10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended: June 30, 2018

OR

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

For the transition period from: ___ to ___.

Commission File Number: 001-336180

ULURU Inc.(Exact Name of Registrant as Specified in its Charter)

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

4410 Beltway Drive Addison, Texas	75001
(Address of Principal Executive Offices)	(Zip Code)

(214) 905-5145

Registrant's Telephone Number, including Area Code

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☑    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 is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definition of "accelerated filer", "large accelerated filer",  "smaller reporting company" and "emerging growth 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 August 14, 2018, there were 201,349,431 shares of the registrant's Common Stock, $0.001 par value per share ("Common Stock"), 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.

ULURU Inc.

INDEX TO FORM 10-Q

For the Three and Six Months Ended JUNE 30, 2018

		Page
PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements.	3
	Condensed Consolidated Balance Sheets as of June 30, 2018 (unaudited) and December 31, 2017	3
	Condensed Consolidated Statements of Operations (unaudited) for the three and six months ended June 30, 2018 and 2017	4
	Condensed Consolidated Statements of Cash Flows (unaudited) for the six months ended June 30, 2018 and 2017	5
	Notes to Condensed Consolidated Financial Statements (unaudited)	6
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations.	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	22
Item 4.	Controls and Procedures.	22
PART II	OTHER INFORMATION
Item 1.	Legal Proceedings.	22
Item 1A.	Risk Factors.	22
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	22
Item 3.	Defaults Upon Senior Securities.	22
Item 4.	Mine Safety Disclosures.	22
Item 5.	Other Information.	22
Item 6.	Exhibits.	23
	Signatures.	23

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PART I – FINANCIAL INFORMATION

ITEM 1. Financial Statements.

ULURU Inc.CONDENSED CONSOLIDATED BALANCE SHEETS

	June 30, 2018			December 31, 2017
	(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents	$	3,146,219		$	3,710,882
Accounts receivable, net		221,337			256,123
Inventory		457,917			497,461
Prepaid expenses and deferred charges		111,653			170,686
Total Current Assets		3,937,126			4,635,152
Property, Equipment and Leasehold Improvements, net		42,763			53,723
Other Assets
Intangible asset - patents, net		161,367			179,737
Intangible asset - licensing rights, net		3,450,195			3,656,636
Deposits		4,316			18,069
Total Other Assets		3,615,878			3,854,442
TOTAL ASSETS	$	7,595,767		$	8,543,317
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable	$	1,172,368		$	1,213,246
Accrued liabilities		173,807			163,969
Accrued interest		161,644			99,658
Convertible notes payable, current portion, net of unamortized debt discount and debt issuance costs		747,189			---
Deferred revenue, current portion		29,227			35,761
Total Current Liabilities		2,284,235			1,512,634
Long Term Liabilities
Convertible notes payable, net of unamortized debt discount and debt issuance costs		---			570,189
Deferred revenue, net of current portion		331,800			352,698
Total Long Term Liabilities		331,800			922,887
TOTAL LIABILITIES		2,616,035			2,435,521
COMMITMENTS AND CONTINGENCIES		---			---
STOCKHOLDERS' EQUITY
Preferred Stock - $0.001 par value; 20,000 shares authorized;
Preferred Stock Series A, 1,000 shares designated; no shares issued and outstanding at June 30, 2018 and December 31, 2017, respectively		---			---
Preferred Stock Series B, 1,250 shares designated; no shares issued and outstanding at June 30, 2018 and December 31, 2017, respectively		---			---
Common Stock - $0.001 par value; 750,000,000 shares authorized;
201,349,431 and 201,349,431 shares issued and outstanding at June 30, 2018 and December 31, 2017, respectively		201,349			201,349
Additional paid-in capital		68,562,533			68,556,734
Accumulated  (deficit)		(63,784,150	)		(62,650,287	)
TOTAL STOCKHOLDERS' EQUITY		4,979,732			6,107,796
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	7,595,767		$	8,543,317
The accompanying notes are an integral part of these condensed consolidated financial statements.

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ULURU Inc.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended June 30,						Six months Ended June 30,
	2018			2017			2018			2017
Revenues
License fees	$	---		$	1,436		$	---		$	2,858
Product sales, net		105,550			2,878			189,345			218,573
Total Revenues		105,550			4,314			189,345			221,431
Costs and Expenses
Cost of product sold		43,756			3,067			70,111			105,416
Research and development		37,500			48,192			84,565			108,321
Selling, general and administrative		355,482			327,210			730,153			701,393
Amortization of intangible assets		113,027			113,027			224,811			202,334
Depreciation		5,481			32,842			10,961			65,558
Gain on sale of equipment		---			---			(29,179	)		---
Total Costs and Expenses		555,246			524,329			1,091,422			1,183,022
Operating (Loss)		(449,696	)		(520,015	)		(902,077	)		(961,591	)
Other Income (Expense)
Interest and miscellaneous income		---			2			---			4
Interest expense		(126,670	)		(133,864	)		(252,149	)		(155,141	)
Foreign currency transaction loss		(8,744	)		(3,181	)		(6,299	)		(3,071	)
Gain on settlement of liability		---			114,013			---			114,013
(Loss) Before Income Taxes		(585,110	)		(543,045	)		(1,160,525	)		(1,005,786	)
Income taxes		---			---			---			---
Net (Loss)	$	(585,110	)	$	(543,045	)	$	(1,160,525	)	$	(1,005,786	)
Basic and diluted net (loss) per common share	$	(0.00	)	$	(0.01	)	$	(0.01	)	$	(0.01	)
Weighted average number of common shares outstanding		201,349,431			76,349,431			201,349,431			69,772,774
The accompanying notes are an integral part of these consolidated financial statements.

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ULURU Inc. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Six Months Ended June 30,
	2018			2017
OPERATING ACTIVITIES :
Net loss	$	(1,160,525	)	$	(1,005,786	)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of intangible assets		224,811			202,334
Depreciation		10,961			65,558
Share-based compensation for stock and options issued to employees		---			8,697
Share-based compensation for options issued to non-employees		5,799			---
Amortization of debt discount on promissory notes		172,671			87,006
Amortization of debt issuance costs on promissory notes		4,329			1,916
Gain on sale of equipment		(29,179	)		---
Gain on settlement of liability		---			(114,013	)
Change in operating assets and liabilities:
Accounts receivable		34,785			59,177
Inventory		39,544			9,776
Prepaid expenses and deferred charges		59,033			97,958
Deposits		13,753			---
Accounts payable		(40,878	)		218,155
Accrued liabilities		9,838			(110,347	)
Accrued interest		61,986			36,591
Deferred revenue		(770	)		(14,328	)
Total		566,683			548,480
Net Cash Used in Operating Activities		(593,842	)		(457,306	)
INVESTING ACTIVITIES :
Purchase of equipment		---			(3,501	)
Proceeds from sale of equipment		29,179			---
Net Cash Provided / (Used) in Investing Activities		29,179			(3,501	)
FINANCING ACTIVITIES :
Proceeds from issuance of convertible notes and warrant, net		---			983,092
Proceeds from sale of Series B preferred stock, net		---			4,915,661
Proceeds from issuance of promissory notes		---			120,000
Repayment of principle due on promissory notes		---			(140,000	)
Net Cash Provided by Financing Activities		---			5,878,753
Net (Decrease) / Increase in Cash		(564,663	)		5,417,946
Cash,  beginning of period		3,710,882			36,615
Cash,  end of period	$	3,146,219		$	5,454,561
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Cash paid for interest	$	---		$	2,672
Cash paid for income taxes	$	---		$	---
Non-cash investing and financing activities:
Issuance of common stock for acquisition of licensing rights	$	---		$	869,375
The accompanying notes are an integral part of these condensed consolidated financial statements.

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ULURU Inc.

NOTES TO

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1. COMPANY OVERVIEW AND BASIS OF PRESENTATION

Company Overview

ULURU Inc. (hereinafter "we", "our", "us", "ULURU", or the "Company") is a Nevada corporation.  We are a specialty medical technology company committed to developing and commercializing innovative wound care and drug delivery systems based on our patented technologies.  Our mission is to improve the lives of patients the world over by delivering comprehensive solutions that optimize outcomes for the key stakeholders in our healthcare systems: patients, providers, and payers.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP") for interim financial information and with the instructions to Form 10-Q and include the accounts of ULURU Inc., a Nevada corporation, and its wholly-owned subsidiary, Uluru Delaware Inc., a Delaware corporation.  They do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. All adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the Company's financial position as of June 30, 2018 and the results of its operations for the three and six months ended June 30, 2018 and 2017 and cash flows for the six months ended June 30, 2018 and 2017 have been made.

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

All intercompany transactions and balances have been eliminated in consolidation.  Certain prior period amounts have been reclassified to conform to current period presentations.

Operating results for the three and six months ended June 30, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018.

These condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2017, as filed with the Securities and Exchange Commission on March 30, 2018 (the "2017 Form 10-K"), including the risk factors set forth therein.

NOTE 2. 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 ("Topic 606"), which amends the guidance for accounting for revenue from contracts with customers and requires revenue recognition based on the transfer of promised goods or services to customers in an amount that reflects consideration the Company expects to be entitled to in exchange for goods or services.  Topic 606 supersedes prior revenue recognition requirements in ASC Topic 605 and most industry-specific accounting guidance. In 2015 and 2016, the FASB issued additional updated guidance, which clarified certain aspects of the Topic 606 and the related implementation guidance issued by the FASB-IASB Joint Transition Resource Group for Revenue Recognition.

