882		$	36,615

SUPPLEMENTAL CASH FLOW DISCLOSURE:
Cash paid for interest	$	2,994	$	16,099
Non-cash investing and financing activities:
Issuance of common stock for acquisition of licensing rights	$	869,375		---
Issuance of common stock for principle due on promissory note		---	$	51,474
Issuance of common stock for interest due on promissory note		---	$	2,239
Issuance of common stock for services		---	$	36,000
The accompanying notes are an integral part of these consolidated financial statements.

F - 5

ULURU Inc.

NOTES TO

CONSOLIDATED FINANCIAL STATEMENTS

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 medical technology company committed to developing and commercializing a range of innovative wound care and mucoadhesive film products based on our patented Nanoflex® and OraDisc^TM technologies, with the goal of improving outcomes for patients, health care professionals, and health care payers.

Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United State of America ("U.S. GAAP") and include the accounts of ULURU Inc., a Nevada corporation, and its wholly-owned subsidiary, ULURU Delaware Inc., a Delaware corporation.  Both companies have a December 31 fiscal year end.

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.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies used in the preparation of these consolidated financial statements:

Cash and Cash Equivalents

Cash and cash equivalents include highly liquid investments with original maturities of three months or less.  The carrying value of these cash equivalents approximates fair value.

We 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 taking into consideration the need for liquidity and capital preservation.  These investments are not held for trading or other speculative purposes.

F - 6

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable are recorded at the invoiced amount and do not bear interest.  We estimate the collectability of our accounts receivable. In order to assess the collectability of these receivables, we monitor the current creditworthiness of each customer and analyze the balances aged beyond the customer's credit terms. Theses evaluations may indicate a situation in which a certain customer cannot meet its financial obligations due to deterioration of its financial viability, credit ratings or bankruptcy. The allowance requirements are based on current facts and are reevaluated and adjusted as additional information is received. Accounts receivable are subject to an allowance for collection when it is probable that the balance will not be collected. As of December 31, 2017 and 2016, the allowance for doubtful accounts was $20,543 and $2,679, respectively.  For the years ended December 31, 2017 and 2016, the accounts written off as uncollectible were $2,156 and $72,644, respectively.

Inventory

Inventories are stated at the lower of cost or market value.  Raw material inventory cost is determined on the first-in, first-out method. Costs of finished goods are determined by an actual cost method. 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.

Prepaid Expenses and Deferred Charges

As of December 31, 2017 and 2016, prepaid expenses were composed primarily of insurance policy costs.  We amortize our insurance costs ratably over the term of each policy.  Typically, our insurance policies are subject to renewal in July and October of each year.

Property, Equipment and Leasehold Improvements

Property, equipment, and leasehold improvements are recorded at cost. Depreciation is provided over the estimated useful lives of the related assets using the straight-line method.  Estimated useful lives for property, equipment, and leasehold improvements categories are as follows:

Laboratory and manufacturing equipment	7 years
Computers, office equipment, and furniture	5 years
Computer software	3 years
Leasehold improvements	Lease term

Intangible Assets

We expense internal patent and application costs as incurred because, even though we believe the patents and underlying processes have continuing value, the amount of future benefits to be derived from them are uncertain.  Purchased patents are capitalized and amortized over the life of the patent.

Licensing Rights

Purchased licensing rights are capitalized and amortized over the life of the patent associated with the licensed product.

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Impairment of Assets

In accordance with the provisions of Accounting Standards Codification ("ASC") Topic 350-30, Intangibles Other than Goodwill, our policy is to evaluate whether there has been a permanent impairment in the value of long-lived assets and certain identifiable intangibles when certain events have taken place that indicate the remaining unamortized balance may not be recoverable, or at least annually to determine the current value of the intangible asset. When factors indicate that the intangible assets should be evaluated for possible impairment, we use an estimate of undiscounted cash flows.  Considerable management judgment is necessary to estimate the undiscounted cash flows.  Accordingly, actual results could vary significantly from management's estimates.

Debt Issuance Costs

We defer debt issuance costs associated with the issuance of our promissory note payable and amortize those costs over the period of the promissory note obligation using the effective interest method.  In 2017, we incurred approximately $101,000 of debt issuance costs related to our issuance to Velocitas GmbH of a convertible promissory note and Series B preferred stock, of which approximately $17,000 was allocated to the convertible promissory note and approximately $84,000 was allocated to the Series B preferred stock.  In 2016, we did not incur any new debt issuance costs.  During 2017 and 2016, we recorded amortization of approximately $6,000 and $23,000, respectively, of debt issuance costs. Unamortized debt issuance costs at December 31, 2017 and 2016 were approximately $11,000 and nil, respectively.

Shipping and Handling Costs

Shipping and handling costs incurred for product shipments are included in cost of goods sold.

Income Taxes

We use the liability method of accounting for income taxes pursuant to ASC Topic 740, Income Taxes.  Under this method, deferred income taxes are recorded to reflect the tax consequences in future periods of temporary differences between the tax basis of assets and liabilities and their financial statement amounts at year-end.

Revenue Recognition and Deferred Revenue

License Fees

We recognize revenue from license payments not tied to achieving a specific performance milestone ratably during the period over which we are obligated to perform services. The period over which we are obligated to perform services is estimated based on available facts and circumstances. Determination of any alteration of the performance period normally indicated by the terms of such agreements involves judgment on management's part. License revenues with no specific performance criteria are recognized when received from our foreign licensee and their various foreign sub-licensees as there is no control by us over the various foreign sub-licensees and no performance criteria to which we are subject.

We recognize revenue from performance payments ratably, when such performance is substantially in our control and when we believe that completion of such performance is reasonably probable, over the period during which we estimate that we will complete such performance obligations.  In circumstances where the arrangement includes a refund provision, we defer revenue recognition until the refund condition is no longer applicable unless, in our judgment, the refund circumstances are within our operating control and are unlikely to occur.

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Substantive at-risk milestone payments, which are based on achieving a specific performance milestone when performance of such milestone is contingent on performance by others or for which achievement cannot be reasonably estimated or assured, are recognized as revenue when the milestone is achieved and the related payment is due, provided that there is no substantial future service obligation associated with the milestone.

For the year ended December 31, 2017, we recognized approximately $6,000 in licensing fees due to the amortization of a licensing fee originally received in 2008 from one of our international distributors.  For the year ended December 31, 2016, we recognized approximately $343,000 in licensing fees due to the one-time recognition of unamortized licensing fees related to the cancellation of distribution agreements with three distributors.  The recognition of unamortized licensing fees was based upon the cancellation of each distribution agreements and that there are no further performance obligations that are required by the Company under each distribution agreement.

Royalty Income

We receive royalty revenues under license agreements with a number of third parties that sell products based on technology we have developed or to which we have rights. The license agreements provide for the payment of royalties to us based on sales of the licensed products. We record these revenues based on estimates of the sales that occurred during the relevant period. The relevant period estimates of sales are based on interim data provided by licensees and analysis of historical royalties we have been paid (adjusted for any changes in facts and circumstances, as appropriate).

We maintain regular communication with our licensees in order to gauge the reasonableness of our estimates. Differences between actual royalty revenues and estimated royalty revenues are reconciled and adjusted for in the period in which they become known, typically the following quarter. Historically, adjustments have not been material based on actual amounts paid by licensees. As it relates to royalty income, there are no future performance obligations on our part under these license agreements. To the extent we do not have sufficient ability to accurately estimate revenue; we record it on a cash basis.

Product Sales

We recognize revenue and related costs from the sale of our products at the time the products are shipped to the customer.  Provisions for returns, rebates, and discounts are established in the same period the related product sales are recorded.

We review the supply levels of our products sold to major wholesalers in the U.S., primarily by reviewing reports supplied by our major wholesalers and available volume information for our products, or alternative approaches.  When we believe wholesaler purchasing patterns have caused an unusual increase or decrease in the sales of a major product compared with underlying demand, we disclose this in our product sales discussion if we believe the amount is material to the product sales trend; however, we are not always able to accurately quantify the amount of stocking or destocking.  Wholesaler stocking and destocking activity historically has not caused any material changes in the rate of actual product returns.

We establish sales return accruals for anticipated product returns. We record the return amounts as a deduction to arrive at our net product sales.  Consistent with revenue recognition accounting guidance, we estimate a reserve when the sales occur for future product returns related to those sales. This estimate is primarily based on historical return rates as well as specifically identified anticipated returns due to known business conditions and product expiry dates. Actual product returns have been nil over the past two years.

We establish sales rebate and discount accruals in the same period as the related sales.  The rebate and discount amounts are recorded as a deduction to arrive at our net product sales.  We base these accruals primarily upon our historical rebate and discount payments made to our customer segment groups and the provisions of current rebate and discount contracts.

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Foreign currency transaction gain (loss)

Our functional currency and our reporting currency is the U.S. dollar and foreign currency transactions are primarily undertaken in Euros.  Monetary assets and liabilities are translated using the foreign currency exchange rate prevailing at the balance sheet date.  Revenues, non-monetary assets and liabilities denominated in foreign currencies are translated at rates of foreign currency exchange in effect at the date of the transaction.  Expenses are translated at average foreign currency exchange rates for the period.  Gains and losses arising on translation or settlement of foreign currency denominated transactions or balances are included in the determination of net income.

Research and Development Expenses

Pursuant to ASC Topic 730, Research and Development, our research and development costs are expensed as incurred.  Research and development expenses include, but are not limited to, salaries and benefits, laboratory supplies, facilities expenses, preclinical development costs, clinical trial and related clinical manufacturing expenses, contract services, consulting fees and other outside expenses. The cost of materials and equipment or facilities that are acquired for research and development activities and that have alternative future uses are capitalized when acquired. There were no such capitalized materials, equipment or facilities for the years ended December 31, 2017 and 2016.

Basic and Diluted Net Loss Per Common Share

In accordance with 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 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 and warrants from the calculation of diluted net loss per common share because all such securities are antidilutive for all periods presented.

Concentrations of Credit Risk

Concentration of credit risk with respect to financial instruments, consisting primarily of cash and cash equivalents, that 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.  During 2017, we utilized Bank of American, N.A. and South State Bank as our banking institutions.  During 2016, we utilized Bank of America, N.A. as our banking institution.  At December 31, 2017 and 2016 our cash and cash equivalents totaled approximately $3,711,000 and $37,000, 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 high-quality corporations.

Concentration of credit risk with respect to trade accounts receivable are customers with balances that exceed 5% of total consolidated trade accounts receivable at December 31, 2017 and 2016.  As of December 31, 2017, three customers, of which two are our international distributors, exceeded the 5% threshold, jointly with 99%.  One customer, being one of our international distributors, exceeded the 5% threshold at December 31, 2016, with 95%. As a result, we believe that accounts receivable credit risk exposure is limited.  We maintain an allowance for doubtful accounts, but historically have not experienced any significant losses related to an individual customer or group of customers.

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Concentrations of Foreign Currency Risk

A portion of our revenues and all of our expenses are denominated in U.S. dollars.  We are expecting 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.

Fair Value of Financial Instruments

In accordance with portions of ASC Topic 820, Fair Value Measurements, 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.

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, notes receivable and accrued interest, and convertible note payable balances approximates fair value based on a valuation methodology using the income approach and a discounted cash flow model.

NOTE 3. THE EFFECT OF RECENTLY ISSUED ACCOUNTING STANDARDS

In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard will be effective for the Company on January 1, 2018. The standard permits the use of either the full retrospective method, in which case the standard would be applied to each prior reporting period presented, or the modified retrospective method, in which case the cumulative effect of applying the standard would be recognized at the date of initial application. Additionally, in March 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net), which clarifies the implementation guidance on principal versus agent considerations in ASU No. 2014-09. In April 2016, the FASB issued ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, which clarifies certain aspects of identifying performance obligations and licensing implementation guidance. In May 2016, the FASB issued ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients, which relates to disclosures of remaining performance obligations, as well as other amendments to guidance on collectability, non-cash consideration and the presentation of sales and other similar taxes collected from customers. These standards have the same effective date and transition date of January 1, 2018. The Company adopted this standard on January 1, 2018 using the modified retrospective method. This approach allows the Company to apply the new standard to (1) all new contracts entered into after January 1, 2018 and (2) all existing contracts for which all (or substantially all) of the revenue has not been recognized under legacy revenue guidance as of January 1, 2018 through a cumulative adjustment to equity. Revenue presented in the Company's comparative financial statements for periods prior to January 1, 2018 would not be revised.

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The new revenue recognition standard referred to as ASC 606 requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers and replaces most of the existing revenue recognition standards in U.S. GAAP. A five-step model will be utilized to achieve the core principle; (1) identify the customer contract, (2) identify the contract's performance obligations, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations and (5) recognize revenue when or as a performance obligation is satisfied. Under ASC 606, the timing of recognizing royalties, sales-based milestones and other forms of contingent consideration is not expected to change. However, transaction prices are no longer required to be fixed or determinable and certain variable consideration might be recognized prior to the occurrence or resolution of the contingent event to the extent it is probable that a significant reversal in the amount of estimated cumulative revenue will not occur.

The Company evaluated its contracts with customers under the above ASUs (collectively, "ASC 606").  The impact of adopting ASC 606 on the Company's results of operations, financial condition, and cash flows varies depending on the contract.  For some contracts, there is no change to timing or method of recognizing revenue while for others, there are changes to timing and/or method of recognizing revenue. The Company will record adjustments upon the adoption of ASC 606 as a result of different accounting treatment of our revenue agreements with respect to the inclusion of milestone payments in the initial transaction price and the method to be used to recognize upfront fees. Under the old standard, milestone payments are recognized when earned and upfront fees were generally recognized as revenue over the research term on a straight-line basis if another method of revenue recognition did not more clearly match the pattern of delivery of goods or services to the customer. Under the new standard, milestone payments are included in the initial transaction price when it is probable that a significant reversal of the milestone payment will not occur. In addition, the Company can no longer default to the straight-line method as the default method in recognizing revenue for goods or services delivered over time. We are currently evaluating the effect of this guidance will have on our consolidated financial statements.  In addition to any impact on our consolidated financial statements, we will include expanded disclosures, including the disaggregation of revenue, significant judgments made with regard to revenue recognition and reconciliation of contract balances, among other disclosures.

In August 2014, FASB issued ASU No. 2014-15, "Presentation of Financial Statements – Going Concern".  ASU No 2014-15 provides guidance regarding management's responsibility to evaluate whether there exists substantial doubt about an organization's ability to continue as a going concern and to provide related footnote disclosures in certain circumstances.  ASU No. 2014-15 is effective for annual reporting periods beginning after December 15, 2016, and interim periods thereafter.  The adoption of ASU No. 2015-15 did not have a material effect on our financial position and results of operations

In April 2015, FASB issued ASU No. 2015-03, Simplifying the Presentation of Debt Issuance Costs, which requires debt issuance costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The guidance is effective January 1, 2016 with early adoption permitted.  The Company has elected early adoption as the guidance is a change in financial statement presentation only and will not have a material impact on our consolidated financial results.

In July 2015, FASB issued ASU No. 2015-11, "Simplifying the Measurement of Inventory."  Under ASU No. 2015-11, inventory should be measured at the lower of cost and net realizable value.  Subsequent measurement is unchanged for inventory measured using LIFO or the retail inventory method.  ASU No. 2015-11 is effective for annual reporting periods beginning after December 15, 2016, and interim periods thereafter.  The adoption of ASU No. 2015-11 did not have a material impact on our consolidated financial statements.

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In November 2015, the FASB issued ASU No. 2015-17, Income Taxes (Topic 740), Balance Sheet Classification of Deferred Taxes. The new standard requires that deferred tax assets and liabilities be classified as non-current in a classified statement of financial position. We adopted this standard on January 1, 2017, and the adoption did not have an impact on our consolidated financial statements due to the full valuation allowance position.

In February 2016, the FASB issued ASU No. 2016-02, Leases(Topic 842). Under ASU 2016-2, an entity will be required to recognize right-of-use assets and lease liabilities on its balance sheet and disclose key information about leasing arrangements. ASU 2016-02 offers specific accounting guidance for a lessee, a lessor and sale and leaseback transactions. Lessees and lessors are required to disclose qualitative and quantitative information about leasing arrangements to enable a user of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. For public companies, ASU 2016-02 is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period, and requires a modified retrospective adoption, with early adoption permitted. We plan to adopt this guidance beginning with its first quarter ending March 31, 2019. We are currently evaluating the effect ASU 2016-02 will have on our consolidated financial statements.

In March 2016, the FASB issued ASU No. 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting ("ASU 2016-09"). ASU 2016-09 simplifies several aspects of the accounting for share-based payment transactions, including the accounting for income taxes, classification of awards as either equity or liabilities, the estimation of forfeitures, statutory tax withholding requirements, and classification in the statement of cash flows. This guidance is effective for the Company on January 1, 2017 and early adoption was permitted. The Company adopted ASU 2016-09 during the first fiscal quarter ended on March 31, 2017. As part of the adoption of this guidance, the Company elected to continue estimating forfeitures in its calculation of stock-based compensation expense.

The excess tax benefits and tax deficiencies from stock-based compensation awards accounted for under ASC 718 are recognized as income tax benefit or expense, respectively, in the statement of operations and comprehensive loss. The income tax related items had no effect on the current period presentation as the Company maintains a full valuation allowance against its deferred tax assets. In addition, excess tax benefits for share-based payments are presented as an operating activity in the statement of cash flows rather than financing activity. The changes have been applied prospectively in accordance with the ASU and prior periods have not been adjusted. The adoption of ASU 2016-09 did not have a material impact on our consolidated financial statements.

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The new standard provides clarification on the cash flow presentation and classification of certain transactions, including debt prepayment or extinguishment, settlement of certain debt instruments, contingent consideration payments made after a business combination, proceeds from the settlement of certain insurance claims and distributions received from equity method investees. The new standard is effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years, with early adoption permitted. An entity that elects early adoption must adopt all of the amendments in the same period. We plan to adopt this standard in the first quarter ended March 31, 2018.

In November 2016, the FASB issued ASU No. 2016-18, Restricted Cash, Statement of Cash Flows (Topic 230). ASU 2016-18 requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. ASU 2016-18 is effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted. The amendments in this ASU should be applied using a retrospective transition method to each period presented. We plan to adopt this standard in the first quarter ended March 31, 2018.

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In January 2017, the FASB issued ASU No. 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The new standard simplifies the measurement of goodwill by eliminating the Step 2 impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit's goodwill with the carrying amount of that goodwill. The new guidance requires an entity to compare the fair value of a reporting unit with its carrying amount and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value. Additionally, an entity should consider income tax effects from any tax-deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. The new guidance becomes effective for goodwill impairment tests in fiscal years beginning after December 15, 2019, though early adoption is permitted. We are currently evaluating the effect ASU 2017-04 will have on our consolidated financial statements.

In May 2017, the FASB issued ASU No. 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting. This accounting standard update provides clarity when a change to terms or conditions of a share-based payment award must be accounted for as a modification. The new guidance requires modification accounting if the vesting condition, fair value or the award classification is not the same both before and after a change to the terms and conditions of the award. The new guidance is effective on a prospective basis beginning on January 1, 2018 with early adoption permitted. We plan to adopt this standard in the first quarter ended March 31, 2018.

There are no other new accounting pronouncements adopted or enacted during the years ended December 31, 2017 and 2016 that had, or are expected to have, a material impact on our consolidated financial statements.

NOTE 4. SEGMENT INFORMATION

Our entire business is managed by a single management team, which reports to the Chief Executive Officer.  Our corporate headquarters in the United States collects proceeds from product sales, licensing fees, royalties, and sponsored research revenues from our arrangements with external customers and licensees.  Our revenues are currently derived primarily from licensees for international activities and our domestic sales activities for our products.

Revenues per geographic area, along with relative percentages of total revenues, for the year ended December 31, are summarized as follows:

Revenues	2017		%			2016		%
Domestic	$	11,127		2	%	$	20,326		5	%
International		706,030		98	%		422,239		95	%
Total	$	717,157		100	%	$	442,565		100	%

A significant portion of our revenues are derived from a few major customers.  For the year ended December 31, 2017, three customers had greater than 10% of total revenues, and jointly represented 92% of total revenues.  For the year ended December 31, 2016, three customers had greater than 10% of total revenues, and jointly represented 88% of total revenues.

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NOTE 5. INVENTORY

As of December 31, 2017 and 2016, our inventory was composed 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 net realizable value.  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.  For the years ended December 31, 2017 and 2016, we wrote off approximately $5,000 and nil, respectively, in obsolete inventories.

The components of inventory, at the different stages of production, consisted of the following at December 31:

Inventory	2017		2016
Raw materials	$	32,329	$	35,800
Work-in-progress		311,632		424,741
Finished goods		153,500		99,059
Total	$	497,461	$	559,600

NOTE 6. PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS

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

Property, equipment and leasehold improvements	2017			2016
Laboratory equipment	$	424,888		$	424,888
Manufacturing equipment		1,604,894			1,604,894
Computers, office equipment, and furniture		154,781			151,280
Computer software		4,108			4,108
Leasehold improvements		95,841			95,841
		2,284,512			2,281,011
Less: accumulated depreciation and amortization		(2,230,789	)		(2,154,270	)
Property, equipment and leasehold improvements, net	$	53,723		$	126,741

Depreciation expense on property, equipment, and leasehold improvements was $76,519 and $132,841 for the years ended December 31, 2017 and 2016, respectively.

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NOTE 7. INTANGIBLE ASSETS

Patents

Intangible patent assets are composed of patents acquired in October 2005.  Intangible patent assets, net consisted of the following at December 31:

Intangible assets - patents	2017			2016
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		(7,418,891	)		(7,381,847	)
Less: reserve for impairment		(2,027,310	)		(2,027,310	)
Intangible assets, net	$	179,737		$	216,781

We performed an evaluation of our intangible patent assets for purposes of determining possible impairment as of December 31, 2017.  Based upon recent market conditions and comparable market transactions for similar intangible assets, we determined that an income approach using a discounted cash flow model was an appropriate valuation methodology to determine each intangible asset's fair value.  The income approach converts future amounts to a single present value amount (discounted cash flow model).  Our discounted cash flow models are highly reliant on various assumptions, including estimates of future cash flow (including long-term growth rates), discount rate, and expectations about variations in the amount and timing of cash flows and the probability of achieving the estimated cash flows, all of which we consider level 3 inputs for determination of fair value.  We believe we have appropriately reflected our best estimate of the assumptions that market participants would use in determining the fair value of our intangible assets at the measurement date.  Upon completion of the evaluation, the fair value of our intangible patent assets exceeded the recorded remaining book value except for the valuation of two patents; "Amlexanox (OraDisc™ A)" and "OraDisc™".  We previously recognized an impairment charge of $2,027,310 for these two patents during the year ended December 31, 2016.