The new revenue standard ("Topic 606") became effective for the Company on January 1, 2018, and was adopted using the modified retrospective method under which previously presented financial statements are not restated and the cumulative effect of adopting the new revenue standard on contracts in process is recognized by an adjustment to retained earnings at the effective date. The cumulative effect of applying the new revenue standard was an increase of $26,662 to stockholder's equity as of January 1, 2018.   The adoption of ASC 606 does not materially impact the Company's revenue recognition as the Company's revenue primarily comes from the sale of products which do not required long term contracts, contracts with multiple deliverables or performance obligations.  Additionally, the Company already historically accounted for variable consideration on its product sales such as sale returns and discounts as part of revenue recognition.  Topic 606 requires more robust disclosures than required by previous guidance, including disclosures related to disaggregation of revenue into appropriate categories, performance obligations, the judgements made in revenue recognition determinations, adjustments to revenue which relate to activities from previous quarters or years, any significant reversals of revenue, and costs to obtain or fulfill contracts. See Note 3, "Revenue Recognition."

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which supersedes current lease accounting guidance. The primary difference between current GAAP and the new standard is the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under current GAAP. The standard requires a modified retrospective approach upon adoption, with practical expedients that may be available to elect. The standard is effective for the Company in the first quarter of 2019 and early adoption is permitted. The Company is evaluating the impact of the ASU on its 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 retrospectively 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 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments ("ASU 2016-15"), providing additional guidance on eight specific cash flow classification issues. The goal of ASU 2016-15 is to reduce diversity in practice of classifying certain items. The amendments in ASU 2016-15 are effective for the Company in the first quarter of 2018 using a retrospective transition method, and early adoption is permitted. The Company's adoption of ASU 2016-15 did not have a material impact on its consolidated financial statements.

- 6 -

In November 2016, the FASB issued ASU No. 2016-18, Restricted Cash, Statement of Cash Flows (Topic 230) ("ASU 2016-18").  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 ASU 2016-18 should be applied using a retrospective transition method to each period presented. The Company's adoption of ASU 2016-18 did not have a material impact on its consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment ("ASU 2017-04").  The amended guidance eliminates a step from the goodwill impairment test. Under the amended guidance, an entity should perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity would recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The Company adopted this new guidance in the fourth quarter of 2017. The Company's adoption of ASU 2017-04 did not have a material impact on its consolidated financial statements.

In May 2017, the FASB issued ASU No. 2017-09, Compensation -Stock Compensation (Topic 718): Scope of Modification Accounting ("ASU 2017-09"). ASU 2017-09 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 retrospective basis beginning on January 1, 2018 with early adoption permitted.  The Company's adoption of ASU 2017-09 did not have a material impact on its consolidated financial statements..

NOTE 3. SIGNIFICANT ACCOUNTING POLICIES

Please refer to the notes in the Company's 2017 Form 10-K for additional details of the Company's financial condition and a description of the Company's accounting policies, which have been continued without change except for the Company's Revenue Recognition accounting policy, which has been updated as a result of the Company's adoption in the current quarter of ASU 2014-09.

Revenue Recognition

The Company's product, Altrazeal®, is distributed to and through a limited number of specialty distributors internationally and a combination of wholesalers and direct to customer sales in the United States.  These customers subsequently resell the Company's product to healthcare providers and patients.  

The Company recognizes revenue as the transfer of control of its products to the Company's customers in an amount reflecting the consideration the Company expects to be entitled. In order to achieve this core principle, the Company applies the following five-step approach:

§	identification of the contract, or contracts, with a customer;
§	recognition of revenue when, or as, we satisfy the performance obligations;
§	determination of the transaction price;
§	allocation of the transaction price to the performance obligations in the contract; and
§	recognition of revenue when, or as, we satisfy the performance obligations.

The Company considers customer purchase orders, which in some cases are governed by master distribution agreements, to be the contracts with the customer. For each contract, the Company considers the promise to transfer products, each of which are distinct, to be the identified performance obligations. In determining the transaction price, the Company evaluates whether the price is subject to refund or adjustment to determine the net consideration to which the Company expects to be entitled. In addition, the Company evaluates the customer's ability to pay as part of its consideration of the contract. As the Company's standard payment terms are less than one year, the Company elected the practical expedient under Accounting Standards Codification (ASC) 606-10-32-18, and determined that its contracts do not have a significant financing component. The Company allocates the transaction price to each distinct product based on the relative standalone selling price. Revenue is recognized when control of the product is transferred to the customer, the customer is obligated to pay the Company, and the Company has no remaining obligations, which is typically at shipment. In certain locations, primarily outside the United States, product shipping terms may vary. Thus, in such locations, the point at which control of the product transfers to the customer and revenue recognition occurs will vary accordingly.

Customer returns of non-conforming products are estimated at the time revenue is recognized. In certain customer relationships, rebates exist, which are recognized according to the terms and conditions of the contractual relationship. Customer returns, rebates, and discounts are not material to the Company's consolidated financial statements. The Company has elected to recognize the revenue and cost for freight and shipping when control over the products has transferred to the customer. When applicable, taxes collected from Customers relating to product sales and remitted to governmental authorities are excluded from revenues.  

The Company has elected to immediately expense contract costs from obtaining a contract as the amortization period of the asset the Company otherwise would have recognized would have been less than a year.

Reserves for Variable Consideration

Revenues from product sales are recorded at the transaction price, which includes estimates of variable consideration for which reserves are established and which result from discounts, returns, and other allowances that are offered within contracts between the Company and its customers.  These reserves are based on the amounts earned or to be claimed on the related sales and are classified as reductions of accounts receivable (if the amount is payable to the customer) or a current liability (if the amount is payable to a party other than a customer).  Where appropriate, these estimates take into consideration a range of possible outcomes and contemplates relevant factors such as the Company's historical experience, current contractual and statutory requirements, specific known market events and trends, industry data and forecasted customer buying and payment patterns.  Overall, these reserves reflect the Company's best estimates of the amount of consideration to which it is entitled based on the terms of the contract.  The amount of variable consideration which is included in the transaction price may be constrained, and is included in the net sales price only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period.  Actual amounts of consideration ultimately received may differ from the Company's estimates. 

The Company believes that the reserves it has established are reasonable based upon current facts and circumstances. Applying different judgments or interpretations to the same facts and circumstances could result in the estimated amount for reserves to vary.  If actual results vary with respect to the Company's reserves, the Company may need to adjust its estimates, which could have a material effect on the Company's results of operations in the period of adjustment. To date, such adjustments have not been material.

Trade Discounts and Allowances 

The Company receives sales order management, data and distribution services from certain customers.  To the extent the services received are distinct from the Company's sale of products to the customer, these payments are classified in selling, general and administrative expenses in the consolidated statements of operations of the Company. The company revenue recognition is net of estimated trade discount and allowances.

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Other Revenues

The Company enters into licensing agreements, from time to time, which are within the scope of Topic 606, under which it may license certain rights to its products or product candidates to third parties.  The terms of these arrangements typically include payment to the Company of one or more of the following: non-refundable, up-front license fees; development, regulatory and commercial milestone payments; and royalties on net sales of licensed products.  Each of these payments results in revenues recognized and classified as other revenues.

Licenses of intellectual property:  If the license of the Company's intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, the Company recognizes revenues from non-refundable, up-front fees allocated to the license when the license is transferred to the customer and the customer is able to use and benefit from the license.  For licenses that are bundled with other promises, the Company utilizes judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue from non-refundable, up-front fees.  The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition.

Milestone Payments:  At the inception of each arrangement that includes development milestone payments, the Company evaluates whether the milestones are considered probable of being reached and estimates the amount to be included in the transaction price using the most likely amount method.  If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in the transaction price.  Milestone payments that are not within the control of the Company or the licensee, such as regulatory approvals, are not considered probable of being achieved until those approvals are received. The transaction price is then allocated to each performance obligation on a relative stand-alone selling price basis, for which the Company recognizes revenue as or when the performance obligations under the contract are satisfied.  At the end of each subsequent reporting period, the Company re-evaluates the probability of achievement of such development milestones and any related constraint, and if necessary, adjusts its estimate of the overall transaction price.  Any such adjustments are recorded on a cumulative catch-up basis, which would affect license, collaboration and other revenues and earnings in the period of adjustment.

Royalties:  For arrangements that include sales-based royalties, including milestone payments based on the level of sales, and the license is deemed to be the predominant item to which the royalties relate, the Company recognizes revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied). 

Under the Company's various contracts, the Company may receive up-front payments and fees, which may require deferral of revenue recognition to a future period until the Company performs its obligations under these arrangements.  Amounts are recorded as accounts receivable when the Company's right to consideration is unconditional.  The Company does not assess whether a contract has a significant financing component if the expectation at contract inception is such that the period between payment by the customer and the transfer of the promised goods or services to the customer will be one year or less.

We received upfront cash payments for licenses of our technology in years 2007 to 2013. The revenue was recognized straight-line over the life of the patent. Our obligation was performed at the time the license was granted. Following the revenue recognition policies in accordance with ASC 606, we decreased the accumulated deficit by $26,662 as of January 1, 2018 and decreased deferred revenue by the same amount.

Effective January 1, 2018, we adopted Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers, as amended (commonly referred to as ASC 606) using the modified retrospective transition method. The cumulative effect of applying the standard was an increase of $26,662 to stockholder's equity as of January 1, 2018. Our statement of operations for the three and six months ended June 30, 2018 and our balance sheet as of June 30, 2018 are presented under ASC 606, while our statement of operations for the three and six months ended June 30, 2017 and our balance sheet as of December 31, 2017 are presented under ASC 605, Revenue Recognition. See below for disclosure of the impact of the adoption of ASC 606 on our statement of operations and balance sheet for the three and six months ended June 30, 2018, and the effect of changes made to our consolidated balance sheet as of January 1, 2018.