Amortization expense for intangible patent assets was $37,044 and $476,450 for the years ended December 31, 2017 and 2016, respectively.  The future aggregate amortization expense for intangible patent assets, remaining as of December 31, 2017, is as follows:

Calendar Years	Future Amortization Expense
2018	$	37,044
2019		37,044
2020		37,145
2021		37,044
2022		31,460
2023 & Beyond		---
Total	$	179,737

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Licensing rights

Acquisition of Licensing Rights – 2015

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 agreed to assume 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 included 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 and, as a result, have expired.

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 were 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 own any of the registered shares. As of the date of this filing, shares cannot be sold under the registration statement because the associated prospectus is not current.

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.

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Acquisition of Licensing Rights – 2017

On February 27, 2017, we entered into a Note, Warrant and Preferred Stock Purchase Agreement (the "Purchase Agreement") with Velocitas Partners, LLC ("Velocitas") and Velocitas I LLC ("Velo LLC"), an entity controlled by Velocitas, with respect to an aggregate financing of up to $6,000,000.

Refer to a description in greater detail of the financing event with Velocitas and Velo LLC in Note 10. Convertible Debt.

At the second closing of the financing event with Velocitas and Velo LLC, which occurred on March 31, 2017, the Company acquired the Altrazeal® distributor agreements Velocitas had with its sub-distributors in exchange for the issuance of 13,375,000 shares of Common Stock.  The Company has valued the acquisition of the Altrazeal® distributor agreement from Velocitas at $869,375 based on the closing price of $0.065 per share of the Company's Common Stock on March 31, 2017.

Licensing rights, net consisted of the following at December 31:

Intangible assets - licensing rights	December 31, 2017			December 31, 2016
Intangible assets – licensing rights, gross	$	4,381,881		$	3,512,506
Less: accumulated amortization		(725,245	)		(331,419	)
Intangible assets - licensing rights, net	$	3,656,636		$	3,181,087

We performed an evaluation of our intangible licensing rights assets for purposes of determining possible impairment as of December 31, 2017.  Based upon recent market conditions and comparable market transactions for similar licensing rights, we determined that an income approach using a discounted cash flow model was an appropriate valuation methodology to determine each licensing rights asset fair value.  The income approach converts future amounts to a single present value amount (discounted cash flow model).  Our discounted cash flow models are highly reliant on various assumptions, including estimates of future cash flow (including long-term growth rates), discount rate, and expectations about variations in the amount and timing of cash flows and the probability of achieving the estimated cash flows, all of which we consider level 3 inputs for determination of fair value.  We believe we have appropriately reflected our best estimate of the assumptions that market participants would use in determining the fair value of our intangible licensing rights assets at the measurement date.  Upon completion of the evaluation, the fair value of our intangible licensing rights assets exceeded the recorded remaining book value.

Amortization expense for intangible licensing rights assets was $393,826 and $325,148 for the years ended December 31, 2017 and 2016, respectively.  The future aggregate amortization expense for intangible licensing rights assets, remaining as of December 31, 2017, is as follows:

Calendar Years	Future Amortization Expense
2018	$	416,303
2019		416,303
2020		416,303
2021		416,303
2022		416,303
2023 & Beyond		1,575,121
Total	$	3,656,636

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NOTE 8. ACCRUED LIABILITIES

Accrued liabilities consisted of the following at December 31:

Accrued Liabilities	2017		2016
Accrued compensation/benefits	$	124,819	$	274,874
Accrued insurance payable		---		40,422
Accrued royalties		39,144		---
Product rebates/returns		6		4
Total accrued liabilities	$	163,969	$	315,300

NOTE 9. PROMISSORY NOTES PAYABLE

On December 15, 2016, January 18, 2017, and February 16, 2017, we issued promissory notes to Velocitas with principal amounts and purchase prices of $20,000, $65,000, and $30,000, respectively.  Each of the promissory notes bore interest at the rate of 6.0% per annum with payment of principal and interest due on the earlier of (i) 180 days from the date of issuance, (ii) the date of closing of any debt or equity financing transaction by and between Uluru and Velocitas, or (iii) the payment to the Company of certain invoices due from selected Company distributors.  Each of the promissory notes was secured by a pledge of certain product inventory, and there were no debt issuance costs incurred by the Company.  On February 27, 2017, each of the promissory notes was repaid in connection with the issuance of the Convertible Promissory Note, dated February 27, 2017, in the amount of $500,000 (the "Initial Note") under the Purchase Agreement with Velocitas.

On February 21, 2017, we issued a promissory note to Kirkwood Investors, Inc. ("Kirkwood") with a principal amount and purchase price of $25,000.  The promissory note bore interest at the rate of 6.0% per annum with payment of principal and interest due on the earlier of (i) 60 days from the date of issuance, (ii) the date of closing of any debt or equity financing transaction by Uluru, or (iii) no later than two days after receiving written request by Kirkwood.  The promissory note was secured by a pledge of certain product inventory and accounts receivables and there were no debt issuance costs incurred by the Company.  The Company's Vice President and Chief Financial Officer, Terrance K. Wallberg, is President and sole shareholder of Kirkwood.  On February 27, 2017, the outstanding promissory note to Kirkwood was repaid in connection with the issuance of the Initial Note under the Purchase Agreement with Velocitas.

NOTE 10. CONVERTIBLE DEBT

Debt Financing – February and March 2017

On February 27, 2017, the Company entered into the Purchase Agreement with Velocitas and Velo LLC under which the Company received gross proceeds of $6,000,000 in two closings with the initial closing occurring on February 27, 2017 and the second closing occurring on March 31, 2017, which we refer to as the "March 2017 Offering".

The first closing, which occurred on February 27, 2017, included the purchase by Velocitas at face value of the $500,000 Initial Note, with the Initial Note accruing interest at 12.5% per annum and having a term of two years (subject to acceleration under certain circumstances).

The second closing, which occurred on March 31, 2017, included the purchase by Velocitas at face value of an additional $500,000 Secured Convertible Note, dated March 31, 2017, (the "Second Note") with the Second Note accruing interest at 12.5% per annum and having a term of two years (subject to acceleration under certain circumstances), and Velo LLC purchasing 1,250 shares of Series B Convertible Preferred Stock of the Company for gross proceeds of $5,000,000, at an as-converted-to-Common Stock purchase price of $0.04 per share.

F - 19

The Initial Note and the Second Note are convertible into shares of Common Stock at a conversion price of $0.04 per share, subject to equitable adjustments, with mandatory conversion of all unpaid principal and interest required on the second anniversary of each such note, unless an event of default has occurred and is continuing.  The Initial Note and the Second Note are secured by all of the assets of the Company and its subsidiaries pursuant to a Security Agreement executed at the initial closing.

The Series B Convertible Preferred Stock that was issued in connection with the second closing provided, among other things, that it would automatically convert into Common Stock when the number of authorized shares of Common Stock is increased within 190 days of the second closing as necessary to permit all outstanding convertible or exercisable securities (including the Series B Convertible Preferred Stock) to convert to Common Stock. Following stockholder approval of an amendment to our articles of incorporation increasing the number of authorized shares of Common Stock from 200,000,000 shares to 750,000,000 shares, the Company filed on July 26, 2017 with the State of Nevada an amendment to its articles of incorporation implementing such increase.  This resulted in the conversion of all 1,250 outstanding shares of Series B Convertible Preferred Stock held by Velo LLC into 125,000,000 shares of Common Stock.

As a condition of the March 2017 Offering, the Company issued to Velocitas at the second closing a warrant to purchase up to 57,055,057 shares of Common Stock (the "Warrant").  The Warrant has an exercise price of $0.04 per share, a 10-year term and is subject to cashless exercise. In addition, at the second closing, the Company acquired the Altrazeal distributor agreements Velocitas had with its sub-distributors in exchange for the issuance of 13,375,000 shares of Common Stock.

The Company, Velocitas, Velo LLC, and certain affiliates also signed a Voting Agreement (the "Voting Agreement") pursuant to which the parties agreed to set the size of the Board of Directors at six directors, and agreed to vote for the election to the Board of Directors of four persons designated by Velocitas (initially to be Anish Shah, Oksana Tiedt, Vaidehi Shah and Arindam Bose), one director designated by Bradley J. Sacks and one additional director designated by a major investor or by the Board of Directors.  In addition, the parties to the Voting Agreement agreed to vote in favor of a proposal to amend the Company's articles of incorporation to increase the authorized shares as required to permit the conversion of the Series B Convertible Preferred Stock.

In addition, the Company, Velocitas, Velo LLC, and certain affiliates entered into an Investor Rights Agreement (the "Investor Rights Agreement") that provides the parties thereto with demand, Form S-3 and piggy back registration rights, Rule 144 information rights, and a right of first offer (or preemptive rights) in connection with future sales of securities by the Company (subject to standard exceptions).  The Investor Rights Agreement includes indemnification obligations associated with the registration rights.  Michael I. Sacks and Bradley Sacks and affiliates are parties to the Investor Rights Agreement, in part in exchange for the termination by certain of such persons and The Punch Trust of a Registration Rights Agreement dated as of January 31, 2014.

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.

F - 20

Information relating to the Initial Note and Second Note is as follows:

											As of December 31, 2017
Transaction	Initial Principal Amount		Interest Rate			Maturity Date	Conversion Price		Principal Balance		Unamortized Debt Discount		Unamortized Debt Issuance Costs		Carrying Value
Initial Note	$	500,000		12.5	%	02/27/2019	$	0.04	$	500,000	$	206,634	$	5,361	$	288,005
Second Note	$	500,000		12.5	%	03/31/2019	$	0.04	$	500,000	$	212,322	$	5,494	$	282,184
Total	$	1,000,000							$	1,000,000	$	418,956	$	10,855	$	570,189

As part of the Initial Note and the Second Note, at the holder's option, all unpaid principle and interest due under each convertible promissory note may be converted into shares of Common Stock based on a conversion price of $0.04 per share.  The Initial Note and the Second Note mature on February 27, 2019 and March 31, 2019, respectively, and on each maturity date each convertible promissory note, and accrued interest thereon, is subject to mandatory conversion based on a conversion price of $0.04 per share, unless an event of default has occurred and is continuing.

The amount of interest cost recognized from our promissory notes and our convertible debt was $100,355 and $14,079 for the years ended December 31, 2017 and 2016, respectively.  The amount of debt discount amortized from our promissory notes and our convertible debt was $262,344 and $32,015 for the years ended December 31, 2017 and 2016, respectively.  The amount of debt issuance costs amortized from our promissory notes was $6,053 and $22,927 for the years ended December 31, 2017 and 2016, respectively.

NOTE 11. EQUITY TRANSACTIONS

Preferred Stock Transaction

March 2017 Offering

On February 27, 2017, the Company entered into the Purchase Agreement with Velocitas and Velo LLC under which the Company received gross proceeds of $6,000,000, in two closing with the initial closing occurring on February 27, 2017 and the second closing occurring on March 31, 2017.

The second closing included, among other transaction components, the purchase by Velo LLC of 1,250 shares of Series B Convertible Preferred Stock of the Company for $5,000,000.

As of July 26, 2017, all 1,250 outstanding shares of Series B Convertible Preferred Stock held by Velo LLC were converted into 125,000,000 shares of Common Stock.

Refer to a description in greater detail of the financing event with Velocitas and Velo LLC in Note 10. Convertible Debt.

F - 21

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 during the one year following the date of issuance (subject to standard exceptions).

The March 2016 Offering 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 are 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 former 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 former Vice President of Polymer Drug Delivery.

NOTE 12. STOCKHOLDERS' EQUITY

Common Stock

As of December 31, 2017, we had 201,349,431 shares of Common Stock issued and outstanding.  For the year ended December 31, 2017, we issued 138,375,000 shares of Common Stock which is composed of 13,375,000 shares of Common Stock issued to Velocitas for the acquisition of licensing rights and 125,000,000 shares of Common Stock issued to Velo LLC for the conversion and exchange of all 1,250 outstanding shares of Series B Convertible Preferred Stock held by Velo LLC.

At the 2017 Annual Meeting of Stockholders, held on July 25, 2017, a proposal to increase the number of authorized shares of Common Stock from 200,000,000 shares to 750,000,000 shares was approved by a majority vote of the stockholders.  On the next day, the Company filed with the State of Nevada an amendment to its articles of incorporation implementing such increase.

Preferred Stock

As of December 31, 2017, we had no shares of Series A Preferred Stock issued and outstanding.  For the year ended December 31, 2017, we did not issue or redeem any Series A Preferred Stock.

As of December 31, 2017, we had no shares of Series B Convertible Preferred Stock issued and outstanding.  For the year ended December 31, 2017, we issued 1,250 Series B Shares to Velo LLC, and on August 1, 2017, all outstanding shares of Series B Convertible Preferred Stock held by Velo LLC were mandatorily converted into an aggregate of 125,000,000 shares of Common Stock.

F - 22

Warrants

The following table summarizes the warrants outstanding and the number of shares of common stock subject to exercise as of December 31, 2017 and the changes therein during the two years 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		(840,075	)	$	0.84
Balance as of December 31, 2016		26,179,560		$	0.11
Warrants issued		57,055,057		$	0.04
Warrants exercised		---			---
Warrants cancelled		---			---
Balance as of December 31, 2017		83,234,617		$	0.06

For the year ended December 31, 2017, we issued a warrant to purchase up to an aggregate of 57,055,057 shares of our Common Stock at an exercise price of $0.04 per shares pursuant to the March 2017 Offering.

Of the warrant shares subject to exercise as of December 31, 2017, expiration of the right to exercise is as follows:

Date of Expiration	Number of Warrant Shares of Common Stock Subject to Expiration
March 14, 2018		660,000
January 15, 2019		80,000
April 30, 2020		194,118
March 30, 2021		25,245,442
March 31, 2027		57,055,057
Total		83,234,617

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NOTE 13. EARNINGS PER SHARE

Basic and Diluted Net Loss Per Share

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

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

	December 31, 2017		December 31, 2016
Warrants to purchase Common Stock		83,234,617		26,179,560
Stock options to purchase Common Stock		150,736		691,237
Common Stock issuable upon the assumed conversion of our convertible promissory notes (1)		31,250,000		---
Common Stock issuable upon the conversion of our Series B Convertible Preferred Stock (2)		---		---
Total		114,635,353		26,870,797

(1)

As part of the Initial Note and the Second Note, at the holder's option, all unpaid principle and interest due under each convertible promissory note may be converted into shares of Common Stock based on a conversion price of $0.04 per share.  The Initial Note and the Second Note mature on February 27, 2019 and March 31, 2019, respectively, and on each maturity date each convertible promissory note, and accrued interest thereon, is subject to mandatory conversion based on a conversion price of $0.04 per share, unless an event of default has occurred and is continuing.  For the purposes of this Table, we have assumed that all outstanding principal and interest will be converted on each applicable maturity date.

(2)

Pursuant to the March 2017 Offering, Velo LLC purchased 1,250 shares of Series B Convertible Preferred Stock of the Company for $5,000,000.  The Series B Convertible Preferred Stock that was issued in the March 2017 Offering, (a) voted together with the Common Stock as a single class (subject to standard protective provisions for the Series B Convertible Preferred Stock), (b) had the same dividend rights as the Common Stock, (c) had a liquidation preference equal to the greater of its purchase price and its as converted-to-Common Stock value, (d) automatically converted into Common Stock when the number of authorized shares of Common Stock was increased within 190 days of the second closing as necessary to permit all outstanding convertible or exercisable securities (including the Series B Convertible Preferred Stock) to convert to Common Stock, and (e) was convertible into Common Stock  at the discretion of the holder, subject to the availability of authorized shares, at an as-converted-to-Common Stock purchase price of $0.04 per share.   On August 1, 2017, all 1,250 outstanding shares of Series B Convertible Preferred Stock converted in exchange for 125,000,000 shares of Common Stock as a result of the approval by the stockholders at the 2017 Annual Meeting of Stockholders held on July 25, 2017, and the filing in July 2017, of an amendment increasing our authorized shares of Common Stock from 200,000,000 shares to 750,000,000 shares.

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NOTE 14. SHARE BASED COMPENSATION

The Company's share-based compensation plan, the 2006 Equity Incentive Plan ("Incentive Plan"), is administered by the compensation committee of the Board of Directors, 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 years ended December 31, 2017 and 2016, 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 years ended December 31:

	2017		2016
Research and development	$	---	$	7,614
Selling, general and administrative		7,923		12,360
Total share-based compensation expense	$	7,923	$	19,974

At December 31, 2017, 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 zero.

The following table summarizes the stock options outstanding and the number of shares of Common Stock subject to exercise as of December 31, 2017 and the changes therein during the two years then ended:

	Stock Options			Weighted Average Exercise Price per Share
Outstanding as of December 31, 2015		1,6664,573		$	1.73
Granted		---			---
Forfeited/cancelled		(973,336	)		1.58
Exercised		---			---
Outstanding as of December 31, 2016		691,237		$	1.94
Granted		---			---
Forfeited/cancelled		(540,501	)		1.30
Exercised		---			---
Outstanding as of December 31, 2017		150,736		$	4.26

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The following table presents the stock option grants outstanding and exercisable as of December 31, 2017:

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
	90,000	$	0.33		5.2		90,000	$	0.33
	40,000		1.15		6.7		40,000		1.15
	20,736		27.33		0.3		20,736		27.33
	150,736	$	4.26		4.9		150,736	$	4.26

Restricted Stock Awards

Restricted stock awards, which typically vest over a period of six months 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 years ended December 31, 2017 and 2016, we did not grant any restricted stock awards.  At December 31, 2017, the balance of unearned share-based compensation to be expensed in future periods related to restricted stock awards, as adjusted for expected forfeitures, is nil.

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.

F - 26

As of December 31, 2017, we had granted options to purchase 2,061,167 shares of Common Stock since the inception of the Equity Incentive Plan, of which 150,736 were outstanding at a weighted average exercise price of $4.26 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 29, 2016, the Incentive Plan expired by its terms, and no additional awards may be granted thereunder.  The expiration of the Incentive Plan does not affect outstanding awards.

On March 28, 2018, our Board of Directors adopted and approved our 2018 Equity Incentive Plan which initially provides for the issuance of up to 20,000,000 shares of our Common Stock pursuant to stock options and other equity awards.

NOTE 15. EMPLOYMENT BENEFIT PLAN

We maintain a defined contribution or 401(k) Plan for our qualified employees.  Participants may contribute a percentage of their compensation on a pre-tax basis, subject to a maximum annual contribution imposed by the Internal Revenue Code.  We may make discretionary matching contributions as well as discretionary profit-sharing contributions to the 401(k) Plan.  Our contributions to the 401(k) Plan are made in cash and vest immediately.  The Company's Common Stock is not an investment option available to participants in the 401(k) Plan.  We contributed $9,569 and $17,396 to the 401(k) Plan during the years ended December 31, 2017 and 2016, respectively.

NOTE 16. FAIR VALUE MEASUREMENTS

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

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

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

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

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

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

F - 27

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 notes receivable and accrued interest and convertible note payable balances approximates fair value based on a valuation methodology using the income approach and a discounted cash flow model.

The fair value of our financial instruments consisted of the following at December 31:

Description	2017		2016
Liabilities:
Convertible promissory note – March 2017	$	500,000		---
Convertible promissory note – February 2017	$	500,000		---
Promissory note – December 2016		---	$	20,000
Total	$	1,000,000	$	20,000

NOTE 17. INCOME TAXES

There was no current federal tax provision or benefit recorded for any period since inception, nor were there any recorded deferred income tax assets, as such amounts were completely offset by valuation allowances. Deferred tax assets as of December 31, 2017, of $13,584,125 were reduced to zero, after considering the valuation allowance of $13,584,125, since there is no assurance of future taxable income.  As of December 31, 2017, we have consolidated net operating loss carryforwards ("NOL") and research credit carryforwards for income tax purposes of approximately $58,787,306 and $555,177, respectively.

The following are the consolidated operating loss carryforwards and research credit carryforwards that will begin expiring as follows:

Calendar Years	Consolidated Operating Loss Carryforwards		Research Activities Carryforwards
2021	$	34,248	$	---
2023		95,666		---
2024		910,800		13,584
2025		1,687,528		21,563
2026		11,950,281		60,797
2027		3,431,365		85,052
2028		8,824,940		139,753
2029		6,889,761		81,940
2030		5,113,583		41,096
2031		3,728,626		43,592
2032		3,695,792		8,690
2033		3,187,559		15,882
2034		1,797,031		19,491
2035		2,594,151		21,113
2036		2,510,546		2,624
2037		2,335,429		---
Total	$	58,787,306	$	555,177

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The Tax Reform Act of 1986 contains provisions, which limit the amount of NOL and tax credit carryforwards that companies may utilize in any one year in the event of cumulative changes in ownership over a three-year period in excess of 50%.  Since the effective date of the Tax Reform Act of 1986, the Company has completed significant share issuances in 2003, 2006, and 2017 which may significantly limit our ability to utilize our NOL and tax credit carryforwards against taxable earnings in future periods.  Ownership changes in future periods may place additional limits on our ability to utilize NOLs and tax credit carryforwards.

An analysis of the tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2017 and 2016 are as follows:

	2017			2016
Deferred tax assets:
Net operating loss carryforwards	$	12,637,559		$	20,056,077
Intangible assets		387,249			816,389
Other		577,633			575,065
Total gross deferred tax assets		13,602,441			21,447,531
Deferred tax liabilities:
Property and equipment		18,316			10,391
Total gross deferred tax liabilities		18,316			10,391
Net total of deferred assets and liabilities		13,584,125			21,437,140
Valuation allowance		(13,584,125	)		(21,437,140	)
Net deferred tax assets	$	---		$	---

The valuation allowance decreased by $7,853,015 in 2017 and  increased by $1,531,890 in 2016.

The following is a reconciliation of the expected statutory federal income tax rate to our actual income tax rate for the years ended December 31:

	2017			2016
Expected income tax (benefit) at federal statutory tax rate -35%	$	( 677,456	)	$	( 1,558,549	)
Permanent differences		5,908			7,739
Research tax credits		---			(2,624	)
Amortization of deferred startup costs		---			---
Valuation allowance		671,548			1,553,434
Income tax expense	$	---		$	---

Effective January 1, 2007, we adopted ASC Topic 740, Accounting for Uncertainty in Income Taxes.  ASC Topic 740 is a comprehensive model for how a company should recognize, measure, present, and disclose in its financial statements uncertain tax positions that we have taken or expects to take on a tax return.  If an income tax position exceeds a more likely than not (greater than 50%) probability of success upon tax audit, we will recognize an income tax benefit in its financial statements.  Additionally, companies are required to accrue interest and related penalties, if applicable, on all tax exposures consistent with jurisdictional tax laws.  We did not have any unrecognized tax benefits and there was no effect on our financial condition or results of operations as a result of implementing ASC Topic 740.

F - 29

On December 22, 2017, the Tax Cuts and Jobs Act (the "Tax Act") was signed into law making significant changes to the Internal Revenue Code. Changes include, but are not limited to, a corporate tax rate decrease from 35% to 21%, effective for tax years beginning after December 31, 2017.  We use the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to reverse. As a result of the reduction in the U.S. corporate income tax rate from 35% to 21% under the Tax Act, we revalued our ending net deferred tax assets at December 31, 2017, which were fully offset by a valuation allowance.  The Company has evaluated the other changes resulting from the Tax Act and does not expect them to have a material impact on the tax provision, therefore, the Company considers the accounting complete.

At December 31, 2017, the Company had NOLs and research credit carryforwards of approximately $58,787,000 and $555,000, respectively.  At December 31, 2017, the utilization of a portion of our NOLs is subject to an annual limitation under Section 382 of the Internal Revenue Code (IRC).  If not utilized, these federal NOLs will begin to expire in 2020. The Company continues to evaluate IRC Section 382, which may limit NOLs generated in future years.

The Company evaluates deferred tax assets, including the benefit from NOLs, to determine if a valuation allowance is required. Such evaluation is based on consideration of all available evidence using a "more likely than not" standard with significant weight being given to evidence that can be objectively verified. This assessment considers, among other matters, the nature, frequency, and severity of current and cumulative losses; forecasts of future profitability; the length of statutory carryforward periods; the Company's experience with operating losses; and tax-planning alternatives. The significant piece of objective negative evidence evaluated was the cumulative loss incurred through the year ended December 31, 2017. Given this evidence and the expectation to incur operating losses in the foreseeable future, a full valuation allowance has been recorded against the net deferred tax asset. The Company will continue to maintain a full valuation allowance against the entire amount of its net deferred tax asset, until such time as the Company has determined that the weight of the objectively verifiable positive evidence exceeds that of the negative evidence and it is likely that the Company will be able to utilize all of its net deferred tax asset relating to its federal and state NOL carryforwards. Although the Company has established a full valuation allowance on its net deferred tax asset, it has not forfeited the right to carryforward tax losses up to 20 years and apply such tax losses against taxable income in such years, thereby reducing its future tax obligations. The Company is subject to taxation in the United States and various state jurisdictions.

As of December 31, 2017, federal income tax returns for fiscal years 2014 through 2017 remain open and subject to examination by the Internal Revenue Service.  We file and remit state income taxes in various states where we have determined it is required to file state income taxes.  Our filings with those states remain open for audit for the fiscal years 2014 through 2017.

The Company applies the provisions of ASC 740 related to accounting for uncertain tax positions and concluded there were no such positions associated with the Company requiring accrual of a liability. As of December 31, 2017, the Company has not accrued for any such positions. The Company is currently not under audit for federal or state tax purposes. The Company does not expect a significant change to occur within the next 12 months.

F - 30

NOTE 18. COMMITMENTS AND CONTINGENCIES

Operating Leases

On January 31, 2006 we entered into a lease agreement for office and laboratory space in Addison, Texas.  The lease commenced on April 1, 2006 and 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 required a minimum monthly lease obligation of $9,436, which was inclusive of monthly operating expenses.

On December 15, 2017, we entered into a Termination of Lease Agreement whereby we cancelled our existing lease for office and laboratory space and concurrently entered into a new lease agreement (the "Office Lease") that will continue until December 2019.  The Office Lease encompasses approximately 2,500 rentable square feet and requires a minimum monthly lease obligation of $2,721, which is inclusive of monthly operating expenses.

On January 25, 2018, we entered into a lease agreement for storage and warehouse space in Carrollton, Texas.  The lease commenced on January 24, 2018 and will continue until December 2019.  The lease requires a minimum monthly lease obligation of $1,564, which is inclusive of monthly operating expenses.

On January 16, 2015 we entered into a lease agreement for certain office equipment that commenced on February 1, 2015 and continued until February 1, 2018 and required a minimum lease obligation of $551 per month.

The future minimum lease payments under the Office Lease, the 2018 warehouse lease, and the 2015 equipment lease are as follows as of December 31, 2017:

Calendar Years	Future Lease Expense
2018	$	50,399
2019		51,059
2020		---
2021		---
2022		---
Total	$	101,458

Rent expense for our operating leases amounted to $124,463 and $130,098 for the years ended December 31, 2017 and 2016, respectively.

Indemnification

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.  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.

F - 31

Related Party Transactions and Concentration

Note, Warrant and Preferred Stock Purchase Agreement

On February 27, 2017, we entered into the Purchase Agreement with Velocitas and Velo LLC, an entity controlled by Velocitas, with respect to an aggregate financing of up to $6,000,000.

Refer to a description in greater detail of the financing event with Velocitas and Velo LLC in Note 10. Convertible Debt.

On March 31, 2017, the second closing of the Purchase Agreement included, amongst other transaction components, the Company acquiring the Altrazeal distributor agreements Velocitas had with its sub-distributors in exchange for the issuance of 13,375,000 shares of Common Stock.  The Company has valued the acquisition of the Altrazeal distributor agreement from Velocitas at $869,375 based on the closing price of $0.065 per share of the Company's Common Stock on March 31, 2017.

For the years ended December 31, 2017 and 2016, the Company recorded revenues, in approximate numbers, of $214,000 and nil, respectively, with Velocitas GmbH which represented 30% and 0% of our total revenues, respectively.  As of December 31, 2017 and December 31, 2016, Velocitas GmbH did not have any outstanding net accounts receivable.

Consulting Agreement – Velocitas GmbH

On April 1, 2017, the Company entered into a Consulting Agreement with Velocitas GmbH to provide the Company with operational support services in the fields of regulatory administration, finance, international customer account management, manufacturing, supply chain logistics, and other services required by the Company. Velocitas GmbH receives a monthly payment of $25,833 for providing such services to the Company.

Temporary Advances

On December 15, 2016, January 18, 2017, and February 16, 2017, in exchange for cash equal to the principal amount, we issued promissory notes to Velocitas with purchase prices of $20,000, $65,000, and $30,000, respectively.  Each of the promissory notes bore interest at the rate of 6.0% per annum with payment of principal and interest due on the earlier of (i) 180 days from the date of issuance, (ii) the date of closing of any debt or equity financing transaction by and between Uluru and Velocitas, or (iii) the payment to Uluru of certain invoices due from selected Company's distributors.  Each of the promissory notes was secured by a pledge of certain product inventory and there were no debt issuance costs incurred by the Company.  On February 27, 2017, each of the promissory notes was repaid in connection with the issuance of the Initial Note under the Purchase Agreement with Velocitas.

On February 21, 2017, we issued a promissory note to Kirkwood with a purchase price of $25,000.  The promissory note bore interest at the rate of 6.0% per annum with payment of principal and interest due on the earlier of (i) 60 days from the date of issuance, (ii) the date of closing of any debt or equity financing transaction by the Company, or (iii) no later than two days after receiving written request by Kirkwood.  The promissory note was secured by a pledge of certain product inventory and accounts receivables and there were no debt issuance costs incurred by the Company.  The Company's Vice President and Chief Financial Officer, Terrance K. Wallberg, is President and sole shareholder of Kirkwood.  On February 27, 2017, the outstanding promissory note to Kirkwood was repaid in connection with the issuance of the Initial Note under the Purchase Agreement with Velocitas.

F - 32

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 December 31, 2017, the Company's obligation to these executives for temporarily deferred compensation was approximately $72,000 which was included in accrued liabilities.  As of December 31, 2016, the Company's obligation to these executives for temporarily deferred compensation was approximately $473,000 of which approximately $200,000 was included in accrued liabilities and approximately $273,000 was included in accounts payable.

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 December 31, 2017, 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.  As of December 31, 2017, the Company has accrued approximately $39,000 of expense relating to future milestone payments to Access.

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.

Prescription Drug User Fee Obligation

The Company was assessed prescription drug user fees ("PDUFA") of approximately $535,000 by the United States Department of Health and Human Services (the "DHHS") for the sale and manufacture of Aphthasol® from 2009 to 2012.  The Company had contested the assessments as it believed such fees should be waived because the Company should qualify for abatement of the PDUFA fees.  However, the Company's challenge has been denied by the DHHS.  As of September 30, 2017, the Company had accrued potential penalties and interest of approximately $1,067,000 related to the unpaid PDUFA fees. In November 2017, the Company negotiated a settlement payment of $400,000 with DHHS thereby cancelling certain unpaid invoices and accrued penalties and interest thereon.  There continues to be a PDUFA fee that remains unpaid as of this Report.  Since the Company has not yet reached a settlement with the DHHS on the unpaid PDUFA fee, it is possible that the Company may be subject to additional collection costs.

NOTE 19. LEGAL PROCEEDINGS

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

NOTE 20. SUBSEQUENT EVENTS

None.

F - 33

EX-21.1

Exhibit 21.1

Subsidiaries of ULURU Inc.

Subsidiary	Jurisdiction of Incorporation
Cardinia Acquisition Corp.	Delaware
ULURU Delaware Inc.	Delaware

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the following Registration Statements:

1.	Form S-8	(File Nos. 333-223994-18719548)
2.	Form S-8	(File Nos. 333-196797-14922652)

of our audit report dated March 30, 2018, with respect to the consolidated financial statements of ULURU Inc. (the "Company") included in this Annual Report on Form 10-K of ULURU Inc. for the two years ended December 31, 2017.

/s/ Montgomery Coscia Greilich, LLP

Plano, Texas

March 30, 2018

EX-31.1

EXHIBIT 31.1

Certification of Principal Executive Officer of ULURU Inc.

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

the Securities Exchange Act of 1934, as Amended

I, Vaidehi Shah, certify that:

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

Date: March 30, 2018	/s/ Vaidehi Shah
	Vaidehi Shah
	Chief Executive Officer
	(Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

Certification of Principal Accounting Officer of ULURU Inc.

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

the Securities Exchange Act of 1934, as Amended

I, Terrance K. Wallberg, certify that:

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

Date: March 30, 2018	/s/ Terrance K. Wallberg
	Terrance K. Wallberg
	Vice President and Chief Financial Officer
	(Principal Financial and Accounting Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
This certification set forth below is hereby made solely for the purposes of satisfying the requirements of Section 906 of the Sarbanes-Oxley Act of 2002 and may not be relied upon or used for any other purposes. A signed original of this written statement required by Section 906 has been provided to ULURU Inc. and will be retained by ULURU Inc. and furnished to the SEC or its staff upon its request. Pursuant to Section 906 of the Public Company Accounting Reform and Investor Act of 2002 (18 U.S.C. 1350, as adopted, the "Sarbanes-Oxley Act"), Vaidehi Shah, Chief Executive Officer of ULURU Inc. (the "Company"), hereby certifies that to his knowledge the Annual Report on Form 10-K for the period ended December 31, 2017 of the Company filed with the Securities and Exchange Commission on the date hereof
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 result of operations of the Company for the period specified

Date: March 30, 2018	By:	/s/ Vaidehi Shah
	Name:	Vaidehi Shah
	Title:	Chief Executive Officer

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
This certification set forth below is hereby made solely for the purposes of satisfying the requirements of Section 906 of the Sarbanes-Oxley Act of 2002 and may not be relied upon or used for any other purposes. A signed original of this written statement required by Section 906 has been provided to ULURU Inc. and will be retained by ULURU Inc. and furnished to the SEC or its staff upon its request. Pursuant to Section 906 of the Public Company Accounting Reform and Investor Act of 2002 (18 U.S.C. 1350, as adopted, the "Sarbanes-Oxley Act"), Terrance K. Wallberg, Vice President and Chief Financial Officer of ULURU Inc. (the "Company"), hereby certifies that to his knowledge the Annual Report on Form 10-K for the period ended December 31, 2017 of the Company filed with the Securities and Exchange Commission on the date hereof
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 result of operations of the Company for the period specified

Date: March 30, 2018	By:	/s/ Terrance K. Wallberg
	Name:	Terrance K. Wallberg
	Title:	Vice President and Chief Financial Officer

XML

Document and Entity Information - USD ($)	12 Months Ended
	Dec. 31, 2017	Mar. 30, 2018	Jun. 30, 2017
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
Entity Public Float			$ 2,494,000
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	FY
Document Type	10-K
Amendment Flag	false
Document Period End Date	Dec. 31, 2017
Common Stock [Member]
Entity Information [Line Items]
Entity Common Stock, Shares Outstanding		201,349,431
Series A Preferred Stock [Member]
Entity Information [Line Items]
Entity Common Stock, Shares Outstanding		0
Series B Preferred Stock [Member]
Entity Information [Line Items]
Entity Common Stock, Shares Outstanding		0

XML

CONSOLIDATED BALANCE SHEETS - USD ($)	Dec. 31, 2017	Dec. 31, 2016
Current Assets
Cash and cash equivalents	$ 3,710,882	$ 36,615
Accounts receivable, net	256,123	61,788
Inventory	497,461	559,600
Prepaid expenses and deferred charges	170,686	135,394
Total Current Assets	4,635,152	793,397
Property, Equipment and Leasehold Improvements, net	53,723	126,741
Other Assets
Intangible asset - patents, net	179,737	216,781
Intangible asset - licensing rights, net	3,656,636	3,181,087
Deposits	18,069	18,069
Total Other Assets	3,854,442	3,415,937
TOTAL ASSETS	8,543,317	4,336,075
Current Liabilities
Accounts payable	1,213,246	2,026,671
Accrued liabilities	163,969	315,300
Accrued interest	99,658	53
Promissory note payable, current portion	0	20,000
Deferred revenue, current portion	35,761	45,764
Total Current Liabilities	1,512,634	2,407,788
Long Term Liabilities
Convertible notes payable, net of unamortized debt discount and debt issuance costs	570,189	0
Deferred revenue, net of current portion	352,698	358,462
Total Long Term Liabilities	922,887	358,462
TOTAL LIABILITIES	2,435,521	2,766,250
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common Stock - $ 0.001 par value; 750,000,000 shares authorized; 201,349,431 and 62,974,431 shares issued and outstanding at December 31, 2017 and December 31, 2016, respectively	201,349	62,974
Additional paid-in capital	68,556,734	62,220,850
Accumulated (deficit)	(62,650,287)	(60,713,999)
TOTAL STOCKHOLDERS' EQUITY	6,107,796	1,569,825
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	8,543,317	4,336,075
Series A Preferred Stock [Member]
STOCKHOLDERS' EQUITY
Preferred stock	0	0
Series B Preferred Stock [Member]
STOCKHOLDERS' EQUITY
Preferred stock	$ 0	$ 0

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Dec. 31, 2017	Dec. 31, 2016
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)	750,000,000	750,000,000
Common stock, shares issued (in shares)	201,349,431	62,974,431
Common stock, shares outstanding (in shares)	201,349,431	62,974,431
Series A Preferred Stock [Member]
STOCKHOLDERS' EQUITY
Shares designated (in shares)	1,000	1,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Series B Preferred Stock [Member]
STOCKHOLDERS' EQUITY
Shares designated (in shares)	1,250	1,250
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0

XML

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Revenues
License fees	$ 5,764	$ 363,995
Product sales, net	711,393	78,570
Total Revenues	717,157	442,565
Costs and Expenses
Cost of product sold	229,692	27,668
Research and development	239,948	445,404
Selling, general and administrative	1,478,018	1,308,759
Amortization	430,870	801,598
Depreciation	76,519	132,841
Impairment of intangible asset - patent	0	2,027,310
Total Costs and Expenses	2,455,047	4,743,580
Operating (Loss)	(1,737,890)	(4,301,015)
Other Income (Expense)
Interest and miscellaneous income	47	836
Interest expense	(421,291)	(136,851)
Foreign currency transaction gain (loss)	(5,447)	4,279
Gain on settlement of liabilities	228,293	0
Gain on sale of equipment	0	4,125
Accommodation fee due on promissory note	0	(25,000)
(Loss) Before Income Taxes	(1,936,288)	(4,453,626)
Income taxes	0	0
Net (Loss)	$ (1,936,288)	$ (4,453,626)
Basic and diluted net (loss) per common share (in dollars per share)	$ (0.02)	$ (0.08)
Weighted average number of common shares outstanding (in shares)	125,485,390	56,680,140

XML

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($)	Preferred Stock [Member]	Common Stock [Member]	Additional Paid-in Capital [Member]	Accumulated (Deficit) [Member]	Total
Balance (in shares) at Dec. 31, 2015	0	36,834,933
Balance at Dec. 31, 2015	$ 0	$ 36,835	$ 60,426,915	$ (56,260,373)	$ 4,203,377
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Offering costs associated with issuance of common stock and warrants		$ 0	(21,950)	0	(21,950)
Issuance of Series B preferred stock, common stock and warrants in a private placement, net of fund raising costs (in shares)	0	25,245,442
Issuance of Series B preferred stock common stock and warrants in a private placement, net of fund raising costs	$ 0	$ 25,245	1,707,092	0	1,732,337
Issuance of common stock for principle and interest due on promissory note (in shares)	0	694,056
Issuance of common stock for principle and interest due on promissory note	$ 0	$ 694	53,019	0	53,713
Issuance of common stock for services (in shares)	0	200,000
Issuance of common stock for services	$ 0	$ 200	35,800	0	36,000
Share-based compensation of employees	0	0	19,974	0	19,974
Share-based compensation of non-employees	0	0	0	0	0
Net (loss)	$ 0	$ 0	0	(4,453,626)	(4,453,626)
Balance (in shares) at Dec. 31, 2016	0	62,974,431
Balance at Dec. 31, 2016	$ 0	$ 62,974	62,220,850	(60,713,999)	1,569,825
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of Series B preferred stock, common stock and warrants in a private placement, net of fund raising costs (in shares)	1,250	0
Issuance of Series B preferred stock common stock and warrants in a private placement, net of fund raising costs	$ 1	$ 0	4,915,660	0	4,915,661
Issuance of common stock for acquisition of licensing rights (in shares)		13,375,000
Issuance of common stock for acquisition of licensing rights	0	$ 13,375	856,000	0	869,375
Issuance of warrant to purchase common stock in connection with convertible promissory notes	$ 0	$ 0	681,300	0	681,300
Issuance of common stock in redemption of Series B preferred stock (in shares)	(1,250)	125,000,000
Issuance of common stock in redemption of Series B preferred stock	$ (1)	$ 125,000	(124,999)	0	0
Share-based compensation of employees	0	0	7,923	0	7,923
Share-based compensation of non-employees	0	0	0	0	0
Net (loss)	$ 0	$ 0	0	(1,936,288)	(1,936,288)
Balance (in shares) at Dec. 31, 2017	0	201,349,431
Balance at Dec. 31, 2017	$ 0	$ 201,349	$ 68,556,734	$ (62,650,287)	$ 6,107,796

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CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) - USD ($)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY [Abstract]
Issuance of stock in a private placement, fund raising costs	$ (84,339)	$ (67,663)

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CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
OPERATING ACTIVITIES :
Net (loss)	$ (1,936,288)	$ (4,453,626)
Adjustments to reconcile net (loss) to net cash used in operating activities:
Amortization of intangible assets	430,870	801,598
Depreciation	76,519	132,841
Share-based compensation for stock and options issued to employees	7,923	19,974
Share-based compensation for options issued to non-employees	0	0
Amortization of debt discount on promissory note	262,344	32,015
Amortization of debt issuance costs	6,053	22,927
Gain on sale of equipment	0	(4,125)
Impairment of intangible asset - patents	0	2,027,310
Change in operating assets and liabilities:
Accounts receivable	(194,335)	30,395
Inventory	62,139	(28,179)
Prepaid expenses and deferred charges	(35,292)	(12,193)
Accounts payable	(813,425)	246,474
Accrued liabilities	(151,331)	(50,914)
Accrued interest	99,605	2,292
Deferred revenue	(15,767)	(323,995)
Total	(264,697)	2,896,420
Net Cash Used in Operating Activities	(2,200,985)	(1,557,206)
INVESTING ACTIVITIES :
Purchase of property and equipment	(3,501)	(2,165)
Proceeds from sale of equipment	0	4,125
Net Cash Used in / Provided by Investing Activities	(3,501)	1,960
FINANCING ACTIVITIES :
Proceeds from sale of common stock and warrants, net	0	1,732,337
Proceeds from sale of Series B preferred stock, net	4,915,661	0
Proceeds from issuance of convertible promissory note and warrant, net	983,092	0
Proceeds from issuance of promissory notes	120,000	20,000
Repayment of principle due on promissory notes	(140,000)	0
Repayment of principle due on promissory note	0	(318,526)
Offering costs associated with issuance of common stock and warrants	0	(21,950)
Net Cash Provided by Financing Activities	5,878,753	1,411,861
Net Increase / (Decrease) in Cash	3,674,267	(143,385)
Cash, beginning of year	36,615	180,000
Cash, end of year	3,710,882	36,615
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Cash paid for interest	2,994	16,099
Non-cash investing and financing activities:
Issuance of common stock for acquisition of licensing rights	869,375	0
Issuance of common stock for principle due on promissory note	0	51,474
Issuance of common stock for interest due on promissory note	0	2,239
Issuance of common stock for services	$ 0	$ 36,000

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COMPANY OVERVIEW AND BASIS OF PRESENTATION

12 Months Ended

Dec. 31, 2017

COMPANY OVERVIEW AND BASIS OF PRESENTATION [Abstract]

COMPANY OVERVIEW AND BASIS OF PRESENTATION

NOTE 1. COMPANY OVERVIEW AND BASIS OF PRESENTATION

Company Overview

ULURU Inc. (hereinafter “we”, “our”, “us”, “ULURU”, or the “Company”) is a Nevada corporation.  We are a specialty medical technology company committed to developing and commercializing a range of innovative wound care and mucoadhesive film products based on our patented Nanoflex® and OraDisc^TM technologies, with the goal of improving outcomes for patients, health care professionals, and health care payers.

Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United State of America (“U.S. GAAP”) and include the accounts of ULURU Inc., a Nevada corporation, and its wholly-owned subsidiary, ULURU Delaware Inc., a Delaware corporation.  Both companies have a December 31 fiscal year end.

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.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Dec. 31, 2017

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies used in the preparation of these consolidated financial statements:

Cash and Cash Equivalents

Cash and cash equivalents include highly liquid investments with original maturities of three months or less.  The carrying value of these cash equivalents approximates fair value.

We 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 taking into consideration the need for liquidity and capital preservation.  These investments are not held for trading or other speculative purposes.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable are recorded at the invoiced amount and do not bear interest.  We estimate the collectability of our accounts receivable. In order to assess the collectability of these receivables, we monitor the current creditworthiness of each customer and analyze the balances aged beyond the customer's credit terms. Theses evaluations may indicate a situation in which a certain customer cannot meet its financial obligations due to deterioration of its financial viability, credit ratings or bankruptcy. The allowance requirements are based on current facts and are reevaluated and adjusted as additional information is received. Accounts receivable are subject to an allowance for collection when it is probable that the balance will not be collected. As of December 31, 2017 and 2016, the allowance for doubtful accounts was $20,543 and $2,679, respectively.  For the years ended December 31, 2017 and 2016, the accounts written off as uncollectible were $2,156 and $72,644, respectively.