The table below presents the cumulative effect of the changes made to the consolidated January 1, 2018 balance sheet due to the adoption of ASC 606.

	December 31, 2017,						January 1, 2018
BALANCE SHEET	As Reported Under			Adjustments Due			As Adjusted
	ASC 605			to ASC 606			Under ASC 606
Liabilities
Current liabilities
Current portion of deferred revenue	$	35,761		$	(5,764	)	$	29,997
Total current liabilities		1,512,634			(5,764	)		1,506,870
Deferred revenue, net of current portion		352,698			(20,898	)		331,800
Total liabilities		2,435,521			(26,662	)		2,408,859
Stockholders' Equity
Accumulated deficit		(62,650,287	)		26,662			(62,623,625	)
Total equity	$	6,107,796		$	26,662		$	6,134,458

The table below presents the impact of the adoption of ASC 606 on our statement of operations.

	Six Months Ended June 30, 2018
STATEMENT OF OPERATIONS	Under			Effect of			As Reported
	ASC 605			ASC 606			Under ASC 606
Revenues
License revenues	$	1,422		$	(1,422	)	$	---
Total revenues		190,767			(1,422	)		189,345
Loss from operations	$	(900,655	)	$	(1,422	)	$	(902,077	)
Net loss	$	(1,159,103	)	$	(1,422	)	$	(1,160,525	)
Basic and diluted loss per common share	$	(0.01	)	$	(0.00	)	$	(0.01	)

- 8 -

The table below presents the impact of the adoption of ASC 606 on our balance sheet.

	June 30, 2018
BALANCE SHEET	Under			Effect of			As Reported
	ASC 605			ASC 606			Under ASC 606
Liabilities and Stockholders' Equity
Current liabilities
Current portion of deferred revenue	$	34,991		$	(5,764	)	$	29,227
Total current liabilities		2,289,999			(5,764	)		2,284,235
Deferred revenue, net of current portion		351,276			(19,476	)		331,800
Total liabilities		2,641,275			(25,240	)		2,616,035
Stockholders' Equity
Accumulated deficit		(63,809,390	)		25,240			(63,784,150	)
Total stockholders' equity	$	4,954,492		$	25,240		$	4,979,732

Disaggregation of Revenue

Revenue is disaggregated by primary geographic markets, as we believe this best depicts how the nature, amount, timing, and uncertainty of our revenue and cash flows are affected by economic factors.  For more information on the Company's disaggregated revenue, see Note 4, 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 distribution partners for international activities and our domestic sales activities for our products.

Revenues per geographic area for the three and six months ended June 30 are summarized as follows:

	Three Months Ended June 30,										Six months Ended June 30,
Revenues	2018		%			2017		%			2018		%			2017		%
Domestic	$	2,105		2	%	$	2,878		67	%		13,102		7	%	$	5,415		2	%
International		103,445		98	%		1,436		33	%		176,243		93	%		216,016		98	%
Total	$	105,550		100	%	$	4,314		100	%	$	189,345		100	%	$	221,431		100	%

A significant portion of our revenues are derived from a few major customers.  For the three months ended June 30, 2018 and 2017, three customers and three customers, respectively, had greater than 10% of total revenues and represented in the aggregate 98% and 66%, respectively, of total revenues.  For the six months ended June 30, 2018 and 2017, three customers and one customer, respectively, had greater than 10% of total revenues and represented in  the aggregate 87% and 97%, respectively, of total revenues.

NOTE 5. INVENTORY

As of June 30, 2018, our inventory was comprised of Altrazeal® finished goods, manufacturing costs incurred in the production of Altrazeal®, and raw materials.  Inventories are stated at the lower of cost (first in, first out method) or 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.

The components of inventory, at the different stages of production, consisted of the following at June 30, 2018 and December 31, 2017:

Inventory	June 30, 2018		December 31, 2017
Raw materials	$	45,451	$	32,329
Work-in-progress		341,073		311,632
Finished goods		71,393		153,500
Total	$	457,917	$	497,461

NOTE 6. PROPERTY, EQUIPMENT and LEASEHOLD IMPROVEMENTS

Property, equipment and leasehold improvements, net, consisted of the following at June 30, 2018 and December 31, 2017:

Property, equipment and leasehold improvements	June 30, 2018			December 31, 2017
Laboratory equipment	$	424,888		$	424,888
Manufacturing equipment		1,589,286			1,604,894
Computers, office equipment, and furniture		154,781			154,781
Computer software		4,108			4,108
Leasehold improvements		95,841			95,841
		2,268,904			2,284,512
Less: accumulated depreciation and amortization		(2,226,141	)		(2,230,789	)
Property, equipment and leasehold improvements, net	$	42,763		$	53,723

Depreciation expense on property, equipment and leasehold improvements was $5,481 and $32,842 for the three months ended June 30, 2018 and 2017, respectively, and was $10,961 and $65,558 for the six months ended June 30, 2018 and 2017, respectively.

- 9 -

NOTE 7. INTANGIBLE ASSETS

Patents

Intangible patent assets are composed of patents acquired in October, 2005.  Intangible assets, net consisted of the following at June 30, 2018 and December 31, 2017:

Intangible assets – patents	June 30, 2018			December 31, 2017
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		(7,437,261	)		(7,418,891	)
Less: reserve for impairment		(2,027,310	)		(2,027,310	)
Intangible assets - patents, net	$	161,367		$	179,737

Amortization expense for intangible patents assets was $9,236 and $9,236 for the three months ended June 30, 2018 and 2017, respectively, and was $18,370 and $18,370 for the six months ended June 30, 2018 and 2017, respectively.

The future aggregate amortization expense for intangible patent assets, remaining as of June 30, 2018, is as follows:

Calendar Years	Future Amortization Expense
2018 (Six months)	$	18,674
2019		37,044
2020		37,145
2021		37,044
2022		31,460
Total	$	161,367

Licensing rights

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 9. 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 agreements 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 June 30, 2018 and December 31, 2017:

Intangible assets - licensing rights	June 30, 2018			December 31, 2017
Intangible assets – licensing rights, gross	$	4,381,881		$	4,381,881
Less: accumulated amortization		(931,686	)		(725,245	)
Intangible assets - licensing rights, net	$	3,450,195		$	3,656,636

Amortization expense for intangible licensing rights assets was $103,791 and $103,791 for the three months ended June 30, 2018 and 2017, respectively, and was $206,441 and $183,964 for the six months ended June 30, 2018 and 2017, respectively.

The future aggregate amortization expense for intangible licensing rights assets, remaining as of June 30, 2018, is as follows:

Calendar Years	Future Amortization Expense
2018 (Six months)	$	209,862
2019		416,303
2020		416,303
2021		416,303
2022		416,303
2023 & Beyond		1,575,121
Total	$	3,450,195

- 10 -

NOTE  8. ACCRUED LIABILITIES

Accrued liabilities consisted of the following at June 30, 2018 and December 31, 2017:

Accrued Liabilities	June 30, 2018		December 31, 2017
Accrued compensation/benefits	$	129,006	$	124,819
Accrued property taxes		2,850		---
Accrued royalties		41,951		39,144
Product rebates/returns				6
Total accrued liabilities	$	173,807	$	163,969

NOTE 9. CONVERTIBLE NOTE PAYABLE – RELATED PARTY

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".  Refer to a description in greater detail of the Company's related party affiliation with Velocitas and Velo LLC in Note 16. Related Party Transactions and Concentration.

The first closing, which occurred on February 27, 2017, included the purchase by Velocitas at face value of a Secured Convertible Note, dated February 27, 2017, in the principal amount of $500,000 (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, 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 Company received of $983,092 of net proceeds from the issuance of the Initial Note and the Second Note due to $16,908 of debt issuance costs and received of $4,915,661 of net proceeds from the sale of the Series B Convertible Preferred Stock due to $84,339 of equity issuance costs.

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 right) 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 the Second Note is as follows:

											As of June 30, 2018
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	$	118,425	$	3,145	$	378,430
Second Note	$	500,000		12.5	%	03/31/2019	$	0.04	$	500,000	$	127,860	$	3,381	$	368,759
Total	$	1,000,000							$	1,000,000	$	246,285	$	6,526	$	747,189

- 11 -

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 such 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 $31,164 and $31,165 for the three months ended June 30, 2018 and 2017, respectively, and $61,986 and $37,341 for the six months ended June 30, 2018 and 2017, respectively.

The amount of debt discount amortized from our convertible debt was $86,812 and $87,006 for the three months ended June 30, 2018 and 2017, respectively, and $172,671 and $87,006 for the six months ended June 30, 2018 and 2017, respectively.

The amount of debt issuance costs amortized from our convertible debt was $2,194 and $1,916 for the three months ended June 30, 2018 and 2017, respectively, and $4,329 and $1,916 for the six months ended June 30, 2018 and 2017, respectively.

NOTE 10. 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.  The Company received of $4,915,661 of net proceeds from the sale of the Series B Convertible Preferred Stock due to $84,339 of equity issuance costs.

On 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 9. Convertible Debt.

NOTE 11. STOCKHOLDERS' EQUITY

Common Stock

As of June 30, 2018, we had 201,349,431 shares of Common Stock issued and outstanding.  For the six months ended June 30, 2018, we did not issue or redeem any shares of Common Stock.

Preferred Stock

As of June 30, 2018, we had no shares of Series A Preferred Stock (the "Series A Shares") issued and outstanding.  For the six months ended June 30, 2018, we did not issue or redeem any Series A Shares.