Inventory

Inventories are stated at the lower of cost or market value.  Raw material inventory cost is determined on the first-in, first-out method. Costs of finished goods are determined by an actual cost method. 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.

Prepaid Expenses and Deferred Charges

As of December 31, 2017 and 2016, prepaid expenses were composed primarily of insurance policy costs.  We amortize our insurance costs ratably over the term of each policy.  Typically, our insurance policies are subject to renewal in July and October of each year.

Property, Equipment and Leasehold Improvements

Property, equipment, and leasehold improvements are recorded at cost. Depreciation is provided over the estimated useful lives of the related assets using the straight-line method.  Estimated useful lives for property, equipment, and leasehold improvements categories are as follows:

Laboratory and manufacturing equipment	7 years
Computers, office equipment, and furniture	5 years
Computer software	3 years
Leasehold improvements	Lease term

Intangible Assets

We expense internal patent and application costs as incurred because, even though we believe the patents and underlying processes have continuing value, the amount of future benefits to be derived from them are uncertain.  Purchased patents are capitalized and amortized over the life of the patent.

Licensing Rights

Purchased licensing rights are capitalized and amortized over the life of the patent associated with the licensed product.

Impairment of Assets

In accordance with the provisions of Accounting Standards Codification (“ASC”) Topic 350-30, Intangibles Other than Goodwill, our policy is to evaluate whether there has been a permanent impairment in the value of long-lived assets and certain identifiable intangibles when certain events have taken place that indicate the remaining unamortized balance may not be recoverable, or at least annually to determine the current value of the intangible asset. When factors indicate that the intangible assets should be evaluated for possible impairment, we use an estimate of undiscounted cash flows.  Considerable management judgment is necessary to estimate the undiscounted cash flows.  Accordingly, actual results could vary significantly from management’s estimates.

Debt Issuance Costs

We defer debt issuance costs associated with the issuance of our promissory note payable and amortize those costs over the period of the promissory note obligation using the effective interest method.  In 2017, we incurred approximately $101,000 of debt issuance costs related to our issuance to Velocitas GmbH of a convertible promissory note and Series B preferred stock, of which approximately $17,000 was allocated to the convertible promissory note and approximately $84,000 was allocated to the Series B preferred stock.  In 2016, we did not incur any new debt issuance costs.  During 2017 and 2016, we recorded amortization of approximately $6,000 and $23,000, respectively, of debt issuance costs. Unamortized debt issuance costs at December 31, 2017 and 2016 were approximately $11,000 and nil, respectively.

Shipping and Handling Costs

Shipping and handling costs incurred for product shipments are included in cost of goods sold.

Income Taxes

We use the liability method of accounting for income taxes pursuant to ASC Topic 740, Income Taxes.  Under this method, deferred income taxes are recorded to reflect the tax consequences in future periods of temporary differences between the tax basis of assets and liabilities and their financial statement amounts at year-end.

Revenue Recognition and Deferred Revenue

License Fees

We recognize revenue from license payments not tied to achieving a specific performance milestone ratably during the period over which we are obligated to perform services. The period over which we are obligated to perform services is estimated based on available facts and circumstances. Determination of any alteration of the performance period normally indicated by the terms of such agreements involves judgment on management's part. License revenues with no specific performance criteria are recognized when received from our foreign licensee and their various foreign sub-licensees as there is no control by us over the various foreign sub-licensees and no performance criteria to which we are subject.

We recognize revenue from performance payments ratably, when such performance is substantially in our control and when we believe that completion of such performance is reasonably probable, over the period during which we estimate that we will complete such performance obligations.  In circumstances where the arrangement includes a refund provision, we defer revenue recognition until the refund condition is no longer applicable unless, in our judgment, the refund circumstances are within our operating control and are unlikely to occur.

Substantive at-risk milestone payments, which are based on achieving a specific performance milestone when performance of such milestone is contingent on performance by others or for which achievement cannot be reasonably estimated or assured, are recognized as revenue when the milestone is achieved and the related payment is due, provided that there is no substantial future service obligation associated with the milestone.

For the year ended December 31, 2017, we recognized approximately $6,000 in licensing fees due to the amortization of a licensing fee originally received in 2008 from one of our international distributors.  For the year ended December 31, 2016, we recognized approximately $343,000 in licensing fees due to the one-time recognition of unamortized licensing fees related to the cancellation of distribution agreements with three distributors.  The recognition of unamortized licensing fees was based upon the cancellation of each distribution agreements and that there are no further performance obligations that are required by the Company under each distribution agreement.

Royalty Income

We receive royalty revenues under license agreements with a number of third parties that sell products based on technology we have developed or to which we have rights. The license agreements provide for the payment of royalties to us based on sales of the licensed products. We record these revenues based on estimates of the sales that occurred during the relevant period. The relevant period estimates of sales are based on interim data provided by licensees and analysis of historical royalties we have been paid (adjusted for any changes in facts and circumstances, as appropriate).

We maintain regular communication with our licensees in order to gauge the reasonableness of our estimates. Differences between actual royalty revenues and estimated royalty revenues are reconciled and adjusted for in the period in which they become known, typically the following quarter. Historically, adjustments have not been material based on actual amounts paid by licensees. As it relates to royalty income, there are no future performance obligations on our part under these license agreements. To the extent we do not have sufficient ability to accurately estimate revenue; we record it on a cash basis.

Product Sales

We recognize revenue and related costs from the sale of our products at the time the products are shipped to the customer.  Provisions for returns, rebates, and discounts are established in the same period the related product sales are recorded.

We review the supply levels of our products sold to major wholesalers in the U.S., primarily by reviewing reports supplied by our major wholesalers and available volume information for our products, or alternative approaches.  When we believe wholesaler purchasing patterns have caused an unusual increase or decrease in the sales of a major product compared with underlying demand, we disclose this in our product sales discussion if we believe the amount is material to the product sales trend; however, we are not always able to accurately quantify the amount of stocking or destocking.  Wholesaler stocking and destocking activity historically has not caused any material changes in the rate of actual product returns.

We establish sales return accruals for anticipated product returns. We record the return amounts as a deduction to arrive at our net product sales.  Consistent with revenue recognition accounting guidance, we estimate a reserve when the sales occur for future product returns related to those sales. This estimate is primarily based on historical return rates as well as specifically identified anticipated returns due to known business conditions and product expiry dates. Actual product returns have been nil over the past two years.

We establish sales rebate and discount accruals in the same period as the related sales.  The rebate and discount amounts are recorded as a deduction to arrive at our net product sales.  We base these accruals primarily upon our historical rebate and discount payments made to our customer segment groups and the provisions of current rebate and discount contracts.

Foreign currency transaction gain (loss)

Our functional currency and our reporting currency is the U.S. dollar and foreign currency transactions are primarily undertaken in Euros.  Monetary assets and liabilities are translated using the foreign currency exchange rate prevailing at the balance sheet date.  Revenues, non-monetary assets and liabilities denominated in foreign currencies are translated at rates of foreign currency exchange in effect at the date of the transaction.  Expenses are translated at average foreign currency exchange rates for the period.  Gains and losses arising on translation or settlement of foreign currency denominated transactions or balances are included in the determination of net income.

Research and Development Expenses

Pursuant to ASC Topic 730, Research and Development, our research and development costs are expensed as incurred.  Research and development expenses include, but are not limited to, salaries and benefits, laboratory supplies, facilities expenses, preclinical development costs, clinical trial and related clinical manufacturing expenses, contract services, consulting fees and other outside expenses. The cost of materials and equipment or facilities that are acquired for research and development activities and that have alternative future uses are capitalized when acquired. There were no such capitalized materials, equipment or facilities for the years ended December 31, 2017 and 2016.

Basic and Diluted Net Loss Per Common Share

In accordance with 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 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 and warrants from the calculation of diluted net loss per common share because all such securities are antidilutive for all periods presented.

Concentrations of Credit Risk

Concentration of credit risk with respect to financial instruments, consisting primarily of cash and cash equivalents, that 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.  During 2017, we utilized Bank of American, N.A. and South State Bank as our banking institutions.  During 2016, we utilized Bank of America, N.A. as our banking institution.  At December 31, 2017 and 2016 our cash and cash equivalents totaled approximately $3,711,000 and $37,000, 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 high-quality corporations.

Concentration of credit risk with respect to trade accounts receivable are customers with balances that exceed 5% of total consolidated trade accounts receivable at December 31, 2017 and 2016.  As of December 31, 2017, three customers, of which two are our international distributors, exceeded the 5% threshold, jointly with 99%.  One customer, being one of our international distributors, exceeded the 5% threshold at December 31, 2016, with 95%. As a result, we believe that accounts receivable credit risk exposure is limited.  We maintain an allowance for doubtful accounts, but historically have not experienced any significant losses related to an individual customer or group of customers.

Concentrations of Foreign Currency Risk

A portion of our revenues and all of our expenses are denominated in U.S. dollars.  We are expecting 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.

Fair Value of Financial Instruments

In accordance with portions of ASC Topic 820, Fair Value Measurements, 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.

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, notes receivable and accrued interest, and convertible note payable balances approximates fair value based on a valuation methodology using the income approach and a discounted cash flow model.

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THE EFFECT OF RECENTLY ISSUED ACCOUNTING STANDARDS

12 Months Ended

Dec. 31, 2017

THE EFFECT OF RECENTLY ISSUED ACCOUNTING STANDARDS [Abstract]

THE EFFECT OF RECENTLY ISSUED ACCOUNTING STANDARDS

NOTE 3. THE EFFECT OF RECENTLY ISSUED ACCOUNTING STANDARDS

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard will be effective for the Company on January 1, 2018. The standard permits the use of either the full retrospective method, in which case the standard would be applied to each prior reporting period presented, or the modified retrospective method, in which case the cumulative effect of applying the standard would be recognized at the date of initial application. Additionally, in March 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net), which clarifies the implementation guidance on principal versus agent considerations in ASU No. 2014-09. In April 2016, the FASB issued ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, which clarifies certain aspects of identifying performance obligations and licensing implementation guidance. In May 2016, the FASB issued ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients, which relates to disclosures of remaining performance obligations, as well as other amendments to guidance on collectability, non-cash consideration and the presentation of sales and other similar taxes collected from customers. These standards have the same effective date and transition date of January 1, 2018. The Company adopted this standard on January 1, 2018 using the modified retrospective method. This approach allows the Company to apply the new standard to (1) all new contracts entered into after January 1, 2018 and (2) all existing contracts for which all (or substantially all) of the revenue has not been recognized under legacy revenue guidance as of January 1, 2018 through a cumulative adjustment to equity. Revenue presented in the Company’s comparative financial statements for periods prior to January 1, 2018 would not be revised.

The new revenue recognition standard referred to as ASC 606 requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers and replaces most of the existing revenue recognition standards in U.S. GAAP. A five-step model will be utilized to achieve the core principle; (1) identify the customer contract, (2) identify the contract’s performance obligations, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations and (5) recognize revenue when or as a performance obligation is satisfied. Under ASC 606, the timing of recognizing royalties, sales-based milestones and other forms of contingent consideration is not expected to change. However, transaction prices are no longer required to be fixed or determinable and certain variable consideration might be recognized prior to the occurrence or resolution of the contingent event to the extent it is probable that a significant reversal in the amount of estimated cumulative revenue will not occur.

The Company evaluated its contracts with customers under the above ASUs (collectively, “ASC 606”).  The impact of adopting ASC 606 on the Company’s results of operations, financial condition, and cash flows varies depending on the contract.  For some contracts, there is no change to timing or method of recognizing revenue while for others, there are changes to timing and/or method of recognizing revenue. The Company will record adjustments upon the adoption of ASC 606 as a result of different accounting treatment of our revenue agreements with respect to the inclusion of milestone payments in the initial transaction price and the method to be used to recognize upfront fees. Under the old standard, milestone payments are recognized when earned and upfront fees were generally recognized as revenue over the research term on a straight-line basis if another method of revenue recognition did not more clearly match the pattern of delivery of goods or services to the customer. Under the new standard, milestone payments are included in the initial transaction price when it is probable that a significant reversal of the milestone payment will not occur. In addition, the Company can no longer default to the straight-line method as the default method in recognizing revenue for goods or services delivered over time. We are currently evaluating the effect of this guidance will have on our consolidated financial statements.  In addition to any impact on our consolidated financial statements, we will include expanded disclosures, including the disaggregation of revenue, significant judgments made with regard to revenue recognition and reconciliation of contract balances, among other disclosures.

In August 2014, FASB issued ASU No. 2014-15, “Presentation of Financial Statements – Going Concern”.  ASU No 2014-15 provides guidance regarding management’s responsibility to evaluate whether there exists substantial doubt about an organization’s ability to continue as a going concern and to provide related footnote disclosures in certain circumstances.  ASU No. 2014-15 is effective for annual reporting periods beginning after December 15, 2016, and interim periods thereafter.  The adoption of ASU No. 2015-15 did not have a material effect on our financial position and results of operations

In April 2015, FASB issued ASU No. 2015-03, Simplifying the Presentation of Debt Issuance Costs, which requires debt issuance costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The guidance is effective January 1, 2016 with early adoption permitted.  The Company has elected early adoption as the guidance is a change in financial statement presentation only and will not have a material impact on our consolidated financial results.

In July 2015, FASB issued ASU No. 2015-11, "Simplifying the Measurement of Inventory."  Under ASU No. 2015-11, inventory should be measured at the lower of cost and net realizable value.  Subsequent measurement is unchanged for inventory measured using LIFO or the retail inventory method.  ASU No. 2015-11 is effective for annual reporting periods beginning after December 15, 2016, and interim periods thereafter.  The adoption of ASU No. 2015-11 did not have a material impact on our consolidated financial statements.

In November 2015, the FASB issued ASU No. 2015-17, Income Taxes (Topic 740), Balance Sheet Classification of Deferred Taxes. The new standard requires that deferred tax assets and liabilities be classified as non-current in a classified statement of financial position. We adopted this standard on January 1, 2017, and the adoption did not have an impact on our consolidated financial statements due to the full valuation allowance position.

In February 2016, the FASB issued ASU No. 2016-02, Leases(Topic 842). Under ASU 2016-2, an entity will be required to recognize right-of-use assets and lease liabilities on its balance sheet and disclose key information about leasing arrangements. ASU 2016-02 offers specific accounting guidance for a lessee, a lessor and sale and leaseback transactions. Lessees and lessors are required to disclose qualitative and quantitative information about leasing arrangements to enable a user of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. For public companies, ASU 2016-02 is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period, and requires a modified retrospective adoption, with early adoption permitted. We plan to adopt this guidance beginning with its first quarter ending March 31, 2019. We are currently evaluating the effect ASU 2016-02 will have on our consolidated financial statements.

In March 2016, the FASB issued ASU No. 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”). ASU 2016-09 simplifies several aspects of the accounting for share-based payment transactions, including the accounting for income taxes, classification of awards as either equity or liabilities, the estimation of forfeitures, statutory tax withholding requirements, and classification in the statement of cash flows. This guidance is effective for the Company on January 1, 2017 and early adoption was permitted. The Company adopted ASU 2016-09 during the first fiscal quarter ended on March 31, 2017. As part of the adoption of this guidance, the Company elected to continue estimating forfeitures in its calculation of stock-based compensation expense. The excess tax benefits and tax deficiencies from stock-based compensation awards accounted for under ASC 718 are recognized as income tax benefit or expense, respectively, in the statement of operations and comprehensive loss. The income tax related items had no effect on the current period presentation as the Company maintains a full valuation allowance against its deferred tax assets. In addition, excess tax benefits for share-based payments are presented as an operating activity in the statement of cash flows rather than financing activity. The changes have been applied prospectively in accordance with the ASU and prior periods have not been adjusted. The adoption of ASU 2016-09 did not have a material impact on our consolidated financial statements.

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The new standard provides clarification on the cash flow presentation and classification of certain transactions, including debt prepayment or extinguishment, settlement of certain debt instruments, contingent consideration payments made after a business combination, proceeds from the settlement of certain insurance claims and distributions received from equity method investees. The new standard is effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years, with early adoption permitted. An entity that elects early adoption must adopt all of the amendments in the same period. We plan to adopt this standard in the first quarter ended March 31, 2018.

In November 2016, the FASB issued ASU No. 2016-18, Restricted Cash, Statement of Cash Flows (Topic 230). ASU 2016-18 requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. ASU 2016-18 is effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted. The amendments in this ASU should be applied using a retrospective transition method to each period presented. We plan to adopt this standard in the first quarter ended March 31, 2018.

In January 2017, the FASB issued ASU No. 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The new standard simplifies the measurement of goodwill by eliminating the Step 2 impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit's goodwill with the carrying amount of that goodwill. The new guidance requires an entity to compare the fair value of a reporting unit with its carrying amount and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value. Additionally, an entity should consider income tax effects from any tax-deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. The new guidance becomes effective for goodwill impairment tests in fiscal years beginning after December 15, 2019, though early adoption is permitted. We are currently evaluating the effect ASU 2017-04 will have on our consolidated financial statements.

In May 2017, the FASB issued ASU No. 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting. This accounting standard update provides clarity when a change to terms or conditions of a share-based payment award must be accounted for as a modification. The new guidance requires modification accounting if the vesting condition, fair value or the award classification is not the same both before and after a change to the terms and conditions of the award. The new guidance is effective on a prospective basis beginning on January 1, 2018 with early adoption permitted. We plan to adopt this standard in the first quarter ended March 31, 2018.

There are no other new accounting pronouncements adopted or enacted during the years ended December 31, 2017 and 2016 that had, or are expected to have, a material impact on our consolidated financial statements.

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SEGMENT INFORMATION

12 Months Ended

Dec. 31, 2017

SEGMENT INFORMATION [Abstract]

SEGMENT INFORMATION

NOTE 4. SEGMENT INFORMATION

Our entire business is managed by a single management team, which reports to the Chief Executive Officer.  Our corporate headquarters in the United States collects proceeds from product sales, licensing fees, royalties, and sponsored research revenues from our arrangements with external customers and licensees.  Our revenues are currently derived primarily from licensees for international activities and our domestic sales activities for our products.

Revenues per geographic area, along with relative percentages of total revenues, for the year ended December 31, are summarized as follows:

Revenues	2017		%			2016		%
Domestic	$	11,127		2	%	$	20,326		5	%
International		706,030		98	%		422,239		95	%
Total	$	717,157		100	%	$	442,565		100	%

A significant portion of our revenues are derived from a few major customers.  For the year ended December 31, 2017, three customers had greater than 10% of total revenues, and jointly represented 92% of total revenues.  For the year ended December 31, 2016, three customers had greater than 10% of total revenues, and jointly represented 88% of total revenues.

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INVENTORY

12 Months Ended

Dec. 31, 2017

INVENTORY [Abstract]

INVENTORY

NOTE 5. INVENTORY

As of December 31, 2017 and 2016, our inventory was composed 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 net realizable value.  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.  For the years ended December 31, 2017 and 2016, we wrote off approximately $5,000 and nil, respectively, in obsolete inventories.

The components of inventory, at the different stages of production, consisted of the following at December 31:

Inventory	2017		2016
Raw materials	$	32,329	$	35,800
Work-in-progress		311,632		424,741
Finished goods		153,500		99,059
Total	$	497,461	$	559,600

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PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS

12 Months Ended

Dec. 31, 2017

PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS [Abstract]

PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS

NOTE 6. PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS

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

Property, equipment and leasehold improvements	2017			2016
Laboratory equipment	$	424,888		$	424,888
Manufacturing equipment		1,604,894			1,604,894
Computers, office equipment, and furniture		154,781			151,280
Computer software		4,108			4,108
Leasehold improvements		95,841			95,841
		2,284,512			2,281,011
Less: accumulated depreciation and amortization		(2,230,789	)		(2,154,270	)
Property, equipment and leasehold improvements, net	$	53,723		$	126,741

Depreciation expense on property, equipment, and leasehold improvements was $76,519 and $132,841 for the years ended December 31, 2017 and 2016, respectively.

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INTANGIBLE ASSETS

12 Months Ended

Dec. 31, 2017

INTANGIBLE ASSETS [Abstract]

INTANGIBLE ASSETS

NOTE 7. INTANGIBLE ASSETS

Patents

Intangible patent assets are composed of patents acquired in October 2005.  Intangible patent assets, net consisted of the following at December 31:

Intangible assets - patents	2017			2016
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		(7,418,891	)		(7,381,847	)
Less: reserve for impairment		(2,027,310	)		(2,027,310	)
Intangible assets, net	$	179,737		$	216,781

We performed an evaluation of our intangible patent assets for purposes of determining possible impairment as of December 31, 2017.  Based upon recent market conditions and comparable market transactions for similar intangible assets, we determined that an income approach using a discounted cash flow model was an appropriate valuation methodology to determine each intangible asset’s fair value.  The income approach converts future amounts to a single present value amount (discounted cash flow model).  Our discounted cash flow models are highly reliant on various assumptions, including estimates of future cash flow (including long-term growth rates), discount rate, and expectations about variations in the amount and timing of cash flows and the probability of achieving the estimated cash flows, all of which we consider level 3 inputs for determination of fair value.  We believe we have appropriately reflected our best estimate of the assumptions that market participants would use in determining the fair value of our intangible assets at the measurement date.  Upon completion of the evaluation, the fair value of our intangible patent assets exceeded the recorded remaining book value except for the valuation of two patents; “Amlexanox (OraDisc™ A)” and “OraDisc™”.  We previously recognized an impairment charge of $2,027,310 for these two patents during the year ended December 31, 2016.

Amortization expense for intangible patent assets was $37,044 and $476,450 for the years ended December 31, 2017 and 2016, respectively.  The future aggregate amortization expense for intangible patent assets, remaining as of December 31, 2017, is as follows:

Calendar Years	Future Amortization Expense
2018	$	37,044
2019		37,044
2020		37,145
2021		37,044
2022		31,460
2023 & Beyond		---
Total	$	179,737

Licensing rights

Acquisition of Licensing Rights – 2015

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 agreed to assume 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 included 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 and, as a result, have expired.

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 were 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 own any of the registered shares. As of the date of this filing, shares cannot be sold under the registration statement because the associated prospectus is not current.

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.

Acquisition of Licensing Rights – 2017

On February 27, 2017, we entered into a Note, Warrant and Preferred Stock Purchase Agreement (the “Purchase Agreement”) with Velocitas Partners, LLC (“Velocitas") and Velocitas I LLC (“Velo LLC”), an entity controlled by Velocitas, with respect to an aggregate financing of up to $6,000,000.

Refer to a description in greater detail of the financing event with Velocitas and Velo LLC in Note 10. Convertible Debt.

At the second closing of the financing event with Velocitas and Velo LLC, which occurred on March 31, 2017, the Company acquired the Altrazeal® distributor agreements Velocitas had with its sub-distributors in exchange for the issuance of 13,375,000 shares of Common Stock.  The Company has valued the acquisition of the Altrazeal® distributor agreement from Velocitas at $869,375 based on the closing price of $0.065 per share of the Company’s Common Stock on March 31, 2017.