As of June 30, 2018, we had no shares of Series B Preferred Stock (the "Series B Shares") issued and outstanding.  For the three months ended June 30, 2018, we did not issue or redeem any Series B Shares.

Warrants

The following table summarizes the warrants outstanding and the number of shares of Common Stock subject to exercise as of June 30, 2018 and the changes therein during the six months then ended:

	Number of Shares of Common Stock Subject to Exercise			Weighted – Average Exercise Price
Balance as of December 31, 2017		83,234,617		$	0.06
Warrants issued		---			---
Warrants exercised		---			---
Warrants cancelled		(660,000	)	$	0.60
Balance as of June 30, 2018		82,574,617		$	0.06

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For the six months ended June 30, 2018, we did not issue or redeem any warrants.

Of the warrant shares subject to exercise as of June 30, 2018, expiration of the right to exercise is as follows:

Date of Expiration	Number of Warrant Shares of Common Stock Subject to Expiration
January 15, 2019		80,000
April 30, 2020		194,118
March 30, 2021		25,245,442
March 31, 2027		57,055,057
Total		82,574,617

NOTE 12. EARNINGS PER SHARE

Basic and Diluted Net Loss Per Share

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

Shares used in calculating basic and diluted net loss per common share exclude these potential common shares as of June 30, 2018 and December 31, 2017:

	June 30, 2018		December 31, 2017
Warrants to purchase Common Stock		82,574,617		83,234,617
Stock options to purchase Common Stock		1,635,334		150,736
Common Stock issuable upon the assumed conversion of our convertible promissory notes (1)		31,250,000		31,250,000
Total		115,459,951		114,635,353

(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.

NOTE 13. SHARE BASED COMPENSATION

The Company maintains the 2006 Equity Incentive Plan and the 2018 Equity Incentive Plan.  Each of the Equity Incentive Plans are administered by the Board of Directors, acting in lieu of a compensation committee, 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.

As of March 29, 2016, the 2006 Equity Incentive Plan expired by its terms, and no additional awards may be granted thereunder.  The expiration of the 2006 Equity Incentive Plan does not affect outstanding awards.

On March 28, 2018, the Board of Directors approved the 2018 Equity Incentive Plan, which was subsequently ratified at the Company's 2018 Annual Meeting of Stockholders held on June 11, 2018.  The 2018 Equity Incentive Plan allows for the Company to grant awards for up to 20,000,000 shares of Common Stock.  Awards under the 2018 Equity Incentive Plan may include the following award types: stock options, which may be either incentive stock options or nonqualified stock options; stock appreciation rights; restricted stock; RSUs; other stock-based awards, including unrestricted shares; or any combination of the foregoing. The exercise price of stock options granted under the 2018 Equity Incentive Plan is equal to or greater than the closing price of a share of the Company's Common Stock on the grant date.

Our Board did not granted any stock option awards for the three months ended June 30, 2018.  Our Board has granted the following stock option awards for the six months ended June 30:

	Six Months Ended June 30,
Stock Option Awards	2018		2017(1)
Quantity		1,500,000		---
Weighted average fair value per share	$	0.03		---
Fair value	$	45,000		---

(1)  The Company did not award any shared-based compensation for the three and six months ended June 30, 2017.

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We account for share-based compensation under FASB ASC Topic 718, Stock Compensation, which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees, consultants, and directors based on estimated fair values of the award on the grant date.  We use the Black-Scholes option-pricing model to estimate the fair value of share-based awards with the following weighted average assumptions for the six months ended June 30:

	Six Months Ended June 30,
Stock Option Awards	2018			2017 (4)
Expected volatility  (1)		136.27	%		---
Risk-free interest rate %  (2)		2.56	%		---
Expected term (in years)		5.0			---
Dividend yield  (3)		---			---

(1)	Expected volatility assumption was based upon a combination of historical stock price volatility measured on a daily basis and an estimate of expected future stock price volatility
(2)	Risk-free interest rate assumption is based upon U.S. Treasury bond interest rates appropriate for the term of the stock options.
(3)	The Company does not currently intend to pay cash dividends, thus has assumed a 0% dividend yield.
(4)	The Company did not award any shared-based compensation for the three and six months ended June 30, 2017.

Stock Options (Incentive and Nonstatutory)

The following table summarizes share-based compensation related to stock options for the three and six months ended June 30:

	Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017
Research and development	$	5,610	$	1,682	$	5,799	$	3,345
Selling, general and administrative		---		2,691		---		5,352
Total share-based compensation expense	$	5,610	$	4,373	$	5,799	$	8,697

As of June 30, 2018, the balance of unearned share-based compensation to be expensed in future periods related to unvested stock option awards, as adjusted for expected forfeitures, is approximately $39,000.  The period over which the unearned share-based compensation is expected to be recognized is approximately twenty one months.

The following table summarizes the stock options outstanding and the number of shares of Common Stock subject to exercise as of June 30, 2018 and the changes therein during the six months then ended:

	Stock Options			Weighted Average Exercise Price per Share
Outstanding as of December 31, 2017		150,736		$	4.26
Granted		1,500,000		$	0.05
Forfeited/cancelled		(15,402	)	$	29.59
Exercised		---			---
Outstanding as of June 30, 2018		1,635,334		$	0.16
Exercisable as of June 30, 2018		135,334		$	1.38

Summary of Plans

2006 Equity Incentive Plan

In March 2006, our Board adopted and our stockholders approved our 2006 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 subsequent annual meetings of the stockholders held in 2007, 2009, 2010, 2012, 2013, and 2014, our stockholders approved amendments to the 2006 Equity Incentive Plan that increased the number of shares of Common Stock issuable under the 2006 Equity Incentive Plan 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 June 30, 2018, we had granted options to purchase 2,061,167 shares of Common Stock since the inception of the 2006 Equity Incentive Plan, of which 135,334 were outstanding at a weighted average exercise price of $1.38 per share, and we had granted awards for 68,616 shares of restricted stock since the inception of the 2006 Equity Incentive Plan, of which none were outstanding. As of March 29, 2016, the 2006 Equity Incentive Plan expired by its terms, and no additional awards may be granted thereunder.  The expiration of the 2006 Equity Incentive Plan does not affect outstanding awards.

2018 Equity Incentive Plan

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.

As of June 30, 2018, we had granted options to purchase 1,500,000 shares of Common Stock since the inception of the 2018 Equity Incentive Plan, of which 1,500,000 were outstanding at a weighted average exercise price of $0.05 per share.  As of June 30, 2018, there were 18,500,000 shares that remain available for future grants under the 2018 Equity Incentive Plan.

- 14 -

NOTE 14. FAIR VALUE MEASUREMENTS

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

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

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

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

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

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

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

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

The following table summarizes the fair value of our financial instruments at June 30, 2018 and December 31, 2017.

Description	June 30, 2018		December 31, 2017
Liabilities:
Convertible Note Payable – Related Party – March 2017	$	500,000	$	500,000
Convertible Note Payable – Related Party – February 2017	$	500,000	$	500,000
Total	$	1,000,000	$	1,000,000

NOTE 15. 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 and the Company has provided a full valuation allowance. As a result, the effective tax rate is zero and the net deferred tax assets are zero.

NOTE 16. 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 currently requires a minimum monthly lease obligation of $2,729, which is inclusive of monthly operating expenses.

On January 25, 2018, we entered into a lease agreement for storage and warehouse space ("Warehouse Lease") in Carrollton, Texas.  The lease commenced on January 24, 2018 and will continue until December 2019.  The lease currently requires a minimum monthly lease obligation of $1,629, which is inclusive of monthly operating expenses.

The future minimum lease payments under the Office Lease and the Warehouse Lease are as follows as of June 30, 2018:

Calendar Years	Future Lease Expense
2018 (Six months)	$	26,080
2019		52,288
2020		---
2021		---
Total	$	78,368

Rent expense for our operating leases amounted to $15,025 and $33,596 for the three months ended June 30, 2018 and 2017, respectively, and $28,779 and $65,944 for the six months ended June 30, 2018 and 2017, respectively.

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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 9. Convertible Debt.

On March 31, 2017, the second closing of the Purchase Agreement included, among 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 six months ended June 30, 2018 and 2017, the Company recorded revenues, in approximate numbers, of nil and $215,000, respectively, with Velocitas GmbH, an affiliated entity of Velocitas, which represented 0% and 97% of our total revenues, respectively.  As of June 30, 2018 and December 31, 2017, 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.

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 June 30, 2018 and December 31, 2017, the Company's obligation to these executives for temporarily deferred compensation was approximately $72,000 which was included in accrued liabilities.

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 June 30, 2018, 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 June 30, 2018, the Company has accrued approximately $42,000 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.  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 and accrued penalties and interest 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 17. 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 18. SUBSEQUENT EVENTS

On July 20, 2018, our Board of Directors approved the grant of two nonstatutory stock option awards to two service providers.  Each award was for the purchase of up to 500,000 shares of common stock with an exercise price of $0.05, has a term of ten years, and will vest upon the achievement of four specific performance thresholds.

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

You should read the following discussion and analysis together with all financial and non-financial information appearing elsewhere in this report and with our consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2017, referred to as our 2017 Form 10-K, which has been previously filed with the Securities and Exchange Commission on March 30, 2018, including the risk factors set forth therein.  In addition to historical information, the following discussion and other parts of this report contain forward-looking information that involves risks and uncertainties.  Our actual results could differ materially from those anticipated by such forward-looking information due to competitive factors and other risks discussed in our 2017 Form 10-K under "Risks Associated with our Business".

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This quarterly report on Form 10-Q (including documents incorporated by reference) (this "Report") and other written and oral statements the Company makes from time to time contain certain "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.  You can identify these forward-looking statements by the fact that they do not relate strictly to historical or current facts.  Forward-looking statements may include 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. Such forward-looking statements are based on current expectations and involve inherent risks and uncertainties, including factors that could delay, divert or change any of them, and could cause actual outcomes to differ materially from current expectations. These statements are likely to relate to, among other things, the Company's goals, plans and projections regarding its financial position, statements indicating that the Company has cash and cash equivalents sufficient to fund our operations in the future, statements regarding expected cash flows, market position, product development, product approvals, future revenue, expense levels, performance or results of current and anticipated products and the outcome of contingencies such as legal proceedings, acquisitions, financings, 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.  Actual results will likely vary from anticipated results and may vary materially.

No assurance can be given that any goal or plan set forth in forward-looking statements can be achieved, and readers are cautioned not to place undue reliance on such statements, which speak only as of the date made.  We undertake no obligation to release publicly any revisions to forward-looking statements as a result of new information, future events or otherwise.

Business Overview

Business

ULURU Inc. (together with our subsidiaries, "we", "our", "us", "ULURU" or the "Company") is a Nevada corporation.  We are a specialty medical technology company committed to developing and commercializing innovative wound care and drug delivery systems based on our patented technologies.  Our mission is to improve the lives of patients the world over by delivering comprehensive solutions that optimize outcomes for the key stakeholders in our healthcare systems: patients, providers 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 exuding acute wounds, both surgical and traumatic, as well as 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 strong leadership position in wound management by developing and commercializing a customer focused portfolio of innovative wound care products.  We are also evaluating 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 and beyond, we also engaged a new regulatory team during the past year that reviewed and enhanced our existing quality management systems.

In 2018, we are continuing to execute a series of operational plans originally launched in 2017 to enhance and streamline our business. These include 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.

RESULTS OF OPERATIONS

Fluctuations in Operating Results

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

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Comparison of the three months ended June 30, 2018 and 2017

Total Revenues

Revenues were approximately $106,000 for the three months ended June 30, 2018, as compared to revenues of approximately $4,000 for the three months ended June 30, 2017, and were composed of entirely of Altrazeal® product sales.  The increase of $102,000 in revenues is primarily attributable to Altrazeal® product orders received from our international distributors.

Costs and Expenses

Cost of Goods Sold

Cost of goods sold for the three months ended June 30, 2018 were approximately $44,000 and were composed of, in approximate numbers, $33,000 from the sale of Altrazeal® and $11,000 from the write-off of obsolete product components.  Cost of goods sold for the three months ended June 30, 2017 were approximately $3,000 and was composed entirely of costs from the sale of Altrazeal®.

Research and Development

Research and development expenses totaled approximately $38,000 for the three months ended June 30, 2018 as compared to approximately $48,000 for the three months ended June 30, 2017.  The decrease of approximately $10,000 in research and development expenses was primarily due to, in approximate numbers, a decrease of $20,000 in scientific compensation related to lower head-count and lower share-based compensation and a decrease of $11,000 in facility related costs.  These expense decreases were partially offset by an increase of $12,000 in direct research costs as the prior year costs included a non-recurring expense adjustment and an increase of $9,000 in scientific advisory consulting costs.

Selling, General and Administrative

Selling, general and administrative expenses totaled approximately $355,000 for the three months ended June 30, 2018 as compared to approximately $327,000 for the three months ended June 30, 2017.  The increase of approximately $28,000 in selling, general and administrative expenses was primarily due to, in approximate numbers, an increase of $42,000 in costs associated with the marketing and promotion of Altrazeal®, an increase of $20,000 in legal costs, and an increase of $8,000 in costs for the annual meeting of stockholders held in June 2018.  These expense increases were partially offset by, in approximate numbers, a decrease of $23,000 in compensation costs, a decrease of $11,000 in facility related costs, and a decrease of $8,000 in insurance costs.

Amortization of Intangible Assets

Amortization of intangible assets expense totaled approximately $113,000 for the three months ended June 30, 2018 as compared to approximately $113,000 for the three months ended June 30, 2017.  The expense for each period consists primarily of amortization associated with our acquired patents and licensing rights.

Depreciation

Depreciation expense totaled approximately $5,000 for the three months ended June 30, 2018 as compared to approximately $33,000 for the three months ended June 30, 2017.  The decrease of approximately $28,000 is attributable to certain equipment being fully depreciated.

Interest Expense

Interest expense totaled approximately $127,000 for the three months ended June 30, 2018 as compared to approximately $134,000 for the three months ended June 30, 2017.  Interest expense typically includes interest costs related to regulatory fees and interest costs and amortization of debt discount and debt issuance costs related to debt.  The decrease of approximately $7,000 in interest expense is primarily attributable to costs associated with regulatory fees that were settled in November 2017.

Foreign Currency Transaction Loss

Foreign currency transaction loss totaled approximately $9,000 for the three months ended June 30, 2018 as compared to a foreign currency transaction loss of approximately $3,000 for the three months ended June 30, 2017.  The increase in foreign currency transaction loss of approximately $6,000 is related to fluctuations in the Euro exchange rate experienced during 2018 and the pricing of Altrazeal® to our international distributors being denominated in Euros.

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Comparison of the six months ended June 30, 2018 and 2017

Total Revenues

Revenues were approximately $189,000 for the six months ended June 30, 2018, as compared to revenues of approximately $221,000 for the six months ended June 30, 2017, and were composed entirely of Altrazeal® product sales.  The decrease of $32,000 in revenues is primarily attributable to the timing of Altrazeal® product orders received from our international distributors.

Costs and Expenses

Cost of Goods Sold

Cost of goods sold for the six months ended June 30, 2018 were approximately $70,000 and were composed of, in approximate numbers, $59,000 from the sale of Altrazeal® and $11,000 from the write-off of obsolete product components.  Cost of goods sold for the six months ended June 30, 2017 were approximately $106,000 and was composed entirely of costs from the sale of Altrazeal®.

Research and Development

Research and development expenses totaled approximately $85,000 for the six months ended June 30, 2018 as compared to approximately $108,000 for the six months ended June 30, 2017.  The decrease of approximately $23,000 in research and development expenses was primarily due to, in approximate numbers, a decrease of $48,000 in scientific compensation related to lower head-count and lower share-based compensation and a decrease of $20,000 in facility related costs.  These expense decreases were partially offset by an increase of $24,000 in regulatory consulting costs, an increase of $16,000 in scientific advisory consulting costs and an increase of $5,000 in direct research costs as the prior year costs included a non-recurring expense adjustment.

Selling, General and Administrative

Selling, general and administrative expenses totaled approximately $730,000 for the six months ended June 30, 2018 as compared to approximately $701,000 for the six months ended June 30, 2017.  The increase of approximately $29,000 in selling, general and administrative expenses was primarily due to, in approximate numbers, an increase of $23,000 in costs associated with the marketing and promotion of Altrazeal®, an increase of $32,000 in legal costs, an increase of $24,000 in costs for accounting services related to transitional costs for appointing a new independent accounting firm and accruals for the current year audit, an increase of $13,000 in patent related legal costs, an increase of $13,000 in costs for the annual meeting of stockholders held in June 2018, and an increase of $7,000 in other miscellaneous expenses.  These expense increases were partially offset by, in approximate numbers, a decrease of $29,000 in royalty expenses associated with product sales as the prior year included a non-recurring expense adjustment, a decrease of $22,000 in facility related costs, a decrease of $17,000 in insurance costs, and a decrease of $15,000 in compensation costs.

Amortization of Intangible Assets

Amortization of intangible assets expense totaled approximately $225,000 for the six months ended June 30, 2018 as compared to approximately $202,000 for the six months ended June 30, 2017.  The expense for each period consists primarily of amortization associated with our acquired patents and licensing rights.  The increase of approximately $23,000 in amortization expense is attributable to the purchase of additional licensing rights of approximately $869,000 from Velocitas that occurred in March 2017.

Depreciation

Depreciation expense totaled approximately $11,000 for the six months ended June 30, 2018 as compared to approximately $66,000 for the six months ended June 30, 2017.  The decrease of approximately $55,000 is attributable to certain equipment being fully depreciated.

Interest Expense

Interest expense totaled approximately $252,000 for the six months ended June 30, 2018 as compared to approximately $155,000 for the six months ended June 30, 2017.  Interest expense typically includes interest costs related to regulatory fees and interest costs and amortization of debt discount and debt issuance costs related to debt.  The increase of approximately $97,000 in interest expense is primarily attributable to costs associated with the two convertible promissory notes issued to Velocitas as part of the $6,000,000 offering of convertible notes and equity securities pursuant to the Purchase Agreement with Velocitas and Velo LLC.

Foreign Currency Transaction Loss

Foreign currency transaction loss totaled approximately $6,000 for the six months ended June 30, 2018 as compared to a foreign currency transaction loss of approximately $3,000 for the six months ended June 30, 2017.  The increase in foreign currency transaction loss of approximately $3,000 is related to fluctuations in the Euro exchange rate experienced during 2018 and the pricing of Altrazeal® to our international distributors being denominated in Euros.

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LIQUIDITY AND CAPITAL RESOURCES

We have funded our operations primarily through the public and private sales of convertible notes and Common Stock.  Product sales, royalty payments, 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 June 30, 2018, our cash and cash equivalents were approximately $3,146,000 which is a decrease of approximately $565,000 as compared to our cash and cash equivalents at December 31, 2017 of approximately $3,711,000.  Our working capital (current assets less current liabilities) was approximately $1,653,000 at June 30, 2018 as compared to our working capital at December 31, 2017 of approximately $3,123,000.