Licensing rights, net consisted of the following at December 31:

Intangible assets - licensing rights	December 31, 2017			December 31, 2016
Intangible assets – licensing rights, gross	$	4,381,881		$	3,512,506
Less: accumulated amortization		(725,245	)		(331,419	)
Intangible assets - licensing rights, net	$	3,656,636		$	3,181,087

We performed an evaluation of our intangible licensing rights assets for purposes of determining possible impairment as of December 31, 2017.  Based upon recent market conditions and comparable market transactions for similar licensing rights, we determined that an income approach using a discounted cash flow model was an appropriate valuation methodology to determine each licensing rights asset fair value.  The income approach converts future amounts to a single present value amount (discounted cash flow model).  Our discounted cash flow models are highly reliant on various assumptions, including estimates of future cash flow (including long-term growth rates), discount rate, and expectations about variations in the amount and timing of cash flows and the probability of achieving the estimated cash flows, all of which we consider level 3 inputs for determination of fair value.  We believe we have appropriately reflected our best estimate of the assumptions that market participants would use in determining the fair value of our intangible licensing rights assets at the measurement date.  Upon completion of the evaluation, the fair value of our intangible licensing rights assets exceeded the recorded remaining book value.

Amortization expense for intangible licensing rights assets was $393,826 and $325,148 for the years ended December 31, 2017 and 2016, respectively.  The future aggregate amortization expense for intangible licensing rights assets, remaining as of December 31, 2017, is as follows:

Calendar Years	Future Amortization Expense
2018	$	416,303
2019		416,303
2020		416,303
2021		416,303
2022		416,303
2023 & Beyond		1,575,121
Total	$	3,656,636

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ACCRUED LIABILITIES

12 Months Ended

Dec. 31, 2017

ACCRUED LIABILITIES [Abstract]

ACCRUED LIABILITIES

NOTE 8. ACCRUED LIABILITIES

Accrued liabilities consisted of the following at December 31:

Accrued Liabilities	2017		2016
Accrued compensation/benefits	$	124,819	$	274,874
Accrued insurance payable		---		40,422
Accrued royalties		39,144		---
Product rebates/returns		6		4
Total accrued liabilities	$	163,969	$	315,300

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PROMISSORY NOTES PAYABLE

12 Months Ended

Dec. 31, 2017

PROMISSORY NOTES PAYABLE [Abstract]

PROMISSORY NOTES PAYABLE

NOTE 9. PROMISSORY NOTES PAYABLE

On December 15, 2016, January 18, 2017, and February 16, 2017, we issued promissory notes to Velocitas with principal amounts and purchase prices of $20,000, $65,000, and $30,000, respectively.  Each of the promissory notes bore interest at the rate of 6.0% per annum with payment of principal and interest due on the earlier of (i) 180 days from the date of issuance, (ii) the date of closing of any debt or equity financing transaction by and between Uluru and Velocitas, or (iii) the payment to the Company of certain invoices due from selected Company distributors.  Each of the promissory notes was secured by a pledge of certain product inventory, and there were no debt issuance costs incurred by the Company.  On February 27, 2017, each of the promissory notes was repaid in connection with the issuance of the Convertible Promissory Note, dated February 27, 2017, in the amount of $500,000 (the “Initial Note”) under the Purchase Agreement with Velocitas.

On February 21, 2017, we issued a promissory note to Kirkwood Investors, Inc. (“Kirkwood”) with a principal amount and purchase price of $25,000.  The promissory note bore interest at the rate of 6.0% per annum with payment of principal and interest due on the earlier of (i) 60 days from the date of issuance, (ii) the date of closing of any debt or equity financing transaction by Uluru, or (iii) no later than two days after receiving written request by Kirkwood.  The promissory note was secured by a pledge of certain product inventory and accounts receivables and there were no debt issuance costs incurred by the Company.  The Company’s Vice President and Chief Financial Officer, Terrance K. Wallberg, is President and sole shareholder of Kirkwood.  On February 27, 2017, the outstanding promissory note to Kirkwood was repaid in connection with the issuance of the Initial Note under the Purchase Agreement with Velocitas.

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CONVERTIBLE DEBT

12 Months Ended

Dec. 31, 2017

CONVERTIBLE DEBT [Abstract]

CONVERTIBLE DEBT

NOTE 10. CONVERTIBLE DEBT

Debt Financing – February and March 2017

On February 27, 2017, the Company entered into the Purchase Agreement with Velocitas and Velo LLC under which the Company received gross proceeds of $6,000,000 in two closings with the initial closing occurring on February 27, 2017 and the second closing occurring on March 31, 2017, which we refer to as the “March 2017 Offering”.

The first closing, which occurred on February 27, 2017, included the purchase by Velocitas at face value of the $500,000 Initial Note, with the Initial Note accruing interest at 12.5% per annum and having a term of two years (subject to acceleration under certain circumstances).

The second closing, which occurred on March 31, 2017, included the purchase by Velocitas at face value of an additional $500,000 Secured Convertible Note, dated March 31, 2017, (the “Second Note”) with the Second Note accruing interest at 12.5% per annum and having a term of two years (subject to acceleration under certain circumstances), and Velo LLC purchasing 1,250 shares of Series B Convertible Preferred Stock of the Company for gross proceeds of $5,000,000, at an as-converted-to-Common Stock purchase price of $0.04 per share.

The Initial Note and the Second Note are convertible into shares of Common Stock at a conversion price of $0.04 per share, subject to equitable adjustments, with mandatory conversion of all unpaid principal and interest required on the second anniversary of each such note, unless an event of default has occurred and is continuing.  The Initial Note and the Second Note are secured by all of the assets of the Company and its subsidiaries pursuant to a Security Agreement executed at the initial closing.

The Series B Convertible Preferred Stock that was issued in connection with the second closing provided, among other things, that it would automatically convert into Common Stock when the number of authorized shares of Common Stock is increased within 190 days of the second closing as necessary to permit all outstanding convertible or exercisable securities (including the Series B Convertible Preferred Stock) to convert to Common Stock. Following stockholder approval of an amendment to our articles of incorporation increasing the number of authorized shares of Common Stock from 200,000,000 shares to 750,000,000 shares, the Company filed on July 26, 2017 with the State of Nevada an amendment to its articles of incorporation implementing such increase.  This resulted in the conversion of all 1,250 outstanding shares of Series B Convertible Preferred Stock held by Velo LLC into 125,000,000 shares of Common Stock.

As a condition of the March 2017 Offering, the Company issued to Velocitas at the second closing a warrant to purchase up to 57,055,057 shares of Common Stock (the “Warrant”).  The Warrant has an exercise price of $0.04 per share, a 10-year term and is subject to cashless exercise. In addition, at the second closing, the Company acquired the Altrazeal distributor agreements Velocitas had with its sub-distributors in exchange for the issuance of 13,375,000 shares of Common Stock.

The Company, Velocitas, Velo LLC, and certain affiliates also signed a Voting Agreement (the “Voting Agreement”) pursuant to which the parties agreed to set the size of the Board of Directors at six directors, and agreed to vote for the election to the Board of Directors of four persons designated by Velocitas (initially to be Anish Shah, Oksana Tiedt, Vaidehi Shah and Arindam Bose), one director designated by Bradley J. Sacks and one additional director designated by a major investor or by the Board of Directors.  In addition, the parties to the Voting Agreement agreed to vote in favor of a proposal to amend the Company’s articles of incorporation to increase the authorized shares as required to permit the conversion of the Series B Convertible Preferred Stock.

In addition, the Company, Velocitas, Velo LLC, and certain affiliates entered into an Investor Rights Agreement (the “Investor Rights Agreement”) that provides the parties thereto with demand, Form S-3 and piggy back registration rights, Rule 144 information rights, and a right of first offer (or preemptive rights) in connection with future sales of securities by the Company (subject to standard exceptions).  The Investor Rights Agreement includes indemnification obligations associated with the registration rights.  Michael I. Sacks and Bradley Sacks and affiliates are parties to the Investor Rights Agreement, in part in exchange for the termination by certain of such persons and The Punch Trust of a Registration Rights Agreement dated as of January 31, 2014.

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 Initial Note and Second Note is as follows:

											As of December 31, 2017
Transaction	Initial Principal Amount		Interest Rate			Maturity Date	Conversion Price		Principal Balance		Unamortized Debt Discount		Unamortized Debt Issuance Costs		Carrying Value
Initial Note	$	500,000		12.5	%	02/27/2019	$	0.04	$	500,000	$	206,634	$	5,361	$	288,005
Second Note	$	500,000		12.5	%	03/31/2019	$	0.04	$	500,000	$	212,322	$	5,494	$	282,184
Total	$	1,000,000							$	1,000,000	$	418,956	$	10,855	$	570,189

As part of the Initial Note and the Second Note, at the holder’s option, all unpaid principle and interest due under each convertible promissory note may be converted into shares of Common Stock based on a conversion price of $0.04 per share.  The Initial Note and the Second Note mature on February 27, 2019 and March 31, 2019, respectively, and on each maturity date each convertible promissory note, and accrued interest thereon, is subject to mandatory conversion based on a conversion price of $0.04 per share, unless an event of default has occurred and is continuing.

The amount of interest cost recognized from our promissory notes and our convertible debt was $100,355 and $14,079 for the years ended December 31, 2017 and 2016, respectively.  The amount of debt discount amortized from our promissory notes and our convertible debt was $262,344 and $32,015 for the years ended December 31, 2017 and 2016, respectively.  The amount of debt issuance costs amortized from our promissory notes was $6,053 and $22,927 for the years ended December 31, 2017 and 2016, respectively.

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EQUITY TRANSACTIONS

12 Months Ended

Dec. 31, 2017

EQUITY TRANSACTIONS [Abstract]

EQUITY TRANSACTIONS

NOTE 11. EQUITY TRANSACTIONS

Preferred Stock Transaction

March 2017 Offering

On February 27, 2017, the Company entered into the Purchase Agreement with Velocitas and Velo LLC under which the Company received gross proceeds of $6,000,000, in two closing with the initial closing occurring on February 27, 2017 and the second closing occurring on March 31, 2017.

The second closing included, among other transaction components, the purchase by Velo LLC of 1,250 shares of Series B Convertible Preferred Stock of the Company for $5,000,000.

As of July 26, 2017, all 1,250 outstanding shares of Series B Convertible Preferred Stock held by Velo LLC were converted into 125,000,000 shares of Common Stock.

Refer to a description in greater detail of the financing event with Velocitas and Velo LLC in Note 10. Convertible Debt.

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 during the one year following the date of issuance (subject to standard exceptions).

The March 2016 Offering 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 are 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 former 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 former Vice President of Polymer Drug Delivery.

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STOCKHOLDERS' EQUITY

12 Months Ended

Dec. 31, 2017

STOCKHOLDERS' EQUITY [Abstract]

STOCKHOLDERS' EQUITY

NOTE 12. STOCKHOLDERS’ EQUITY

Common Stock

As of December 31, 2017, we had 201,349,431 shares of Common Stock issued and outstanding.  For the year ended December 31, 2017, we issued 138,375,000 shares of Common Stock which is composed of 13,375,000 shares of Common Stock issued to Velocitas for the acquisition of licensing rights and 125,000,000 shares of Common Stock issued to Velo LLC for the conversion and exchange of all 1,250 outstanding shares of Series B Convertible Preferred Stock held by Velo LLC.

At the 2017 Annual Meeting of Stockholders, held on July 25, 2017, a proposal to increase the number of authorized shares of Common Stock from 200,000,000 shares to 750,000,000 shares was approved by a majority vote of the stockholders.  On the next day, the Company filed with the State of Nevada an amendment to its articles of incorporation implementing such increase.

Preferred Stock

As of December 31, 2017, we had no shares of Series A Preferred Stock issued and outstanding.  For the year ended December 31, 2017, we did not issue or redeem any Series A Preferred Stock.

As of December 31, 2017, we had no shares of Series B Convertible Preferred Stock issued and outstanding.  For the year ended December 31, 2017, we issued 1,250 Series B Shares to Velo LLC, and on August 1, 2017, all outstanding shares of Series B Convertible Preferred Stock held by Velo LLC were mandatorily converted into an aggregate of 125,000,000 shares of Common Stock.

Warrants

The following table summarizes the warrants outstanding and the number of shares of common stock subject to exercise as of December 31, 2017 and the changes therein during the two years 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		(840,075	)	$	0.84
Balance as of December 31, 2016		26,179,560		$	0.11
Warrants issued		57,055,057		$	0.04
Warrants exercised		---			---
Warrants cancelled		---			---
Balance as of December 31, 2017		83,234,617		$	0.06

For the year ended December 31, 2017, we issued a warrant to purchase up to an aggregate of 57,055,057 shares of our Common Stock at an exercise price of $0.04 per shares pursuant to the March 2017 Offering.

Of the warrant shares subject to exercise as of December 31, 2017, expiration of the right to exercise is as follows:

Date of Expiration	Number of Warrant Shares of Common Stock Subject to Expiration
March 14, 2018		660,000
January 15, 2019		80,000
April 30, 2020		194,118
March 30, 2021		25,245,442
March 31, 2027		57,055,057
Total		83,234,617

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EARNINGS PER SHARE

12 Months Ended

Dec. 31, 2017

EARNINGS PER SHARE [Abstract]

EARNINGS PER SHARE

NOTE 13. EARNINGS PER SHARE

Basic and Diluted Net Loss Per Share

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

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

	December 31, 2017		December 31, 2016
Warrants to purchase Common Stock		83,234,617		26,179,560
Stock options to purchase Common Stock		150,736		691,237
Common Stock issuable upon the assumed conversion of our convertible promissory notes (1)		31,250,000		---
Common Stock issuable upon the conversion of our Series B Convertible Preferred Stock (2)		---		---
Total		114,635,353		26,870,797

(1) As part of the Initial Note and the Second Note, at the holder’s option, all unpaid principle and interest due under each convertible promissory note may be converted into shares of Common Stock based on a conversion price of $0.04 per share.  The Initial Note and the Second Note mature on February 27, 2019 and March 31, 2019, respectively, and on each maturity date each convertible promissory note, and accrued interest thereon, is subject to mandatory conversion based on a conversion price of $0.04 per share, unless an event of default has occurred and is continuing.  For the purposes of this Table, we have assumed that all outstanding principal and interest will be converted on each applicable maturity date.

(2) Pursuant to the March 2017 Offering, Velo LLC purchased 1,250 shares of Series B Convertible Preferred Stock of the Company for $5,000,000.  The Series B Convertible Preferred Stock that was issued in the March 2017 Offering, (a) voted together with the Common Stock as a single class (subject to standard protective provisions for the Series B Convertible Preferred Stock), (b) had the same dividend rights as the Common Stock, (c) had a liquidation preference equal to the greater of its purchase price and its as converted-to-Common Stock value, (d) automatically converted into Common Stock when the number of authorized shares of Common Stock was increased within 190 days of the second closing as necessary to permit all outstanding convertible or exercisable securities (including the Series B Convertible Preferred Stock) to convert to Common Stock, and (e) was convertible into Common Stock  at the discretion of the holder, subject to the availability of authorized shares, at an as-converted-to-Common Stock purchase price of $0.04 per share.   On August 1, 2017, all 1,250 outstanding shares of Series B Convertible Preferred Stock converted in exchange for 125,000,000 shares of Common Stock as a result of the approval by the stockholders at the 2017 Annual Meeting of Stockholders held on July 25, 2017, and the filing in July 2017, of an amendment increasing our authorized shares of Common Stock from 200,000,000 shares to 750,000,000 shares.

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SHARE BASED COMPENSATION

12 Months Ended

Dec. 31, 2017

SHARE BASED COMPENSATION [Abstract]

SHARE BASED COMPENSATION

NOTE 14. SHARE BASED COMPENSATION

The Company’s share-based compensation plan, the 2006 Equity Incentive Plan (“Incentive Plan”), is administered by the compensation committee of the Board of Directors, 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 years ended December 31, 2017 and 2016, 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 years ended December 31:

	2017		2016
Research and development	$	---	$	7,614
Selling, general and administrative		7,923		12,360
Total share-based compensation expense	$	7,923	$	19,974

At December 31, 2017, 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 zero.

The following table summarizes the stock options outstanding and the number of shares of Common Stock subject to exercise as of December 31, 2017 and the changes therein during the two years then ended:

	Stock Options			Weighted Average Exercise Price per Share
Outstanding as of December 31, 2015		1,6664,573		$	1.73
Granted		---			---
Forfeited/cancelled		(973,336	)		1.58
Exercised		---			---
Outstanding as of December 31, 2016		691,237		$	1.94
Granted		---			---
Forfeited/cancelled		(540,501	)		1.30
Exercised		---			---
Outstanding as of December 31, 2017		150,736		$	4.26

The following table presents the stock option grants outstanding and exercisable as of December 31, 2017:

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
90,000	$	0.33		5.2		90,000	$	0.33
40,000		1.15		6.7		40,000		1.15
20,736		27.33		0.3		20,736		27.33
150,736	$	4.26		4.9		150,736	$	4.26

Restricted Stock Awards

Restricted stock awards, which typically vest over a period of six months 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 years ended December 31, 2017 and 2016, we did not grant any restricted stock awards.  At December 31, 2017, the balance of unearned share-based compensation to be expensed in future periods related to restricted stock awards, as adjusted for expected forfeitures, is nil.

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 December 31, 2017, we had granted options to purchase 2,061,167 shares of Common Stock since the inception of the Equity Incentive Plan, of which 150,736 were outstanding at a weighted average exercise price of $4.26 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 29, 2016, the Incentive Plan expired by its terms, and no additional awards may be granted thereunder.  The expiration of the Incentive Plan does not affect outstanding awards.

On March 28, 2018, our Board of Directors adopted and approved our 2018 Equity Incentive Plan which initially provides for the issuance of up to 20,000,000 shares of our Common Stock pursuant to stock options and other equity awards.

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EMPLOYMENT BENEFIT PLAN

12 Months Ended

Dec. 31, 2017

EMPLOYMENT BENEFIT PLAN [Abstract]

EMPLOYMENT BENEFIT PLAN

NOTE 15. EMPLOYMENT BENEFIT PLAN

We maintain a defined contribution or 401(k) Plan for our qualified employees.  Participants may contribute a percentage of their compensation on a pre-tax basis, subject to a maximum annual contribution imposed by the Internal Revenue Code.  We may make discretionary matching contributions as well as discretionary profit-sharing contributions to the 401(k) Plan.  Our contributions to the 401(k) Plan are made in cash and vest immediately.  The Company’s Common Stock is not an investment option available to participants in the 401(k) Plan.  We contributed $9,569 and $17,396 to the 401(k) Plan during the years ended December 31, 2017 and 2016, respectively.

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FAIR VALUE MEASUREMENTS

12 Months Ended

Dec. 31, 2017

FAIR VALUE MEASUREMENTS [Abstract]

FAIR VALUE MEASUREMENTS

NOTE 16. FAIR VALUE MEASUREMENTS

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

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

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

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

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

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

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

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

The fair value of our financial instruments consisted of the following at December 31:

Description	2017		2016
Liabilities:
Convertible promissory note – March 2017	$	500,000		---
Convertible promissory note – February 2017	$	500,000		---
Promissory note – December 2016		---	$	20,000
Total	$	1,000,000	$	20,000

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INCOME TAXES

12 Months Ended

Dec. 31, 2017

INCOME TAXES [Abstract]

INCOME TAXES

NOTE 17. INCOME TAXES

There was no current federal tax provision or benefit recorded for any period since inception, nor were there any recorded deferred income tax assets, as such amounts were completely offset by valuation allowances. Deferred tax assets as of December 31, 2017, of $13,584,125 were reduced to zero, after considering the valuation allowance of $13,584,125, since there is no assurance of future taxable income.  As of December 31, 2017, we have consolidated net operating loss carryforwards (“NOL”) and research credit carryforwards for income tax purposes of approximately $58,787,306 and $555,177, respectively.

The following are the consolidated operating loss carryforwards and research credit carryforwards that will begin expiring as follows:

Calendar Years	Consolidated Operating Loss Carryforwards		Research Activities Carryforwards
2021	$	34,248	$	---
2023		95,666		---
2024		910,800		13,584
2025		1,687,528		21,563
2026		11,950,281		60,797
2027		3,431,365		85,052
2028		8,824,940		139,753
2029		6,889,761		81,940
2030		5,113,583		41,096
2031		3,728,626		43,592
2032		3,695,792		8,690
2033		3,187,559		15,882
2034		1,797,031		19,491
2035		2,594,151		21,113
2036		2,510,546		2,624
2037		2,335,429		---
Total	$	58,787,306	$	555,177

The Tax Reform Act of 1986 contains provisions, which limit the amount of NOL and tax credit carryforwards that companies may utilize in any one year in the event of cumulative changes in ownership over a three-year period in excess of 50%.  Since the effective date of the Tax Reform Act of 1986, the Company has completed significant share issuances in 2003, 2006, and 2017 which may significantly limit our ability to utilize our NOL and tax credit carryforwards against taxable earnings in future periods.  Ownership changes in future periods may place additional limits on our ability to utilize NOLs and tax credit carryforwards.

An analysis of the tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2017 and 2016 are as follows:

	2017			2016
Deferred tax assets:
Net operating loss carryforwards	$	12,637,559		$	20,056,077
Intangible assets		387,249			816,389
Other		577,633			575,065
Total gross deferred tax assets		13,602,441			21,447,531
Deferred tax liabilities:
Property and equipment		18,316			10,391
Total gross deferred tax liabilities		18,316			10,391
Net total of deferred assets and liabilities		13,584,125			21,437,140
Valuation allowance		(13,584,125	)		(21,437,140	)
Net deferred tax assets	$	---		$	---

The valuation allowance decreased by $7,853,015 in 2017 and  increased by $1,531,890 in 2016.

The following is a reconciliation of the expected statutory federal income tax rate to our actual income tax rate for the years ended December 31:

	2017			2016
Expected income tax (benefit) at federal statutory tax rate -35%	$	( 677,456	)	$	( 1,558,549	)
Permanent differences		5,908			7,739
Research tax credits		---			(2,624	)
Amortization of deferred startup costs		---			---
Valuation allowance		671,548			1,553,434
Income tax expense	$	---		$	---

Effective January 1, 2007, we adopted ASC Topic 740, Accounting for Uncertainty in Income Taxes.  ASC Topic 740 is a comprehensive model for how a company should recognize, measure, present, and disclose in its financial statements uncertain tax positions that we have taken or expects to take on a tax return.  If an income tax position exceeds a more likely than not (greater than 50%) probability of success upon tax audit, we will recognize an income tax benefit in its financial statements.  Additionally, companies are required to accrue interest and related penalties, if applicable, on all tax exposures consistent with jurisdictional tax laws.  We did not have any unrecognized tax benefits and there was no effect on our financial condition or results of operations as a result of implementing ASC Topic 740.