Consolidated Cash Flow Data
	Six Months Ended June 30,
Net Cash Provided by (Used in)	2018			2017
Operating activities	$	(594,000	)	$	(457,000	)
Investing activities		29,000			(4,000	)
Financing activities		---			5,879,000
Net increase in cash and cash equivalents	$	(565,000	)	$	5,418,000

Operating Activities

For the six months ended June 30, 2018, net cash used in operating activities was approximately $594,000.  The principal components of net cash used for the six months ended June 30, 2018 were, in approximate numbers, our net loss of $1,161,000 and a decrease of $41,000 in accounts payable.  Our net loss for the six months ended June 30, 2018 included substantial non-cash charges of approximately $389,000, in the form of share-based compensation, amortization of patents and licensing rights, depreciation, amortization of debt discount, amortization of debt issuance costs, and a gain on the sale of equipment.  The aforementioned net cash used for the six months ended June 30, 2018 was partially offset by, in approximate numbers, an increase of $62,000 in accrued interest related to our convertible promissory notes, an increase of $10,000 in accrued liabilities due to compensation and property tax accruals, a decrease of $59,000 in prepaid expenses related to insurance and listing fees, a decrease of $39,000 in inventories, a decrease of $35,000 in accounts receivable due to collection activities, and a decrease of $14,000 in deposits.

For the six months ended June 30, 2017, net cash used in operating activities was approximately $457,000.  The principal components of net cash used for the six months ended June 30, 2017 were, in approximate numbers, our net loss of $1,006,000, a decrease of $111,000 in accrued liabilities due to reclassification of compensation liabilities and a decrease of $14,000 in deferred revenues due to amortization of revenues.  Our net loss for the six months ended June 30, 2017 included substantial non-cash charges of approximately $252,000 in the form of share-based compensation, amortization of patents and licensing rights, depreciation, amortization of debt discount, amortization of debt issuance costs, and gain on settlement of liability.  The aforementioned net cash used for the six months ended June 30, 2017 was partially offset by, in approximate numbers, an increase of $218,000 in accounts payable due to reclassification of compensation liabilities, an increase of $37,000 in accrued interest, a decrease of $98,000 in prepaid expenses related to insurance and listing fees, a decrease of $59,000 in accounts receivable due to collection activities, and a decrease of $10,000 in inventories.

Investing Activities

Net cash provided by investing activities for the six months ended June 30, 2018 was approximately $29,000 and was composed of the proceeds from the sale of manufacturing equipment.

Net cash used in investing activities for the six months ended June 30, 2017 was approximately $4,000 and relates to the purchase of computer equipment.

Financing Activities

There were no financing activities for the six months ended June 30, 2018.

Net cash provided by financing activities for the six months ended June 30, 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 Investors, Inc. ("Kirkwood").  The aforementioned net cash provided for the six months ended June 30, 2017 was partially offset by the repayment of $140,000 of short-term promissory notes issued to Velocitas and Kirkwood.

Liquidity

As of June 30, 2018, we had cash and cash equivalents of approximately $3,146,000.

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 June 30, 2018, our net working capital (current assets less current liabilities) was approximately $1,653,000 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 or convertible debt 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;
§	our ability to obtain favorable reimbursement approvals in various jurisdictions;
§	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 June 30, 2018, which is composed of a lease agreement for office and laboratory space in Addison, Texas and a lease agreement for storage and warehouse space in Carrollton, Texas.  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	$	78,368	$	52,224	$	26,144	$	---	$	---
Total contractual cash obligations	$	78,368	$	52,224	$	26,144	$	---	$	---

Capital Expenditures

For the six months ended June 30, 2018 and 2017, our expenditures for property, equipment, and leasehold improvements were nil and approximately $4,000, respectively, and consisted primarily of computer equipment.

Off-Balance Sheet Arrangements

As of June 30, 2018, we did not have any off-balance sheet arrangements.

Impact of Inflation

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

Concentrations of Credit Risk

Concentration of credit risk with respect to financial instruments, consisting primarily of cash and cash equivalents, potentially expose us to concentrations of credit risk due to the use of a limited number of banking institutions and due to maintaining cash balances in banks, which, at times, may exceed the limits of amounts insured by the Federal Deposit Insurance Corporation.  Currently, we utilize JP Morgan/Chase Bank, Bank of America, N.A., and South State Bank as our banking institutions.  At June 30, 2018 and December 31, 2017 our cash and cash equivalents totaled approximately $3,146,000 and $3,711,000, 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 June 30, 2018 and at December 31, 2017.  As of June 30, 2018, three customers exceeded the 5% threshold, jointly with 97%.  As of December 31, 2017, three customers exceeded the 5% threshold, jointly with 92%.  We routinely assess the financial strength of our most significant customers and monitoring the amounts owed to us, taking appropriate action when necessary.  As a result, we believe that our prospective accounts receivable credit risk exposure is limited.

Concentrations of Foreign Currency Risk

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

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CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Management's Discussion and Analysis of Financial Condition and Results of Operations addresses our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP") for interim financial information. The preparation of our financial statements requires that we make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. We evaluate these estimates and judgments on an on-going basis. We base our estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.  Our critical accounting policies are summarized in our 2017 Form 10-K as filed with the Securities and Exchange Commission on March 30, 2018.  We had no significant changes in our critical accounting policies since our last annual report except as described in "Note 3. Significant Accounting Policies" included in this Report.

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk.

This item is not applicable to smaller reporting companies.

ITEM 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this Quarterly Report on Form 10-Q, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of our disclosure controls and procedures, (as defined in Rule 13a-15(e) under the Securities and Exchange Act of 1934, as amended, (the "Exchange Act")).  Disclosure controls and procedures are controls and other procedures designed to reasonably assure that information required to be disclosed in our reports filed or submitted under the Exchange Act, such as this Quarterly Report on Form 10-Q, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms. Disclosure controls and procedures are also designed to reasonably assure that this information is accumulated and communicated to our management, including the Chief Executive Officer and the Chief Financial Officer, to allow timely decisions regarding required disclosure.

Based on this evaluation, our principal executive officer and principal financial officer concluded that as of June 30, 2018, 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 primarily, as a result of the lack of segregation of duties due to a limited number of employees.

Changes in Internal Controls Over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the period covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1.  Legal Proceedings.

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

ITEM 1A.  Risk Factors.

This item is not applicable to smaller reporting companies.  Information about certain risks associated with an investment in our Common Stock is found in Part I, Item 1A of our 2017 Form 10-K.

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

None.

ITEM 3. Defaults Upon Senior Securities.

None.

ITEM 4. Mine Safety Disclosures.

Not applicable.

ITEM 5. Other Information.

None.

- 22 -

ITEM 6. Exhibits.

Exhibit Number		Description
3.1		Restated Articles of Incorporation, including Certificate of Designation of Series B Preferred Stock and certificate of amendment dated July 26, 2017. (1)
3.2		Amended and Restated Bylaws dated December 5, 2008. (2)
31.1	*	Certification of Principal Executive Officer of ULURU Inc. Pursuant to Rule 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Amended.
31.2	*	Certification of Principal Accounting Officer of ULURU Inc. Pursuant to Rule 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Amended.
32.1	**	Certification of Chief Executive Officer of ULURU Inc. Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	**	Certification of Chief Financial Officer of ULURU Inc. Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	***	XBRL Instance Document
101.SCH	***	XBRL Taxonomy Extension Schema Document
101.CAL	***	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	***	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	***	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	***	XBRL Taxonomy Extension Presentation Linkbase Document
---------------------------------------------------
(1)		Incorporated by reference to the Company's Form 10-Q filed on August 14, 2017.
(2)		Incorporated by reference to the Company's Form 10-K filed on March 30, 2009.
	*	Filed herewith.
	**	Filed herewith.  This exhibit shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that Section nor shall it be deemed incorporated by reference in any filings under the Securities Act of 1933 or the Securities and Exchange Act of 1934.
	***	Pursuant to Rule 406T of Regulation S-T, the XBRL-related information in Exhibit 101 to this Quarterly Report on Form 10-Q is deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, and otherwise is not subject to liability under these sections.

SIGNATURES

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

	ULURU Inc.
Date:  August 14, 2018	By:	/s/ Vaidehi Shah
		Vaidehi Shah
		Chief Executive Officer
		(Principal Executive Officer)
Date:  August 14, 2018	By:	/s/ Terrance K. Wallberg
		Terrance K. Wallberg
		Chief Financial Officer and Vice President
		(Principal Financial and Accounting Officer)

- 23 -

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

Date: August 14, 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 Quarterly Report on Form 10-Q of ULURU Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:
	(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	(c)	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report, based on such evaluation; and
	(d)	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.	The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
	(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
	(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 14, 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 of Chief Executive Officer of ULURU Inc.

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

to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of ULURU Inc. (the "Company") on Form 10-Q for the period ended June 30, 2018, as filed with the Securities and Exchange Commission and to which this Certification is an exhibit (the "Report"), the undersigned officer of ULURU Inc. does hereby certify, pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350), that to my knowledge:

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

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

Date: August 14, 2018	/s/ Vaidehi Shah
	Vaidehi Shah
	Chief Executive Officer
	(Principal Executive Officer)

EX-32.2

EXHIBIT 32.2

Certification of Chief Financial Officer of ULURU Inc.