On December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Act”) was signed into law making significant changes to the Internal Revenue Code. Changes include, but are not limited to, a corporate tax rate decrease from 35% to 21%, effective for tax years beginning after December 31, 2017.  We use the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to reverse. As a result of the reduction in the U.S. corporate income tax rate from 35% to 21% under the Tax Act, we revalued our ending net deferred tax assets at December 31, 2017, which were fully offset by a valuation allowance.  The Company has evaluated the other changes resulting from the Tax Act and does not expect them to have a material impact on the tax provision, therefore, the Company considers the accounting complete.

At December 31, 2017, the Company had NOLs and research credit carryforwards of approximately $58,787,000 and $555,000, respectively.  At December 31, 2017, the utilization of a portion of our NOLs is subject to an annual limitation under Section 382 of the Internal Revenue Code (IRC).  If not utilized, these federal NOLs will begin to expire in 2020. The Company continues to evaluate IRC Section 382, which may limit NOLs generated in future years.

The Company evaluates deferred tax assets, including the benefit from NOLs, to determine if a valuation allowance is required. Such evaluation is based on consideration of all available evidence using a “more likely than not” standard with significant weight being given to evidence that can be objectively verified. This assessment considers, among other matters, the nature, frequency, and severity of current and cumulative losses; forecasts of future profitability; the length of statutory carryforward periods; the Company’s experience with operating losses; and tax-planning alternatives. The significant piece of objective negative evidence evaluated was the cumulative loss incurred through the year ended December 31, 2017. Given this evidence and the expectation to incur operating losses in the foreseeable future, a full valuation allowance has been recorded against the net deferred tax asset. The Company will continue to maintain a full valuation allowance against the entire amount of its net deferred tax asset, until such time as the Company has determined that the weight of the objectively verifiable positive evidence exceeds that of the negative evidence and it is likely that the Company will be able to utilize all of its net deferred tax asset relating to its federal and state NOL carryforwards. Although the Company has established a full valuation allowance on its net deferred tax asset, it has not forfeited the right to carryforward tax losses up to 20 years and apply such tax losses against taxable income in such years, thereby reducing its future tax obligations. The Company is subject to taxation in the United States and various state jurisdictions.

As of December 31, 2017, federal income tax returns for fiscal years 2014 through 2017 remain open and subject to examination by the Internal Revenue Service.  We file and remit state income taxes in various states where we have determined it is required to file state income taxes.  Our filings with those states remain open for audit for the fiscal years 2014 through 2017.

The Company applies the provisions of ASC 740 related to accounting for uncertain tax positions and concluded there were no such positions associated with the Company requiring accrual of a liability. As of December 31, 2017, the Company has not accrued for any such positions. The Company is currently not under audit for federal or state tax purposes. The Company does not expect a significant change to occur within the next 12 months.

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COMMITMENTS AND CONTINGENCIES

12 Months Ended

Dec. 31, 2017

COMMITMENTS AND CONTINGENCIES [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE 18. COMMITMENTS AND CONTINGENCIES

Operating Leases

On January 31, 2006 we entered into a lease agreement for office and laboratory space in Addison, Texas.  The lease commenced on April 1, 2006 and 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 required a minimum monthly lease obligation of $9,436, which was inclusive of monthly operating expenses.

On December 15, 2017, we entered into a Termination of Lease Agreement whereby we cancelled our existing lease for office and laboratory space and concurrently entered into a new lease agreement (the “Office Lease”) that will continue until December 2019.  The Office Lease encompasses approximately 2,500 rentable square feet and requires a minimum monthly lease obligation of $2,721, which is inclusive of monthly operating expenses.

On January 25, 2018, we entered into a lease agreement for storage and warehouse space in Carrollton, Texas.  The lease commenced on January 24, 2018 and will continue until December 2019.  The lease requires a minimum monthly lease obligation of $1,564, which is inclusive of monthly operating expenses.

On January 16, 2015 we entered into a lease agreement for certain office equipment that commenced on February 1, 2015 and continued until February 1, 2018 and required a minimum lease obligation of $551 per month.

The future minimum lease payments under the Office Lease, the 2018 warehouse lease, and the 2015 equipment lease are as follows as of December 31, 2017:

Calendar Years	Future Lease Expense
2018	$	50,399
2019		51,059
2020		---
2021		---
2022		---
Total	$	101,458

Rent expense for our operating leases amounted to $124,463 and $130,098 for the years ended December 31, 2017 and 2016, respectively.

Indemnification

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.  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

Note, Warrant and Preferred Stock Purchase Agreement

On February 27, 2017, we entered into the Purchase Agreement with Velocitas and Velo LLC, an entity controlled by Velocitas, with respect to an aggregate financing of up to $6,000,000.

Refer to a description in greater detail of the financing event with Velocitas and Velo LLC in Note 10. Convertible Debt.

On March 31, 2017, the second closing of the Purchase Agreement included, amongst other transaction components, the Company acquiring the Altrazeal distributor agreements Velocitas had with its sub-distributors in exchange for the issuance of 13,375,000 shares of Common Stock.  The Company has valued the acquisition of the Altrazeal distributor agreement from Velocitas at $869,375 based on the closing price of $0.065 per share of the Company’s Common Stock on March 31, 2017.

For the years ended December 31, 2017 and 2016, the Company recorded revenues, in approximate numbers, of $214,000 and nil, respectively, with Velocitas GmbH which represented 30% and 0% of our total revenues, respectively.  As of December 31, 2017 and December 31, 2016, Velocitas GmbH did not have any outstanding net accounts receivable.

Consulting Agreement – Velocitas GmbH

On April 1, 2017, the Company entered into a Consulting Agreement with Velocitas GmbH to provide the Company with operational support services in the fields of regulatory administration, finance, international customer account management, manufacturing, supply chain logistics, and other services required by the Company. Velocitas GmbH receives a monthly payment of $25,833 for providing such services to the Company.

Temporary Advances

On December 15, 2016, January 18, 2017, and February 16, 2017, in exchange for cash equal to the principal amount, we issued promissory notes to Velocitas with purchase prices of $20,000, $65,000, and $30,000, respectively.  Each of the promissory notes bore interest at the rate of 6.0% per annum with payment of principal and interest due on the earlier of (i) 180 days from the date of issuance, (ii) the date of closing of any debt or equity financing transaction by and between Uluru and Velocitas, or (iii) the payment to Uluru of certain invoices due from selected Company’s distributors.  Each of the promissory notes was secured by a pledge of certain product inventory and there were no debt issuance costs incurred by the Company.  On February 27, 2017, each of the promissory notes was repaid in connection with the issuance of the Initial Note under the Purchase Agreement with Velocitas.

On February 21, 2017, we issued a promissory note to Kirkwood with a purchase price of $25,000.  The promissory note bore interest at the rate of 6.0% per annum with payment of principal and interest due on the earlier of (i) 60 days from the date of issuance, (ii) the date of closing of any debt or equity financing transaction by the Company, or (iii) no later than two days after receiving written request by Kirkwood.  The promissory note was secured by a pledge of certain product inventory and accounts receivables and there were no debt issuance costs incurred by the Company.  The Company’s Vice President and Chief Financial Officer, Terrance K. Wallberg, is President and sole shareholder of Kirkwood.  On February 27, 2017, the outstanding promissory note to Kirkwood was repaid in connection with the issuance of the Initial Note under the Purchase Agreement with Velocitas.

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 December 31, 2017, the Company’s obligation to these executives for temporarily deferred compensation was approximately $72,000 which was included in accrued liabilities.  As of December 31, 2016, the Company’s obligation to these executives for temporarily deferred compensation was approximately $473,000 of which approximately $200,000 was included in accrued liabilities and approximately $273,000 was included in accounts payable.

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 December 31, 2017, 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.  As of December 31, 2017, the Company has accrued approximately $39,000 of expense relating to future milestone payments to Access.

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.

Prescription Drug User Fee Obligation

The Company was assessed prescription drug user fees (“PDUFA”) of approximately $535,000 by the United States Department of Health and Human Services (the “DHHS”) for the sale and manufacture of Aphthasol® from 2009 to 2012.  The Company had contested the assessments as it believed such fees should be waived because the Company should qualify for abatement of the PDUFA fees.  However, the Company’s challenge has been denied by the DHHS.  As of September 30, 2017, the Company had accrued potential penalties and interest of approximately $1,067,000 related to the unpaid PDUFA fees. In November 2017, the Company negotiated a settlement payment of $400,000 with DHHS thereby cancelling certain unpaid invoices and accrued penalties and interest thereon.  There continues to be a PDUFA fee that remains unpaid as of this Report.  Since the Company has not yet reached a settlement with the DHHS on the unpaid PDUFA fee, it is possible that the Company may be subject to additional collection costs.

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LEGAL PROCEEDINGS

12 Months Ended

Dec. 31, 2017

LEGAL PROCEEDINGS [Abstract]

LEGAL PROCEEDINGS

NOTE 19. LEGAL PROCEEDINGS

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

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SUBSEQUENT EVENTS

12 Months Ended

Dec. 31, 2017

SUBSEQUENT EVENTS [Abstract]

SUBSEQUENT EVENTS

NOTE 20. SUBSEQUENT EVENTS

None.

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COMPANY OVERVIEW AND BASIS OF PRESENTATION (Policies)

12 Months Ended

Dec. 31, 2017

COMPANY OVERVIEW AND BASIS OF PRESENTATION [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United State of America (“U.S. GAAP”) and include the accounts of ULURU Inc., a Nevada corporation, and its wholly-owned subsidiary, ULURU Delaware Inc., a Delaware corporation.  Both companies have a December 31 fiscal year end.

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.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

12 Months Ended

Dec. 31, 2017

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract]

Cash and Cash Equivalents

Cash and Cash Equivalents

Cash and cash equivalents include highly liquid investments with original maturities of three months or less.  The carrying value of these cash equivalents approximates fair value.

We 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 taking into consideration the need for liquidity and capital preservation.  These investments are not held for trading or other speculative purposes.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable are recorded at the invoiced amount and do not bear interest.  We estimate the collectability of our accounts receivable. In order to assess the collectability of these receivables, we monitor the current creditworthiness of each customer and analyze the balances aged beyond the customer's credit terms. Theses evaluations may indicate a situation in which a certain customer cannot meet its financial obligations due to deterioration of its financial viability, credit ratings or bankruptcy. The allowance requirements are based on current facts and are reevaluated and adjusted as additional information is received. Accounts receivable are subject to an allowance for collection when it is probable that the balance will not be collected. As of December 31, 2017 and 2016, the allowance for doubtful accounts was $20,543 and $2,679, respectively.  For the years ended December 31, 2017 and 2016, the accounts written off as uncollectible were $2,156 and $72,644, respectively.

Inventory

Inventory

Inventories are stated at the lower of cost or market value.  Raw material inventory cost is determined on the first-in, first-out method. Costs of finished goods are determined by an actual cost method. 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.

Prepaid Expenses and Deferred Charges

Prepaid Expenses and Deferred Charges

As of December 31, 2017 and 2016, prepaid expenses were composed primarily of insurance policy costs.  We amortize our insurance costs ratably over the term of each policy.  Typically, our insurance policies are subject to renewal in July and October of each year.

Property, Equipment and Leasehold Improvements

Property, Equipment and Leasehold Improvements

Property, equipment, and leasehold improvements are recorded at cost. Depreciation is provided over the estimated useful lives of the related assets using the straight-line method.  Estimated useful lives for property, equipment, and leasehold improvements categories are as follows:

Laboratory and manufacturing equipment	7 years
Computers, office equipment, and furniture	5 years
Computer software	3 years
Leasehold improvements	Lease term

Intangible Assets

Intangible Assets

We expense internal patent and application costs as incurred because, even though we believe the patents and underlying processes have continuing value, the amount of future benefits to be derived from them are uncertain.  Purchased patents are capitalized and amortized over the life of the patent.

Licensing Rights

Licensing Rights

Purchased licensing rights are capitalized and amortized over the life of the patent associated with the licensed product.

Impairment of Assets

Impairment of Assets

In accordance with the provisions of Accounting Standards Codification (“ASC”) Topic 350-30, Intangibles Other than Goodwill, our policy is to evaluate whether there has been a permanent impairment in the value of long-lived assets and certain identifiable intangibles when certain events have taken place that indicate the remaining unamortized balance may not be recoverable, or at least annually to determine the current value of the intangible asset. When factors indicate that the intangible assets should be evaluated for possible impairment, we use an estimate of undiscounted cash flows.  Considerable management judgment is necessary to estimate the undiscounted cash flows.  Accordingly, actual results could vary significantly from management’s estimates.

Debt Issuance Costs

Debt Issuance Costs

We defer debt issuance costs associated with the issuance of our promissory note payable and amortize those costs over the period of the promissory note obligation using the effective interest method.  In 2017, we incurred approximately $101,000 of debt issuance costs related to our issuance to Velocitas GmbH of a convertible promissory note and Series B preferred stock, of which approximately $17,000 was allocated to the convertible promissory note and approximately $84,000 was allocated to the Series B preferred stock.  In 2016, we did not incur any new debt issuance costs.  During 2017 and 2016, we recorded amortization of approximately $6,000 and $23,000, respectively, of debt issuance costs. Unamortized debt issuance costs at December 31, 2017 and 2016 were approximately $11,000 and nil, respectively.

Shipping and Handling Costs

Shipping and Handling Costs

Shipping and handling costs incurred for product shipments are included in cost of goods sold.

Income Taxes

Income Taxes

We use the liability method of accounting for income taxes pursuant to ASC Topic 740, Income Taxes.  Under this method, deferred income taxes are recorded to reflect the tax consequences in future periods of temporary differences between the tax basis of assets and liabilities and their financial statement amounts at year-end.

Revenue Recognition and Deferred Revenue

Revenue Recognition and Deferred Revenue

License Fees

We recognize revenue from license payments not tied to achieving a specific performance milestone ratably during the period over which we are obligated to perform services. The period over which we are obligated to perform services is estimated based on available facts and circumstances. Determination of any alteration of the performance period normally indicated by the terms of such agreements involves judgment on management's part. License revenues with no specific performance criteria are recognized when received from our foreign licensee and their various foreign sub-licensees as there is no control by us over the various foreign sub-licensees and no performance criteria to which we are subject.

We recognize revenue from performance payments ratably, when such performance is substantially in our control and when we believe that completion of such performance is reasonably probable, over the period during which we estimate that we will complete such performance obligations.  In circumstances where the arrangement includes a refund provision, we defer revenue recognition until the refund condition is no longer applicable unless, in our judgment, the refund circumstances are within our operating control and are unlikely to occur.

Substantive at-risk milestone payments, which are based on achieving a specific performance milestone when performance of such milestone is contingent on performance by others or for which achievement cannot be reasonably estimated or assured, are recognized as revenue when the milestone is achieved and the related payment is due, provided that there is no substantial future service obligation associated with the milestone.

For the year ended December 31, 2017, we recognized approximately $6,000 in licensing fees due to the amortization of a licensing fee originally received in 2008 from one of our international distributors.  For the year ended December 31, 2016, we recognized approximately $343,000 in licensing fees due to the one-time recognition of unamortized licensing fees related to the cancellation of distribution agreements with three distributors.  The recognition of unamortized licensing fees was based upon the cancellation of each distribution agreements and that there are no further performance obligations that are required by the Company under each distribution agreement.

Royalty Income

We receive royalty revenues under license agreements with a number of third parties that sell products based on technology we have developed or to which we have rights. The license agreements provide for the payment of royalties to us based on sales of the licensed products. We record these revenues based on estimates of the sales that occurred during the relevant period. The relevant period estimates of sales are based on interim data provided by licensees and analysis of historical royalties we have been paid (adjusted for any changes in facts and circumstances, as appropriate).

We maintain regular communication with our licensees in order to gauge the reasonableness of our estimates. Differences between actual royalty revenues and estimated royalty revenues are reconciled and adjusted for in the period in which they become known, typically the following quarter. Historically, adjustments have not been material based on actual amounts paid by licensees. As it relates to royalty income, there are no future performance obligations on our part under these license agreements. To the extent we do not have sufficient ability to accurately estimate revenue; we record it on a cash basis.

Product Sales

We recognize revenue and related costs from the sale of our products at the time the products are shipped to the customer.  Provisions for returns, rebates, and discounts are established in the same period the related product sales are recorded.

We review the supply levels of our products sold to major wholesalers in the U.S., primarily by reviewing reports supplied by our major wholesalers and available volume information for our products, or alternative approaches.  When we believe wholesaler purchasing patterns have caused an unusual increase or decrease in the sales of a major product compared with underlying demand, we disclose this in our product sales discussion if we believe the amount is material to the product sales trend; however, we are not always able to accurately quantify the amount of stocking or destocking.  Wholesaler stocking and destocking activity historically has not caused any material changes in the rate of actual product returns.

We establish sales return accruals for anticipated product returns. We record the return amounts as a deduction to arrive at our net product sales.  Consistent with revenue recognition accounting guidance, we estimate a reserve when the sales occur for future product returns related to those sales. This estimate is primarily based on historical return rates as well as specifically identified anticipated returns due to known business conditions and product expiry dates. Actual product returns have been nil over the past two years.

We establish sales rebate and discount accruals in the same period as the related sales.  The rebate and discount amounts are recorded as a deduction to arrive at our net product sales.  We base these accruals primarily upon our historical rebate and discount payments made to our customer segment groups and the provisions of current rebate and discount contracts.

Foreign currency transaction gain (loss)

Foreign currency transaction gain (loss)

Our functional currency and our reporting currency is the U.S. dollar and foreign currency transactions are primarily undertaken in Euros.  Monetary assets and liabilities are translated using the foreign currency exchange rate prevailing at the balance sheet date.  Revenues, non-monetary assets and liabilities denominated in foreign currencies are translated at rates of foreign currency exchange in effect at the date of the transaction.  Expenses are translated at average foreign currency exchange rates for the period.  Gains and losses arising on translation or settlement of foreign currency denominated transactions or balances are included in the determination of net income.

Research and Development Expenses

Research and Development Expenses

Pursuant to ASC Topic 730, Research and Development, our research and development costs are expensed as incurred.  Research and development expenses include, but are not limited to, salaries and benefits, laboratory supplies, facilities expenses, preclinical development costs, clinical trial and related clinical manufacturing expenses, contract services, consulting fees and other outside expenses. The cost of materials and equipment or facilities that are acquired for research and development activities and that have alternative future uses are capitalized when acquired. There were no such capitalized materials, equipment or facilities for the years ended December 31, 2017 and 2016.

Basic and Diluted Net Loss Per Common Share

Basic and Diluted Net Loss Per Common Share

In accordance with 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 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 and warrants from the calculation of diluted net loss per common share because all such securities are antidilutive for all periods presented.

Concentrations of Credit Risk

Concentrations of Credit Risk

Concentration of credit risk with respect to financial instruments, consisting primarily of cash and cash equivalents, that 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.  During 2017, we utilized Bank of American, N.A. and South State Bank as our banking institutions.  During 2016, we utilized Bank of America, N.A. as our banking institution.  At December 31, 2017 and 2016 our cash and cash equivalents totaled approximately $3,711,000 and $37,000, 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 high-quality corporations.

Concentration of credit risk with respect to trade accounts receivable are customers with balances that exceed 5% of total consolidated trade accounts receivable at December 31, 2017 and 2016.  As of December 31, 2017, three customers, of which two are our international distributors, exceeded the 5% threshold, jointly with 99%.  One customer, being one of our international distributors, exceeded the 5% threshold at December 31, 2016, with 95%. As a result, we believe that accounts receivable credit risk exposure is limited.  We maintain an allowance for doubtful accounts, but historically have not experienced any significant losses related to an individual customer or group of customers.

Concentrations of Foreign Currency Risk

Concentrations of Foreign Currency Risk

A portion of our revenues and all of our expenses are denominated in U.S. dollars.  We are expecting 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.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

In accordance with portions of ASC Topic 820, Fair Value Measurements, 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.

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, notes receivable and accrued interest, and convertible note payable balances approximates fair value based on a valuation methodology using the income approach and a discounted cash flow model.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

12 Months Ended

Dec. 31, 2017

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract]

Estimated useful lives for property and equipment

Estimated useful lives for property, equipment, and leasehold improvements categories are as follows:

Laboratory and manufacturing equipment	7 years
Computers, office equipment, and furniture	5 years
Computer software	3 years
Leasehold improvements	Lease term

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SEGMENT INFORMATION (Tables)

12 Months Ended

Dec. 31, 2017

SEGMENT INFORMATION [Abstract]

Revenues per geographic area

Revenues per geographic area, along with relative percentages of total revenues, for the year ended December 31, are summarized as follows:

Revenues	2017		%			2016		%
Domestic	$	11,127		2	%	$	20,326		5	%
International		706,030		98	%		422,239		95	%
Total	$	717,157		100	%	$	442,565		100	%

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INVENTORY (Tables)

12 Months Ended

Dec. 31, 2017

INVENTORY [Abstract]

Inventory

The components of inventory, at the different stages of production, consisted of the following at December 31:

Inventory	2017		2016
Raw materials	$	32,329	$	35,800
Work-in-progress		311,632		424,741
Finished goods		153,500		99,059
Total	$	497,461	$	559,600

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PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS (Tables)

12 Months Ended

Dec. 31, 2017

PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS [Abstract]

Property, equipment and leasehold improvements

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

Property, equipment and leasehold improvements	2017			2016
Laboratory equipment	$	424,888		$	424,888
Manufacturing equipment		1,604,894			1,604,894
Computers, office equipment, and furniture		154,781			151,280
Computer software		4,108			4,108
Leasehold improvements		95,841			95,841
		2,284,512			2,281,011
Less: accumulated depreciation and amortization		(2,230,789	)		(2,154,270	)
Property, equipment and leasehold improvements, net	$	53,723		$	126,741

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INTANGIBLE ASSETS (Tables)

12 Months Ended

Dec. 31, 2017

Patents [Member]

Finite-Lived Intangible Assets [Line Items]

Intangible assets

Intangible patent assets, net consisted of the following at December 31:

Intangible assets - patents	2017			2016
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		(7,418,891	)		(7,381,847	)
Less: reserve for impairment		(2,027,310	)		(2,027,310	)
Intangible assets, net	$	179,737		$	216,781

Future aggregate amortization expense for intangible assets

The future aggregate amortization expense for intangible patent assets, remaining as of December 31, 2017, is as follows:

Calendar Years	Future Amortization Expense
2018	$	37,044
2019		37,044
2020		37,145
2021		37,044
2022		31,460
2023 & Beyond		---
Total	$	179,737

Licensing Rights [Member]

Finite-Lived Intangible Assets [Line Items]

Intangible assets

Licensing rights, net consisted of the following at December 31:

Intangible assets - licensing rights	December 31, 2017			December 31, 2016
Intangible assets – licensing rights, gross	$	4,381,881		$	3,512,506
Less: accumulated amortization		(725,245	)		(331,419	)
Intangible assets - licensing rights, net	$	3,656,636		$	3,181,087

Future aggregate amortization expense for intangible assets

The future aggregate amortization expense for intangible licensing rights assets, remaining as of December 31, 2017, is as follows:

Calendar Years	Future Amortization Expense
2018	$	416,303
2019		416,303
2020		416,303
2021		416,303
2022		416,303
2023 & Beyond		1,575,121
Total	$	3,656,636

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ACCRUED LIABILITIES (Tables)

12 Months Ended

Dec. 31, 2017

ACCRUED LIABILITIES [Abstract]

Accrued liabilities

Accrued liabilities consisted of the following at December 31:

Accrued Liabilities	2017		2016
Accrued compensation/benefits	$	124,819	$	274,874
Accrued insurance payable		---		40,422
Accrued royalties		39,144		---
Product rebates/returns		6		4
Total accrued liabilities	$	163,969	$	315,300

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CONVERTIBLE DEBT (Tables)

12 Months Ended

Dec. 31, 2017

CONVERTIBLE DEBT [Abstract]

Information relating to convertible debt

Information relating to the Initial Note and Second Note is as follows:

											As of December 31, 2017
Transaction	Initial Principal Amount		Interest Rate			Maturity Date	Conversion Price		Principal Balance		Unamortized Debt Discount		Unamortized Debt Issuance Costs		Carrying Value
Initial Note	$	500,000		12.5	%	02/27/2019	$	0.04	$	500,000	$	206,634	$	5,361	$	288,005
Second Note	$	500,000		12.5	%	03/31/2019	$	0.04	$	500,000	$	212,322	$	5,494	$	282,184
Total	$	1,000,000							$	1,000,000	$	418,956	$	10,855	$	570,189

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STOCKHOLDERS' EQUITY (Tables)

12 Months Ended

Dec. 31, 2017

STOCKHOLDERS' EQUITY [Abstract]

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

The following table summarizes the warrants outstanding and the number of shares of common stock subject to exercise as of December 31, 2017 and the changes therein during the two years 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		(840,075	)	$	0.84
Balance as of December 31, 2016		26,179,560		$	0.11
Warrants issued		57,055,057		$	0.04
Warrants exercised		---			---
Warrants cancelled		---			---
Balance as of December 31, 2017		83,234,617		$	0.06

Expiration dates for warrants subject to exercise

Of the warrant shares subject to exercise as of December 31, 2017, expiration of the right to exercise is as follows:

Date of Expiration	Number of Warrant Shares of Common Stock Subject to Expiration
March 14, 2018		660,000
January 15, 2019		80,000
April 30, 2020		194,118
March 30, 2021		25,245,442
March 31, 2027		57,055,057
Total		83,234,617

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EARNINGS PER SHARE (Tables)

12 Months Ended

Dec. 31, 2017

EARNINGS PER SHARE [Abstract]

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

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

	December 31, 2017		December 31, 2016
Warrants to purchase Common Stock		83,234,617		26,179,560
Stock options to purchase Common Stock		150,736		691,237
Common Stock issuable upon the assumed conversion of our convertible promissory notes (1)		31,250,000		---
Common Stock issuable upon the conversion of our Series B Convertible Preferred Stock (2)		---		---
Total		114,635,353		26,870,797

(1) As part of the Initial Note and the Second Note, at the holder’s option, all unpaid principle and interest due under each convertible promissory note may be converted into shares of Common Stock based on a conversion price of $0.04 per share.  The Initial Note and the Second Note mature on February 27, 2019 and March 31, 2019, respectively, and on each maturity date each convertible promissory note, and accrued interest thereon, is subject to mandatory conversion based on a conversion price of $0.04 per share, unless an event of default has occurred and is continuing.  For the purposes of this Table, we have assumed that all outstanding principal and interest will be converted on each applicable maturity date.

(2) Pursuant to the March 2017 Offering, Velo LLC purchased 1,250 shares of Series B Convertible Preferred Stock of the Company for $5,000,000.  The Series B Convertible Preferred Stock that was issued in the March 2017 Offering, (a) voted together with the Common Stock as a single class (subject to standard protective provisions for the Series B Convertible Preferred Stock), (b) had the same dividend rights as the Common Stock, (c) had a liquidation preference equal to the greater of its purchase price and its as converted-to-Common Stock value, (d) automatically converted into Common Stock when the number of authorized shares of Common Stock was increased within 190 days of the second closing as necessary to permit all outstanding convertible or exercisable securities (including the Series B Convertible Preferred Stock) to convert to Common Stock, and (e) was convertible into Common Stock  at the discretion of the holder, subject to the availability of authorized shares, at an as-converted-to-Common Stock purchase price of $0.04 per share.   On August 1, 2017, all 1,250 outstanding shares of Series B Convertible Preferred Stock converted in exchange for 125,000,000 shares of Common Stock as a result of the approval by the stockholders at the 2017 Annual Meeting of Stockholders held on July 25, 2017, and the filing in July 2017, of an amendment increasing our authorized shares of Common Stock from 200,000,000 shares to 750,000,000 shares.

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SHARE BASED COMPENSATION (Tables)

12 Months Ended

Dec. 31, 2017

SHARE BASED COMPENSATION [Abstract]

Allocated share-based compensation expense

The following table summarizes share-based compensation related to stock options for the years ended December 31:

	2017		2016
Research and development	$	---	$	7,614
Selling, general and administrative		7,923		12,360
Total share-based compensation expense	$	7,923	$	19,974

Stock option activity

The following table summarizes the stock options outstanding and the number of shares of Common Stock subject to exercise as of December 31, 2017 and the changes therein during the two years then ended:

	Stock Options			Weighted Average Exercise Price per Share
Outstanding as of December 31, 2015		1,6664,573		$	1.73
Granted		---			---
Forfeited/cancelled		(973,336	)		1.58
Exercised		---			---
Outstanding as of December 31, 2016		691,237		$	1.94
Granted		---			---
Forfeited/cancelled		(540,501	)		1.30
Exercised		---			---
Outstanding as of December 31, 2017		150,736		$	4.26

Stock option grants outstanding and exercisable

The following table presents the stock option grants outstanding and exercisable as of December 31, 2017:

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
90,000	$	0.33		5.2		90,000	$	0.33
40,000		1.15		6.7		40,000		1.15
20,736		27.33		0.3		20,736		27.33
150,736	$	4.26		4.9		150,736	$	4.26

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FAIR VALUE MEASUREMENTS (Tables)

12 Months Ended

Dec. 31, 2017

FAIR VALUE MEASUREMENTS [Abstract]

Fair value of our financial instruments

The fair value of our financial instruments consisted of the following at December 31:

Description	2017		2016
Liabilities:
Convertible promissory note – March 2017	$	500,000		---
Convertible promissory note – February 2017	$	500,000		---
Promissory note – December 2016		---	$	20,000
Total	$	1,000,000	$	20,000

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INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2017

INCOME TAXES [Abstract]

Expiration of consolidated operating loss carryforwards and research credit carryforwards

The following are the consolidated operating loss carryforwards and research credit carryforwards that will begin expiring as follows:

Calendar Years	Consolidated Operating Loss Carryforwards		Research Activities Carryforwards
2021	$	34,248	$	---
2023		95,666		---
2024		910,800		13,584
2025		1,687,528		21,563
2026		11,950,281		60,797
2027		3,431,365		85,052
2028		8,824,940		139,753
2029		6,889,761		81,940
2030		5,113,583		41,096
2031		3,728,626		43,592
2032		3,695,792		8,690
2033		3,187,559		15,882
2034		1,797,031		19,491
2035		2,594,151		21,113
2036		2,510,546		2,624
2037		2,335,429		---
Total	$	58,787,306	$	555,177

Deferred tax assets and deferred tax liabilities

An analysis of the tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2017 and 2016 are as follows:

	2017			2016
Deferred tax assets:
Net operating loss carryforwards	$	12,637,559		$	20,056,077
Intangible assets		387,249			816,389
Other		577,633			575,065
Total gross deferred tax assets		13,602,441			21,447,531
Deferred tax liabilities:
Property and equipment		18,316			10,391
Total gross deferred tax liabilities		18,316			10,391
Net total of deferred assets and liabilities		13,584,125			21,437,140
Valuation allowance		(13,584,125	)		(21,437,140	)
Net deferred tax assets	$	---		$	---

Reconciliation of expected statutory federal income tax rate to actual income tax rate

The following is a reconciliation of the expected statutory federal income tax rate to our actual income tax rate for the years ended December 31:

	2017			2016
Expected income tax (benefit) at federal statutory tax rate -35%	$	( 677,456	)	$	( 1,558,549	)
Permanent differences		5,908			7,739
Research tax credits		---			(2,624	)
Amortization of deferred startup costs		---			---
Valuation allowance		671,548			1,553,434
Income tax expense	$	---		$	---

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COMMITMENTS AND CONTINGENCIES (Tables)

12 Months Ended

Dec. 31, 2017

COMMITMENTS AND CONTINGENCIES [Abstract]

Future minimum lease payments

The future minimum lease payments under the Office Lease, the 2018 warehouse lease, and the 2015 equipment lease are as follows as of December 31, 2017:

Calendar Years	Future Lease Expense
2018	$	50,399
2019		51,059
2020		---
2021		---
2022		---
Total	$	101,458

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details)	12 Months Ended
	Dec. 31, 2017 USD ($) Customer Distributors	Dec. 31, 2016 USD ($) Customer Distributors	Dec. 31, 2015 USD ($)
Accounts Receivable and Allowance for Doubtful Accounts [Abstract]
Allowance for doubtful accounts	$ 20,543	$ 2,679
Accounts written off as uncollectible	2,156	72,644
Debt Instrument [Line Items]
Debt issuance costs related to promissory note payable	418,956
Amortization of deferred financing costs	6,053	22,927
Unamortized debt issuance costs	11,000	0
Revenue Recognition and Deferred Revenue [Abstract]
License costs	$ 6,000	343,000
Product Sales [Abstract]
Period over which no actual product returns occurred	2 years
Concentrations of Credit Risk [Abstract]
Cash and cash equivalents	$ 3,710,882	$ 36,615	$ 180,000
Concentrations of Credit Risk [Line Items]
Minimum threshold limit of trade accounts receivable	5.00%	5.00%
Number of customers exceeding threshold limit of 5% | Customer	3	1
Number of international distributors exceeds threshold limit of 5% | Distributors	2	1
Concentration risk, percentage	100.00%	100.00%
Velocitas Partners, LLC [Member]
Debt Instrument [Line Items]
Debt issuance costs related to promissory note payable	$ 101,000	$ 0
Velocitas Partners, LLC [Member] | Convertible Promissory Note [Member]
Debt Instrument [Line Items]
Debt issuance costs related to promissory note payable	17,000
Velocitas Partners, LLC [Member] | Series B Preferred Stock [Member]
Debt Instrument [Line Items]
Debt issuance costs related to promissory note payable	$ 84,000
Laboratory and Manufacturing Equipment [Member]
Property, Equipment and Leasehold Improvements [Line Items]
Estimated useful life of property and equipment	7 years
Computers, Office Equipment, and Furniture [Member]
Property, Equipment and Leasehold Improvements [Line Items]
Estimated useful life of property and equipment	5 years
Computer Software [Member]
Property, Equipment and Leasehold Improvements [Line Items]
Estimated useful life of property and equipment	3 years
Leasehold Improvements [Member]
Property, Equipment and Leasehold Improvements [Line Items]
Estimated useful life of property and equipment, description	Lease term
Accounts Receivable [Member] | Credit Concentration Risk [Member]
Concentrations of Credit Risk [Line Items]
Concentration risk, percentage	99.00%	95.00%

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SEGMENT INFORMATION (Details)	12 Months Ended
	Dec. 31, 2017 USD ($) Customer	Dec. 31, 2016 USD ($) Customer
Revenues from External Customers and Long-Lived Assets [Line Items]
Total revenues	$ 717,157	$ 442,565
Total Revenue, percentage	100.00%	100.00%
Revenue [Member] | Customer Concentration Risk [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total Revenue, percentage	92.00%	88.00%
Number of major customers | Customer	3	3
Reportable Geographical Components [Member] | Domestic [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total revenues	$ 11,127	$ 20,326
Total Revenue, percentage	2.00%	5.00%
Reportable Geographical Components [Member] | International [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total revenues	$ 706,030	$ 422,239
Total Revenue, percentage	98.00%	95.00%

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INVENTORY (Details) - USD ($)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
INVENTORY [Abstract]
Obsolete finished goods	$ 5,000	$ 0
Components of inventory [Abstract]
Raw materials	32,329	35,800
Work-in-progress	311,632	424,741
Finished goods	153,500	99,059
Total	$ 497,461	$ 559,600

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PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS (Details) - USD ($)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Property, equipment and leasehold improvements, net [Abstract]
Property, equipment and leasehold improvements, gross	$ 2,284,512	$ 2,281,011
Less: accumulated depreciation and amortization	(2,230,789)	(2,154,270)
Property, equipment and leasehold improvements, net	53,723	126,741
Depreciation expense	76,519	132,841
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	154,781	151,280
Computer Software [Member]
Property, equipment and leasehold improvements, net [Abstract]
Property, equipment and leasehold improvements, gross	4,108	4,108
Leasehold Improvements [Member]
Property, equipment and leasehold improvements, net [Abstract]
Property, equipment and leasehold improvements, gross	$ 95,841	$ 95,841

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INTANGIBLE ASSETS, Patents (Details)	12 Months Ended
	Dec. 31, 2017 USD ($)	Dec. 31, 2016 USD ($) Patent
Finite-Lived Intangible Assets [Line Items]
Total	$ 179,737	$ 216,781
Number of patents | Patent		2
Amortization expense	430,870	$ 801,598
Future aggregate amortization expense for intangible assets [Abstract]
Total	179,737	216,781
Patents [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross	9,625,938	9,625,938
Less: accumulated amortization	(7,418,891)	(7,381,847)
Less: reserve for impairment	(2,027,310)	(2,027,310)
Total	179,737	216,781
Amortization expense	37,044	476,450
Future aggregate amortization expense for intangible assets [Abstract]
2018	37,044
2019	37,044
2020	37,145
2021	37,044
2022	31,460
2023 & Beyond	0
Total	179,737	216,781
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

XML

INTANGIBLE ASSETS, Licensing Rights (Details)			3 Months Ended	12 Months Ended
	Feb. 27, 2017 USD ($)	Dec. 24, 2015 EUR (€) shares	Mar. 31, 2017 USD ($) $ / shares shares	Dec. 31, 2017 USD ($) shares	Dec. 31, 2016 USD ($) shares	Dec. 24, 2015 $ / shares shares
Finite-Lived Intangible Assets [Line Items]
Transfer fee				$ 6,000	$ 343,000
Issuance of common stock (in shares) | shares				201,349,431	62,974,431
Total				$ 179,737	$ 216,781
Amortization expense				430,870	801,598
Future aggregate amortization expense for intangible assets [Abstract]
Total				179,737	216,781
Licensing Rights [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets - licensing rights, gross				4,381,881	3,512,506
Less: accumulated amortization				(725,245)	(331,419)
Total				3,656,636	3,181,087
Amortization expense				393,826	325,148
Future aggregate amortization expense for intangible assets [Abstract]
2018				416,303
2019				416,303
2020				416,303
2021				416,303
2022				416,303
2023 & Beyond				1,575,121
Total				$ 3,656,636	$ 3,181,087
Altrazeal Trading GmbH [Member] | Licensing Rights [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
Number of days for closing registration statement				20 days
Common stock reissued (in shares) | shares		2,500,000
Warrants to purchase shares of common stock (in shares) | shares						444,161
IPMD GmbH [Member] | Licensing Rights [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
Warrants to purchase shares of common stock (in shares) | shares						209,525
Velocitas Partners, LLC [Member]
Finite-Lived Intangible Assets [Line Items]
Expected gross proceeds	$ 6,000,000
Velocitas Partners, LLC [Member] | Maximum [Member]
Finite-Lived Intangible Assets [Line Items]
Expected gross proceeds	$ 6,000,000
Velocitas Partners, LLC [Member] | Second Closing [Member]
Finite-Lived Intangible Assets [Line Items]
Aggregate shares of common stock issued upon exercise of warrants (in shares) | shares			13,375,000
Exercise price of warrants (in dollars per share) | $ / shares			$ 0.04
Warrants to purchase shares of common stock (in shares) | shares			13,375,000
Acquisition value			$ 869,375
Closing price of common stock (in dollars per share) | $ / shares			$ 0.065

XML

ACCRUED LIABILITIES (Details) - USD ($)	Dec. 31, 2017	Dec. 31, 2016
Accrued Liabilities [Abstract]
Accrued compensation/benefits	$ 124,819	$ 274,874
Accrued insurance payable	0	40,422
Accrued royalties	39,144	0
Product rebates/returns	6	4
Total accrued liabilities	$ 163,969	$ 315,300

XML

PROMISSORY NOTES PAYABLE (Details) - USD ($)	12 Months Ended
	Dec. 31, 2017	Feb. 27, 2017	Feb. 21, 2017	Feb. 16, 2017	Jan. 18, 2017	Dec. 15, 2016
Debt Instrument [Line Items]
Initial principal amount and purchase price	$ 1,000,000
Initial Note [Member]
Debt Instrument [Line Items]
Initial principal amount and purchase price	$ 500,000
Interest rate	12.50%
Velocitas Partners, LLC [Member]
Debt Instrument [Line Items]
Initial principal amount and purchase price				$ 30,000	$ 65,000	$ 20,000
Interest rate				6.00%	6.00%	6.00%
Monthly installment payments commencing period	180 days
Velocitas Partners, LLC [Member] | Initial Note [Member]
Debt Instrument [Line Items]
Initial principal amount and purchase price		$ 500,000
Kirkwood Investors, Inc [Member]
Debt Instrument [Line Items]
Initial principal amount and purchase price			$ 25,000
Interest rate			6.00%
Monthly installment payments commencing period	60 days
Number of days for registration effective for a period	2 days

XML

CONVERTIBLE DEBT (Details)		3 Months Ended	12 Months Ended
	Feb. 27, 2017 USD ($) Closing	Mar. 31, 2017 USD ($) Director $ / shares shares	Dec. 31, 2017 USD ($) $ / shares shares	Dec. 31, 2016 USD ($) shares	Aug. 01, 2017 shares	Jul. 26, 2017 shares	Jul. 25, 2017 shares	Jun. 30, 2017 shares	Feb. 16, 2017 USD ($)	Jan. 18, 2017 USD ($)	Dec. 15, 2016 USD ($)
Debt Instrument [Line Items]
Authorized shares of common stock (in shares) | shares			750,000,000	750,000,000			750,000,000	200,000,000
Information relating to convertible notes payable [Abstract]
Initial principal amount			$ 1,000,000
Principal balance			1,000,000
Unamortized debt discount			418,956
Unamortized debt issuance costs			10,855
Carrying value			570,189
Interest cost recognized for promissory note and convertible debt			100,355	$ 14,079
Amortization of debt discount for promissory note and convertible debt			262,344	32,015
Amortization of debt issuance costs for promissory note			$ 6,053	$ 22,927
Common Stock [Member]
Debt Instrument [Line Items]
Convertible preferred stock shares issued upon conversion (in shares) | shares					125,000,000
Series B Convertible Preferred Stock [Member]
Debt Instrument [Line Items]
Number of shares issued (in shares) | shares			0
Preferred stock, shares outstanding (in shares) | shares			0		1,250
Velocitas Partners, LLC [Member]
Debt Instrument [Line Items]
Gross proceeds	$ 6,000,000
Number of closings | Closing	2
Information relating to convertible notes payable [Abstract]
Initial principal amount									$ 30,000	$ 65,000	$ 20,000
Interest rate									6.00%	6.00%	6.00%
Velocitas Partners, LLC [Member] | Maximum [Member]
Debt Instrument [Line Items]
Gross proceeds	$ 6,000,000
Velocitas Partners, LLC [Member] | Common Stock [Member]
Debt Instrument [Line Items]
Convertible preferred stock shares issued upon conversion (in shares) | shares			125,000,000			125,000,000
Velocitas Partners, LLC [Member] | Series B Convertible Preferred Stock [Member]
Debt Instrument [Line Items]
Preferred stock, shares outstanding (in shares) | shares			1,250			1,250
Velocitas Partners, LLC [Member] | First Closing [Member]
Debt Instrument [Line Items]
Debt instrument term			2 years
Velocitas Partners, LLC [Member] | Second Closing [Member]
Debt Instrument [Line Items]
Debt instrument term			2 years
Proceeds from issuance of preferred stock		$ 5,000,000
Purchase price (in dollars per share) | $ / shares		$ 0.04
Number of days taken to automatically convert to common stock			190 years
Warrants to purchase shares of common stock (in shares) | shares		13,375,000
Warrants exercise price (in dollars per share) | $ / shares		$ 0.04
Term of warrants			10 years
Number of board of directors | Director		4
Initial Note [Member]
Information relating to convertible notes payable [Abstract]
Initial principal amount			$ 500,000
Interest rate			12.50%
Maturity date			Feb. 27, 2019
Conversion price (in dollars per share) | $ / shares			$ 0.04
Principal balance			$ 500,000
Unamortized debt discount			206,634
Unamortized debt issuance costs			5,361
Carrying value			288,005
Initial Note [Member] | Velocitas Partners, LLC [Member]
Information relating to convertible notes payable [Abstract]
Initial principal amount	$ 500,000
Second Note [Member]
Debt Instrument [Line Items]
Number of board of directors | Director		6
Information relating to convertible notes payable [Abstract]
Initial principal amount			$ 500,000
Interest rate			12.50%
Maturity date			Mar. 31, 2019
Conversion price (in dollars per share) | $ / shares			$ 0.04
Principal balance			$ 500,000
Unamortized debt discount			212,322
Unamortized debt issuance costs			5,494
Carrying value			$ 282,184
Second Note [Member] | Bradley J. Sacks [Member]
Debt Instrument [Line Items]
Number of board of directors | Director		1
Second Note [Member] | Major Investor or Board of Directors [Member]
Debt Instrument [Line Items]
Number of board of directors | Director		1
Second Note [Member] | Velocitas Partners, LLC [Member] | Maximum [Member]
Debt Instrument [Line Items]
Warrants to purchase shares of common stock (in shares) | shares		57,055,057
Second Note [Member] | Velocitas Partners, LLC [Member] | Series B Convertible Preferred Stock [Member]
Debt Instrument [Line Items]
Number of shares issued (in shares) | shares		1,250