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

to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of ULURU Inc. (the "Company") on Form 10-Q for the period ended June 30, 2018, as filed with the Securities and Exchange Commission and to which this Certification is an exhibit (the "Report"), the undersigned officer of ULURU Inc. does hereby certify, pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350), that to my knowledge:

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

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

Date: August 14, 2018	/s/ Terrance K. Wallberg
	Terrance K. Wallberg
	Vice President and Chief Financial Officer
	(Principal Financial and Accounting Officer)

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2018	Aug. 14, 2018
Entity Information [Line Items]
Entity Registrant Name	ULURU Inc.
Entity Central Index Key	0001168220
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Smaller Reporting Company
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q2
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2018
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

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($)	Jun. 30, 2018	Dec. 31, 2017
Current Assets
Cash and cash equivalents	$ 3,146,219	$ 3,710,882
Accounts receivable, net	221,337	256,123
Inventory	457,917	497,461
Prepaid expenses and deferred charges	111,653	170,686
Total Current Assets	3,937,126	4,635,152
Property, Equipment and Leasehold Improvements, net	42,763	53,723
Other Assets
Intangible asset - patents, net	161,367	179,737
Intangible asset - licensing rights, net	3,450,195	3,656,636
Deposits	4,316	18,069
Total Other Assets	3,615,878	3,854,442
TOTAL ASSETS	7,595,767	8,543,317
Current Liabilities
Accounts payable	1,172,368	1,213,246
Accrued liabilities	173,807	163,969
Accrued interest	161,644	99,658
Convertible notes payable, current portion, net of unamortized debt discount and debt issuance costs	747,189	0
Deferred revenue, current portion	29,227	35,761
Total Current Liabilities	2,284,235	1,512,634
Long Term Liabilities
Convertible notes payable, net of unamortized debt discount and debt issuance costs	0	570,189
Deferred revenue, net of current portion	331,800	352,698
Total Long Term Liabilities	331,800	922,887
TOTAL LIABILITIES	2,616,035	2,435,521
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common Stock - $0.001 par value; 750,000,000 shares authorized; 201,349,431 and 201,349,431 shares issued and outstanding at June 30, 2018 and December 31, 2017, respectively	201,349	201,349
Additional paid-in capital	68,562,533	68,556,734
Accumulated (deficit)	(63,784,150)	(62,650,287)
TOTAL STOCKHOLDERS' EQUITY	4,979,732	6,107,796
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	7,595,767	8,543,317
Series A Preferred Stock [Member]
STOCKHOLDERS' EQUITY
Preferred stock	0	0
Series B Preferred Stock [Member]
STOCKHOLDERS' EQUITY
Preferred stock	$ 0	$ 0

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares	Jun. 30, 2018	Dec. 31, 2017
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	201,349,431
Common stock, shares outstanding (in shares)	201,349,431	201,349,431
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

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Revenues
Total revenues	$ 105,550	$ 4,314	$ 189,345	$ 221,431
Costs and Expenses
Cost of product sold	43,756	3,067	70,111	105,416
Research and development	37,500	48,192	84,565	108,321
Selling, general and administrative	355,482	327,201	730,153	701,393
Amortization of intangible assets	113,027	113,027	224,811	202,334
Depreciation	5,481	32,842	10,961	65,558
Gain on sale of equipment	0	0	(29,179)	0
Total Costs and Expenses	555,246	524,329	1,091,422	1,183,022
Operating (Loss)	(449,696)	(520,015)	(902,077)	(961,591)
Other Income (Expense)
Interest and miscellaneous income	0	2	0	4
Interest expense	(126,670)	(133,864)	(252,149)	(155,141)
Foreign currency transaction loss	(8,744)	(3,181)	(6,299)	(3,071)
Gain on settlement of liability	0	114,013	0	114,013
(Loss) Before Income Taxes	(585,110)	(543,045)	(1,160,525)	(1,005,786)
Income taxes	0	0	0	0
Net (Loss)	$ (585,110)	$ (543,045)	$ (1,160,525)	$ (1,005,786)
Basic and diluted net (loss) per common share (in dollars per share)	$ 0	$ (0.01)	$ (0.01)	$ (0.01)
Weighted average number of common shares outstanding (in shares)	201,349,431	76,349,431	201,349,431	69,772,774
License Fees [Member]
Revenues
Total revenues	$ 0	$ 1,436	$ 0	$ 2,858
Product Sales, Net [Member]
Revenues
Total revenues	$ 105,550	$ 2,878	$ 189,345	$ 218,573

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
OPERATING ACTIVITIES :
Net loss	$ (1,160,525)	$ (1,005,786)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of intangible assets	224,811	202,334
Depreciation	10,961	65,558
Share-based compensation for stock and options issued to employees	0	8,697
Share-based compensation for options issued to non-employees	5,799	0
Amortization of debt discount on promissory notes	172,671	87,006
Amortization of debt issuance costs on promissory notes	4,329	1,916
Gain on sale of equipment	(29,179)	0
Gain on settlement of liability	0	(114,013)
Change in operating assets and liabilities:
Accounts receivable	34,785	59,177
Inventory	39,544	9,776
Prepaid expenses and deferred charges	59,033	97,958
Deposits	13,753	0
Accounts payable	(40,878)	218,155
Accrued liabilities	9,838	(110,347)
Accrued interest	61,986	36,591
Deferred revenue	(770)	(14,328)
Total	566,683	548,480
Net Cash Used in Operating Activities	(593,842)	(457,306)
INVESTING ACTIVITIES :
Purchase of equipment	0	(3,501)
Proceeds from sale of equipment	29,179	0
Net Cash Provided / (Used) in Investing Activities	29,179	(3,501)
FINANCING ACTIVITIES :
Proceeds from issuance of convertible notes and warrant, net	0	983,092
Proceeds from sale of Series B preferred stock, net	0	4,915,661
Proceeds from issuance of promissory notes	0	120,000
Repayment of principle due on promissory notes	0	(140,000)
Net Cash Provided by Financing Activities	0	5,878,753
Net (Decrease) / Increase in Cash	(564,663)	5,417,946
Cash, beginning of period	3,710,882	36,615
Cash, end of period	3,146,219	5,454,561
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Cash paid for interest	0	2,672
Cash paid for income taxes	0	0
Non-cash investing and financing activities:
Issuance of common stock for acquisition of licensing rights	$ 0	$ 869,375

XML

COMPANY OVERVIEW AND BASIS OF PRESENTATION

6 Months Ended

Jun. 30, 2018

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 innovative wound care and drug delivery systems based on our patented technologies.  Our mission is to improve the lives of patients the world over by delivering comprehensive solutions that optimize outcomes for the key stakeholders in our healthcare systems: patients, providers, and payers.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and include the accounts of ULURU Inc., a Nevada corporation, and its wholly-owned subsidiary, Uluru Delaware Inc., a Delaware corporation.  They do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. All adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the Company’s financial position as of June 30, 2018 and the results of its operations for the three and six months ended June 30, 2018 and 2017 and cash flows for the six months ended June 30, 2018 and 2017 have been made.

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

All intercompany transactions and balances have been eliminated in consolidation.  Certain prior period amounts have been reclassified to conform to current period presentations.

Operating results for the three and six months ended June 30, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018.

These condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, as filed with the Securities and Exchange Commission on March 30, 2018 (the “2017 Form 10-K”), including the risk factors set forth therein.

XML

THE EFFECT OF RECENTLY ISSUED ACCOUNTING STANDARDS

6 Months Ended

Jun. 30, 2018

THE EFFECT OF RECENTLY ISSUED ACCOUNTING STANDARDS [Abstract]

THE EFFECT OF RECENTLY ISSUED ACCOUNTING STANDARDS

NOTE 2. 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 (“Topic 606”), which amends the guidance for accounting for revenue from contracts with customers and requires revenue recognition based on the transfer of promised goods or services to customers in an amount that reflects consideration the Company expects to be entitled to in exchange for goods or services.  Topic 606 supersedes prior revenue recognition requirements in ASC Topic 605 and most industry-specific accounting guidance. In 2015 and 2016, the FASB issued additional updated guidance, which clarified certain aspects of the Topic 606 and the related implementation guidance issued by the FASB-IASB Joint Transition Resource Group for Revenue Recognition.

The new revenue standard (“Topic 606”) became effective for the Company on January 1, 2018, and was adopted using the modified retrospective method under which previously presented financial statements are not restated and the cumulative effect of adopting the new revenue standard on contracts in process is recognized by an adjustment to retained earnings at the effective date. The cumulative effect of applying the new revenue standard was an increase of $26,662 to stockholder’s equity as of January 1, 2018.   The adoption of ASC 606 does not materially impact the Company’s revenue recognition as the Company’s revenue primarily comes from the sale of products which do not required long term contracts, contracts with multiple deliverables or performance obligations.  Additionally, the Company already historically accounted for variable consideration on its product sales such as sale returns and discounts as part of revenue recognition.  Topic 606 requires more robust disclosures than required by previous guidance, including disclosures related to disaggregation of revenue into appropriate categories, performance obligations, the judgements made in revenue recognition determinations, adjustments to revenue which relate to activities from previous quarters or years, any significant reversals of revenue, and costs to obtain or fulfill contracts. See Note 3, “Revenue Recognition.”

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which supersedes current lease accounting guidance. The primary difference between current GAAP and the new standard is the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under current GAAP. The standard requires a modified retrospective approach upon adoption, with practical expedients that may be available to elect. The standard is effective for the Company in the first quarter of 2019 and early adoption is permitted. The Company is evaluating the impact of the ASU on its 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 retrospectively 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 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”), providing additional guidance on eight specific cash flow classification issues. The goal of ASU 2016-15 is to reduce diversity in practice of classifying certain items. The amendments in ASU 2016-15 are effective for the Company in the first quarter of 2018 using a retrospective transition method, and early adoption is permitted. The Company’s adoption of ASU 2016-15 did not have a material impact on its consolidated financial statements.