XML

EQUITY TRANSACTIONS (Details)			1 Months Ended		12 Months Ended
	Feb. 27, 2017 USD ($) Closing	Mar. 29, 2016 USD ($) Investor Warrant $ / shares $ / Unit shares	Apr. 30, 2016 USD ($)	Mar. 31, 2016 USD ($)	Dec. 31, 2017 USD ($) shares	Aug. 01, 2017 shares	Jul. 26, 2017 shares
Velocitas Partners, LLC [Member]
Class of Stock [Line Items]
Number of closings | Closing	2
Proceeds from issuance or sale of equity | $	$ 6,000,000
Common Stock [Member]
Class of Stock [Line Items]
Convertible preferred stock shares issued upon conversion (in shares)						125,000,000
Common stock issued during period (in shares)					138,375,000
Common Stock [Member] | Velocitas Partners, LLC [Member]
Class of Stock [Line Items]
Convertible preferred stock shares issued upon conversion (in shares)					125,000,000		125,000,000
Common stock issued during period (in shares)					13,375,000
Series B Convertible Preferred Stock [Member]
Class of Stock [Line Items]
Number of shares issued (in shares)					0
Preferred stock, shares outstanding (in shares)					0	1,250
Series B Convertible Preferred Stock [Member] | Velocitas Partners, LLC [Member]
Class of Stock [Line Items]
Preferred stock, shares outstanding (in shares)					1,250		1,250
Common stock issued during period (in shares)					1,250
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)		25,245,442
Aggregate shares of common stock issued upon exercise of warrants (in shares)		25,245,442
Purchase price (in dollars per unit) | $ / Unit		0.0713
Number of common shares per unit		1
Number of warrants per unit | Warrant		1
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
Term of warrants					5 years
Proceeds from offering | $			$ 361,000	$ 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] | 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
March 2017 Offering [Member] | Velocitas Partners, LLC [Member]
Class of Stock [Line Items]
Number of closings | Closing	2
Proceeds from issuance or sale of equity | $	$ 6,000,000
March 2017 Offering [Member] | Common Stock [Member] | Velocitas Partners, LLC [Member]
Class of Stock [Line Items]
Convertible preferred stock shares issued upon conversion (in shares)							125,000,000
March 2017 Offering [Member] | Series B Convertible Preferred Stock [Member] | Velocitas Partners, LLC [Member]
Class of Stock [Line Items]
Number of shares issued (in shares)					1,250
Proceeds from issuance of preferred stock | $					$ 5,000,000
Preferred stock, shares outstanding (in shares)							1,250

XML

STOCKHOLDERS' EQUITY (Details) - shares	12 Months Ended
	Dec. 31, 2017	Aug. 01, 2017	Jul. 26, 2017	Jul. 25, 2017	Jun. 30, 2017	Dec. 31, 2016
Common Stock [Abstract]
Common stock, shares issued (in shares)	201,349,431					62,974,431
Common stock, shares outstanding (in shares)	201,349,431					62,974,431
Authorized shares of common stock (in shares)	750,000,000			750,000,000	200,000,000	750,000,000
Series A Preferred Stock [Member]
Preferred Stock [Abstract]
Preferred stock, shares issued (in shares)	0					0
Preferred stock, shares outstanding (in shares)	0					0
Series B Convertible Preferred Stock [Member]
Preferred Stock [Abstract]
Preferred stock, shares issued (in shares)	0
Preferred stock, shares outstanding (in shares)	0	1,250
Velocitas Partners, LLC [Member] | Series B Convertible Preferred Stock [Member]
Common Stock [Abstract]
Stock issued during period (in shares)	1,250
Preferred Stock [Abstract]
Preferred stock, shares outstanding (in shares)	1,250		1,250
Common Stock [Member]
Common Stock [Abstract]
Stock issued during period (in shares)	138,375,000
Convertible preferred stock shares issued upon conversion (in shares)		125,000,000
Common Stock [Member] | Velocitas Partners, LLC [Member]
Common Stock [Abstract]
Stock issued during period (in shares)	13,375,000
Convertible preferred stock shares issued upon conversion (in shares)	125,000,000		125,000,000

XML

STOCKHOLDERS' EQUITY, Warrants (Details)	12 Months Ended
	Dec. 31, 2017 $ / shares shares	Dec. 31, 2016 $ / shares shares
Warrants and Number of Shares of Common Stock Subject to Exercise [Roll Forward]
Balance (in shares)	26,179,560	1,774,193
Warrants issued (in shares)	57,055,057	25,245,442
Warrants exercised (in shares)	0	0
Warrants cancelled (in shares)	0	(840,075)
Balance (in shares)	83,234,617	26,179,560
Warrants, Weighted-Average Exercise Price [Abstract]
Balance (in dollars per share) | $ / shares	0.11	0.77
Warrants issued (in dollars per share) | $ / shares	0.04	0.09
Warrants exercised (in dollars per share) | $ / shares	0	0
Warrants cancelled (in dollars per share) | $ / shares	0	0.84
Balance (in dollars per share) | $ / shares	0.06	0.11
March 14, 2018 [Member]
Warrants and Number of Shares of Common Stock Subject to Exercise [Roll Forward]
Balance (in shares)	660,000
January 15, 2019 [Member]
Warrants and Number of Shares of Common Stock Subject to Exercise [Roll Forward]
Balance (in shares)	80,000
April 30, 2020 [Member]
Warrants and Number of Shares of Common Stock Subject to Exercise [Roll Forward]
Balance (in shares)	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
March 31, 2027 [Member]
Warrants and Number of Shares of Common Stock Subject to Exercise [Roll Forward]
Balance (in shares)	57,055,057

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EARNINGS PER SHARE (Details) - USD ($)		3 Months Ended	12 Months Ended
		Mar. 31, 2017	Dec. 31, 2017	Dec. 31, 2016	Aug. 01, 2017	Jul. 25, 2017	Jun. 30, 2017
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from calculating basic and diluted net loss per common share (in shares)			114,635,353	26,870,797
Authorized shares of common stock (in shares)			750,000,000	750,000,000		750,000,000	200,000,000
Common Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Convertible preferred stock shares issued upon conversion (in shares)					125,000,000
Series B Convertible Preferred Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Number of shares issued (in shares)			0
Preferred stock, shares outstanding (in shares)			0		1,250
Initial Note [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Conversion price (in dollars per share)			$ 0.04
Maturity date			Feb. 27, 2019
Second Note [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Conversion price (in dollars per share)			$ 0.04
Maturity date			Mar. 31, 2019
Warrants to Purchase Common Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from calculating basic and diluted net loss per common share (in shares)			83,234,617	26,179,560
Stock Options to Purchase Common Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from calculating basic and diluted net loss per common share (in shares)			150,736	691,237
Common Stock Issuable Upon the Assumed Conversion of Our Convertible Promissory Notes [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from calculating basic and diluted net loss per common share (in shares)	[1]		31,250,000	0
Conversion price (in dollars per share)			$ 0.04
Common Stock Issuable Upon the Assumed Conversion of Our Series B Convertible Preferred Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from calculating basic and diluted net loss per common share (in shares)	[2]		0	0
Common Stock Issuable Upon the Assumed Conversion of Our Series B Convertible Preferred Stock [Member] | Second Closing [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Number of shares issued (in shares)		1,250
Proceeds from issuance of preferred stock		$ 5,000,000
Number of days taken to automatically convert to common stock			190 days
Purchase price (in dollars per share)		$ 0.04

[1] As part of the Initial Note and the Second Note, at the holder's option, all unpaid principle and interest due under each convertible promissory note may be converted into shares of Common Stock based on a conversion price of $0.04 per share. The Initial Note and the Second Note mature on February 27, 2019 and March 31, 2019, respectively, and on each maturity date each convertible promissory note, and accrued interest thereon, is subject to mandatory conversion based on a conversion price of $0.04 per share, unless an event of default has occurred and is continuing. For the purposes of this Table, we have assumed that all outstanding principal and interest will be converted on each applicable maturity date.

[2] Pursuant to the March 2017 Offering, Velo LLC purchased 1,250 shares of Series B Convertible Preferred Stock of the Company for $5,000,000. The Series B Convertible Preferred Stock that was issued in the March 2017 Offering, (a) voted together with the Common Stock as a single class (subject to standard protective provisions for the Series B Convertible Preferred Stock), (b) had the same dividend rights as the Common Stock, (c) had a liquidation preference equal to the greater of its purchase price and its as converted-to-Common Stock value, (d) automatically converted into Common Stock when the number of authorized shares of Common Stock was increased within 190 days of the second closing as necessary to permit all outstanding convertible or exercisable securities (including the Series B Convertible Preferred Stock) to convert to Common Stock, and (e) was convertible into Common Stock at the discretion of the holder, subject to the availability of authorized shares, at an as-converted-to-Common Stock purchase price of $0.04 per share. On August 1, 2017, all 1,250 outstanding shares of Series B Convertible Preferred Stock converted in exchange for 125,000,000 shares of Common Stock as a result of the approval by the stockholders at the 2017 Annual Meeting of Stockholders held on July 25, 2017, and the filing in July 2017, of an amendment increasing our authorized shares of Common Stock from 200,000,000 shares to 750,000,000 shares.

XML

SHARE BASED COMPENSATION, Allocated compensation expense (Details) - Stock Options [Member] - USD ($)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based compensation expense	$ 7,923	$ 19,974
Research and Development [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based compensation expense	0	7,614
Selling, General and Administrative [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based compensation expense	$ 7,923	$ 12,360

XML

SHARE BASED COMPENSATION, Stock option, restricted stock and summary of plans (Details) - USD ($)							12 Months Ended
	Jun. 05, 2014	Jun. 13, 2013	Jun. 14, 2012	Jun. 15, 2010	Dec. 17, 2009	May 08, 2007	Dec. 31, 2017	Dec. 31, 2016	Mar. 28, 2018	Mar. 31, 2006
Stock Options [Member]
Options, Outstanding [Roll Forward]
Outstanding, beginning of period (in shares)							691,237	16,664,573
Granted (in shares)							0	0
Forfeited/cancelled (in shares)							(540,501)	(973,336)
Exercised (in shares)							0	0
Outstanding, end of period (in shares)							150,736	691,237
Outstanding, Weighted Average Exercise Price [Roll Forward]
Outstanding, beginning of period (in dollars per share)							$ 1.94	$ 1.73
Granted (in dollars per share)							0	0
Forfeited/cancelled (in dollars per share)							1.30	1.58
Exercised (in dollars per share)							0	0
Outstanding, end of period (in dollars per share)							$ 4.26	$ 1.94
Nonvested Awards, unearned share-based compensation [Abstract]
Unearned share-based compensation expense							$ 0
Stock Options [Member] | Maximum [Member]
Additional disclosures [Abstract]
Contractual term							10 years
Restricted Stock [Member]
Nonvested Awards, unearned share-based compensation [Abstract]
Unearned share-based compensation expense							$ 0	$ 0
Restricted Stock [Member] | Minimum [Member]
Additional disclosures [Abstract]
Vesting period							6 months
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
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
2018 Equity Incentive Plan [Member] | Subsequent Event [Member]
Additional disclosures [Abstract]
Number of shares authorized (in shares)									20,000,000

XML

SHARE BASED COMPENSATION, Stock options grant outstanding and excercisable (Details)	12 Months Ended
	Dec. 31, 2017 $ / shares shares
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Stock Options Outstanding (in shares) | shares	150,736
Options Outstanding, Weighted Average Exercise Price per Share (in dollars per share) | $ / shares	$ 4.26
Options Outstanding, Weighted Average Remaining Contractual Life in Years	4 years 10 months 24 days
Stock Options Exercisable (in shares) | shares	150,736
Options Exercisable, Weighted Average Exercise Price per Share (in dollars per share) | $ / shares	$ 4.26
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	90,000
Options Outstanding, Weighted Average Exercise Price per Share (in dollars per share) | $ / shares	$ 0.33
Options Outstanding, Weighted Average Remaining Contractual Life in Years	5 years 2 months 12 days
Stock Options Exercisable (in shares) | shares	90,000
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	40,000
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 8 months 12 days
Stock Options Exercisable (in shares) | shares	40,000
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	20,736
Options Outstanding, Weighted Average Exercise Price per Share (in dollars per share) | $ / shares	$ 27.33
Options Outstanding, Weighted Average Remaining Contractual Life in Years	3 months 18 days
Stock Options Exercisable (in shares) | shares	20,736
Options Exercisable, Weighted Average Exercise Price per Share (in dollars per share) | $ / shares	$ 27.33

XML

EMPLOYMENT BENEFIT PLAN (Details) - USD ($)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
EMPLOYMENT BENEFIT PLAN [Abstract]
Contributions made to 401(k) plan	$ 9,569	$ 17,396

XML

FAIR VALUE MEASUREMENTS (Details) - USD ($)	Dec. 31, 2017	Dec. 31, 2016
Liabilities [Abstract]
Promissory note payable	$ 1,000,000	$ 20,000
Convertible Promissory Note - March 2017 [Member]
Liabilities [Abstract]
Promissory note payable	500,000	0
Convertible Promissory Note - February 2017 [Member]
Liabilities [Abstract]
Promissory note payable	500,000	0
Promissory Note - December 2016 [Member]
Liabilities [Abstract]
Promissory note payable	$ 0	$ 20,000

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INCOME TAXES (Details) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Expiration of Operating Loss Carryforwards and Research Credit Carryforwards [Line Items]
Consolidated operating loss carryforwards		$ 58,787,306
Research activities carryforwards		$ 555,177
Period of cumulative changes in ownership considered for limit on operating loss and tax credit carryforwards		3 years
Minimum percentage of cumulative changes in ownership considered for limit on operating loss and tax credit carryforwards		50.00%
Deferred tax assets [Abstract]
Net operating loss carryforwards		$ 12,637,559	$ 20,056,077
Intangible assets		387,249	816,389
Other		577,633	575,065
Total gross deferred tax assets		13,602,441	21,447,531
Deferred tax liabilities [Abstract]
Property and equipment		18,316	10,391
Total gross deferred tax liabilities		18,316	10,391
Net total of deferred assets and liabilities		13,584,125	21,437,140
Valuation allowance		(13,584,125)	(21,437,140)
Net deferred tax assets		0	0
Increase (decrease) in valuation allowance		(7,853,015)	1,531,890
Reconciliation of expected statutory federal income tax rate to actual income tax rate [Abstract]
Expected income tax (benefit) at federal statutory tax rate -35%		(677,456)	(1,558,549)
Permanent differences		5,908	7,739
Research tax credits		0	(2,624)
Amortization of deferred startup costs		0	0
Valuation allowance		671,548	1,553,434
Income tax expense		$ 0	$ 0
Income Tax Disclosure [Line Items]
Federal statutory tax rate		35.00%
Maximum [Member]
Income Tax Disclosure [Line Items]
Carryforward tax losses period		20 years
2021 [Member]
Expiration of Operating Loss Carryforwards and Research Credit Carryforwards [Line Items]
Consolidated operating loss carryforwards		$ 34,248
Research activities carryforwards		0
2023 [Member]
Expiration of Operating Loss Carryforwards and Research Credit Carryforwards [Line Items]
Consolidated operating loss carryforwards		95,666
Research activities carryforwards		0
2024 [Member]
Expiration of Operating Loss Carryforwards and Research Credit Carryforwards [Line Items]
Consolidated operating loss carryforwards		910,800
Research activities carryforwards		13,584
2025 [Member]
Expiration of Operating Loss Carryforwards and Research Credit Carryforwards [Line Items]
Consolidated operating loss carryforwards		1,687,528
Research activities carryforwards		21,563
2026 [Member]
Expiration of Operating Loss Carryforwards and Research Credit Carryforwards [Line Items]
Consolidated operating loss carryforwards		11,950,281
Research activities carryforwards		60,797
2027 [Member]
Expiration of Operating Loss Carryforwards and Research Credit Carryforwards [Line Items]
Consolidated operating loss carryforwards		3,431,365
Research activities carryforwards		85,052
2028 [Member]
Expiration of Operating Loss Carryforwards and Research Credit Carryforwards [Line Items]
Consolidated operating loss carryforwards		8,824,940
Research activities carryforwards		139,753
2029 [Member]
Expiration of Operating Loss Carryforwards and Research Credit Carryforwards [Line Items]
Consolidated operating loss carryforwards		6,889,761
Research activities carryforwards		81,940
2030 [Member]
Expiration of Operating Loss Carryforwards and Research Credit Carryforwards [Line Items]
Consolidated operating loss carryforwards		5,113,583
Research activities carryforwards		41,096
2031 [Member]
Expiration of Operating Loss Carryforwards and Research Credit Carryforwards [Line Items]
Consolidated operating loss carryforwards		3,728,626
Research activities carryforwards		43,592
2032 [Member]
Expiration of Operating Loss Carryforwards and Research Credit Carryforwards [Line Items]
Consolidated operating loss carryforwards		3,695,792
Research activities carryforwards		8,690
2033 [Member]
Expiration of Operating Loss Carryforwards and Research Credit Carryforwards [Line Items]
Consolidated operating loss carryforwards		3,187,559
Research activities carryforwards		15,882
2034 [Member]
Expiration of Operating Loss Carryforwards and Research Credit Carryforwards [Line Items]
Consolidated operating loss carryforwards		1,797,031
Research activities carryforwards		19,491
2035 [Member]
Expiration of Operating Loss Carryforwards and Research Credit Carryforwards [Line Items]
Consolidated operating loss carryforwards		2,594,151
Research activities carryforwards		21,113
2036 [Member]
Expiration of Operating Loss Carryforwards and Research Credit Carryforwards [Line Items]
Consolidated operating loss carryforwards		2,510,546
Research activities carryforwards		2,624
2037 [Member]
Expiration of Operating Loss Carryforwards and Research Credit Carryforwards [Line Items]
Consolidated operating loss carryforwards		2,335,429
Research activities carryforwards		$ 0
Plan [Member]
Income Tax Disclosure [Line Items]
Federal statutory tax rate	21.00%

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COMMITMENTS AND CONTINGENCIES (Details)	1 Months Ended	2 Months Ended	12 Months Ended			13 Months Ended	23 Months Ended	33 Months Ended	35 Months Ended	60 Months Ended
	Dec. 31, 2017 USD ($)	Mar. 30, 2018 USD ($)	Dec. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)	Mar. 16, 2015 USD ($)	Mar. 31, 2014 USD ($)	Feb. 22, 2013 USD ($)	Dec. 31, 2017 USD ($)	Dec. 31, 2017 USD ($)	Mar. 31, 2011 USD ($)	Dec. 15, 2017 ft²
Future minimum lease payments [Abstract]
2018	$ 50,399		$ 50,399					$ 50,399	$ 50,399
2019	51,059		51,059					51,059	51,059
2020	0		0					0	0
2021	0		0					0	0
2022	0		0					0	0
Total	101,458		101,458					101,458	101,458
Rent expense for operating lease			$ 124,463	$ 130,098
Storage and Warehouse [Member] | Subsequent Event [Member]
Operating Leased Assets [Line Items]
Minimum monthly lease obligation		$ 1,564
Office and Laboratory Space [Member]
Operating Leased Assets [Line Items]
Minimum monthly lease obligation	$ 2,721				$ 9,379	$ 9,193	$ 9,776	$ 9,436		$ 9,330
Office rentable square feet | ft²											2,500
Office Equipment [Member]
Operating Leased Assets [Line Items]
Minimum monthly lease obligation									$ 551

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COMMITMENTS AND CONTINGENCIES, Related Party (Details) - USD ($)						3 Months Ended	12 Months Ended
	Feb. 27, 2017	Feb. 21, 2017	Feb. 16, 2017	Jan. 18, 2017	Dec. 15, 2016	Mar. 31, 2017	Dec. 31, 2017	Dec. 31, 2016	Apr. 02, 2017
Related Party Obligations [Abstract]
Concentration risk, percentage							100.00%	100.00%
Initial principal amount							$ 1,000,000
Summary of compensation earned, compensation paid in cash, and compensation temporarily deferred [Abstract]
Deferred compensation							72,000	$ 473,000
Compensation accrued liabilities								200,000
Compensation accounts payable								273,000
Velocitas Partners, LLC [Member]
Related Party Obligations [Abstract]
Initial principal amount			$ 30,000	$ 65,000	$ 20,000
Interest rate			6.00%	6.00%	6.00%
Monthly installment payments commencing period			180 days	180 days	180 days
Velocitas Partners, LLC [Member] | Maximum [Member]
Related Party Obligations [Abstract]
Expected gross proceeds	$ 6,000,000
Velocitas GmbH [Member]
Related Party Obligations [Abstract]
Monthly payment									$ 25,833
Velocitas GmbH [Member] | Revenue [Member]
Related Party Obligations [Abstract]
Related party sales							$ 214,000	$ 0
Concentration risk, percentage							30.00%	0.00%
Velocitas GmbH [Member] | Accounts Receivable [Member]
Related Party Obligations [Abstract]
Outstanding accounts receivable							$ 0	$ 0
Kirkwood Investors, Inc [Member]
Related Party Obligations [Abstract]
Initial principal amount		$ 25,000
Interest rate		6.00%
Monthly installment payments commencing period		60 days
Number of days after receiving interest rate		2 days
Altrazeal Distributors [Member] | Second Closing [Member]
Related Party Obligations [Abstract]
Warrants to purchase shares of common stock (in shares)						13,375,000
Acquisition value						$ 869,375
Closing price of common stock (in dollars per share)						$ 0.065

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COMMITMENTS AND CONTINGENCIES, Contingent Milestone Obligations (Details) - USD ($)	12 Months Ended
	Dec. 31, 2017	Mar. 07, 2008
Access Pharmaceuticals [Member]
Milestone payments [Line Items]
Future milestone obligations	$ 4,750,000
Accrued expenses related to future milestone payments	39,000
Access Pharmaceuticals [Member] | Annual Sales, Certain Products [Member] | Minimum [Member]
Milestone payments [Line Items]
Milestone for payment	20,000,000
Access Pharmaceuticals [Member] | Annual Sales, Certain Products [Member] | Maximum [Member]
Milestone payments [Line Items]
Milestone for payment	40,000,000
Access Pharmaceuticals [Member] | Annual Sales, Any One Certain Product [Member]
Milestone payments [Line Items]
Milestone for payment	20,000,000
Access Pharmaceuticals [Member] | Cumulative Sales, Certain Products [Member] | Minimum [Member]
Milestone payments [Line Items]
Milestone for payment	50,000,000
Access Pharmaceuticals [Member] | Cumulative Sales, Certain Products [Member] | Maximum [Member]
Milestone payments [Line Items]
Milestone for payment	$ 100,000,000
ProStrakan Ltd [Member]
Milestone payments [Line Items]
Royalty percentage		30.00%
ProStrakan Ltd [Member] | Maximum [Member]
Milestone payments [Line Items]
Future milestone obligations		$ 1,400,000

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COMMITMENTS AND CONTINGENCIES, Prescription Drug User Fee Obligation (Details) - USD ($)	1 Months Ended
	Nov. 30, 2017	Dec. 31, 2017	Sep. 30, 2017
Loss Contingencies [Line Items]
Settlement payment amount to DHHS	$ 400,000
Assessed Prescription Drug User Fee [Member]
Loss Contingencies [Line Items]
Prescription drug user fees		$ 535,000
Accrued potential penalties and interest			$ 1,067,000

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LEGAL PROCEEDINGS (Details)	12 Months Ended
	Dec. 31, 2017
LEGAL PROCEEDINGS [Abstract]
Maximum percentage of material proceedings/interest	5.00%