In November 2016, the FASB issued ASU No. 2016-18, Restricted Cash, Statement of Cash Flows (Topic 230) (“ASU 2016-18”).  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 ASU 2016-18 should be applied using a retrospective transition method to each period presented. The Company’s adoption of ASU 2016-18 did not have a material impact on its consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (“ASU 2017-04”).  The amended guidance eliminates a step from the goodwill impairment test. Under the amended guidance, an entity should perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity would recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The Company adopted this new guidance in the fourth quarter of 2017. The Company’s adoption of ASU 2017-04 did not have a material impact on its consolidated financial statements.

In May 2017, the FASB issued ASU No. 2017-09, Compensation -Stock Compensation (Topic 718): Scope of Modification Accounting (“ASU 2017-09”). ASU 2017-09 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 retrospective basis beginning on January 1, 2018 with early adoption permitted.  The Company’s adoption of ASU 2017-09 did not have a material impact on its consolidated financial statements.

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SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Jun. 30, 2018

SIGNIFICANT ACCOUNTING POLICIES [Abstract]

SIGNIFICANT ACCOUNTING POLICIES

NOTE 3. SIGNIFICANT ACCOUNTING POLICIES

Please refer to the notes in the Company’s 2017 Form 10-K for additional details of the Company’s financial condition and a description of the Company’s accounting policies, which have been continued without change except for the Company’s Revenue Recognition accounting policy, which has been updated as a result of the Company’s adoption in the current quarter of ASU 2014-09.

Revenue Recognition

The Company’s product, Altrazeal®, is distributed to and through a limited number of specialty distributors internationally and a combination of wholesalers and direct to customer sales in the United States.  These customers subsequently resell the Company’s product to healthcare providers and patients.

The Company recognizes revenue as the transfer of control of its products to the Company’s customers in an amount reflecting the consideration the Company expects to be entitled. In order to achieve this core principle, the Company applies the following five-step approach:

§ identification of the contract, or contracts, with a customer;

§ recognition of revenue when, or as, we satisfy the performance obligations;

§ determination of the transaction price;

§ allocation of the transaction price to the performance obligations in the contract; and

§ recognition of revenue when, or as, we satisfy the performance obligations.

The Company considers customer purchase orders, which in some cases are governed by master distribution agreements, to be the contracts with the customer. For each contract, the Company considers the promise to transfer products, each of which are distinct, to be the identified performance obligations. In determining the transaction price, the Company evaluates whether the price is subject to refund or adjustment to determine the net consideration to which the Company expects to be entitled. In addition, the Company evaluates the customer’s ability to pay as part of its consideration of the contract. As the Company’s standard payment terms are less than one year, the Company elected the practical expedient under Accounting Standards Codification (ASC) 606-10-32-18, and determined that its contracts do not have a significant financing component. The Company allocates the transaction price to each distinct product based on the relative standalone selling price. Revenue is recognized when control of the product is transferred to the customer, the customer is obligated to pay the Company, and the Company has no remaining obligations, which is typically at shipment. In certain locations, primarily outside the United States, product shipping terms may vary. Thus, in such locations, the point at which control of the product transfers to the customer and revenue recognition occurs will vary accordingly.

Customer returns of non-conforming products are estimated at the time revenue is recognized. In certain customer relationships, rebates exist, which are recognized according to the terms and conditions of the contractual relationship. Customer returns, rebates, and discounts are not material to the Company’s consolidated financial statements. The Company has elected to recognize the revenue and cost for freight and shipping when control over the products has transferred to the customer. When applicable, taxes collected from Customers relating to product sales and remitted to governmental authorities are excluded from revenues.

The Company has elected to immediately expense contract costs from obtaining a contract as the amortization period of the asset the Company otherwise would have recognized would have been less than a year.

Reserves for Variable Consideration

Revenues from product sales are recorded at the transaction price, which includes estimates of variable consideration for which reserves are established and which result from discounts, returns, and other allowances that are offered within contracts between the Company and its customers.  These reserves are based on the amounts earned or to be claimed on the related sales and are classified as reductions of accounts receivable (if the amount is payable to the customer) or a current liability (if the amount is payable to a party other than a customer).  Where appropriate, these estimates take into consideration a range of possible outcomes and contemplates relevant factors such as the Company’s historical experience, current contractual and statutory requirements, specific known market events and trends, industry data and forecasted customer buying and payment patterns.  Overall, these reserves reflect the Company’s best estimates of the amount of consideration to which it is entitled based on the terms of the contract.  The amount of variable consideration which is included in the transaction price may be constrained, and is included in the net sales price only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period.  Actual amounts of consideration ultimately received may differ from the Company’s estimates.

The Company believes that the reserves it has established are reasonable based upon current facts and circumstances. Applying different judgments or interpretations to the same facts and circumstances could result in the estimated amount for reserves to vary.  If actual results vary with respect to the Company’s reserves, the Company may need to adjust its estimates, which could have a material effect on the Company’s results of operations in the period of adjustment. To date, such adjustments have not been material.

Trade Discounts and Allowances

The Company receives sales order management, data and distribution services from certain customers.  To the extent the services received are distinct from the Company’s sale of products to the customer, these payments are classified in selling, general and administrative expenses in the consolidated statements of operations of the Company. The company revenue recognition is net of estimated trade discount and allowances.

Other Revenues

The Company enters into licensing agreements, from time to time, which are within the scope of Topic 606, under which it may license certain rights to its products or product candidates to third parties.  The terms of these arrangements typically include payment to the Company of one or more of the following: non-refundable, up-front license fees; development, regulatory and commercial milestone payments; and royalties on net sales of licensed products.  Each of these payments results in revenues recognized and classified as other revenues.

Licenses of intellectual property:  If the license of the Company’s intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, the Company recognizes revenues from non-refundable, up-front fees allocated to the license when the license is transferred to the customer and the customer is able to use and benefit from the license.  For licenses that are bundled with other promises, the Company utilizes judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue from non-refundable, up-front fees.  The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition.

Milestone Payments:  At the inception of each arrangement that includes development milestone payments, the Company evaluates whether the milestones are considered probable of being reached and estimates the amount to be included in the transaction price using the most likely amount method.  If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in the transaction price.  Milestone payments that are not within the control of the Company or the licensee, such as regulatory approvals, are not considered probable of being achieved until those approvals are received. The transaction price is then allocated to each performance obligation on a relative stand-alone selling price basis, for which the Company recognizes revenue as or when the performance obligations under the contract are satisfied.  At the end of each subsequent reporting period, the Company re-evaluates the probability of achievement of such development milestones and any related constraint, and if necessary, adjusts its estimate of the overall transaction price.  Any such adjustments are recorded on a cumulative catch-up basis, which would affect license, collaboration and other revenues and earnings in the period of adjustment.

Royalties:  For arrangements that include sales-based royalties, including milestone payments based on the level of sales, and the license is deemed to be the predominant item to which the royalties relate, the Company recognizes revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied).

Under the Company’s various contracts, the Company may receive up-front payments and fees, which may require deferral of revenue recognition to a future period until the Company performs its obligations under these arrangements.  Amounts are recorded as accounts receivable when the Company’s right to consideration is unconditional.  The Company does not assess whether a contract has a significant financing component if the expectation at contract inception is such that the period between payment by the customer and the transfer of the promised goods or services to the customer will be one year or less.

We received upfront cash payments for licenses of our technology in years 2007 to 2013. The revenue was recognized straight-line over the life of the patent. Our obligation was performed at the time the license was granted. Following the revenue recognition policies in accordance with ASC 606, we decreased the accumulated deficit by $26,662 as of January 1, 2018 and decreased deferred revenue by the same amount.

Effective January 1, 2018, we adopted Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers, as amended (commonly referred to as ASC 606) using the modified retrospective transition method. The cumulative effect of applying the standard was an increase of $26,662 to stockholder’s equity as of January 1, 2018. Our statement of operations for the three and six months ended June 30, 2018 and our balance sheet as of June 30, 2018 are presented under ASC 606, while our statement of operations for the three and six months ended June 30, 2017 and our balance sheet as of December 31, 2017 are presented under ASC 605, Revenue Recognition. See below for disclosure of the impact of the adoption of ASC 606 on our statement of operations and balance sheet for the three and six months ended June 30, 2018, and the effect of changes made to our consolidated balance sheet as of January 1, 2018.

The table below presents the cumulative effect of the changes made to the consolidated January 1, 2018 balance sheet due to the adoption of ASC 606.

BALANCE SHEET	December 31, 2017, As Reported Under ASC 605			Adjustments Due to ASC 606			January 1, 2018 As Adjusted Under ASC 606
Liabilities
Current liabilities
Current portion of deferred revenue	$	35,761		$	(5,764	)	$	29,997
Total current liabilities		1,512,634			(5,764	)		1,506,870
Deferred revenue, net of current portion		352,698			(20,898	)		331,800
Total liabilities		2,435,521			(26,662	)		2,408,859
Stockholders’ Equity
Accumulated deficit		(62,650,287	)		26,662			(62,623,625	)
Total equity	$	6,107,796		$	26,662		$	6,134,458

The table below presents the impact of the adoption of ASC 606 on our statement of operations.

	Six Months Ended June 30, 2018
STATEMENT OF OPERATIONS	Under ASC 605			Effect of ASC 606			As Reported Under ASC 606
Revenues
License revenues	$	1,422		$	(1,422	)	$	---
Total revenues		190,767			(1,422	)		189,345
Loss from operations	$	(900,655	)	$	(1,422	)	$	(902,077	)
Net loss	$	(1,159,103	)	$	(1,422	)	$	(1,160,525	)
Basic and diluted loss per common share	$	(0.01	)	$	(0.00	)	$	(0.01	)

The table below presents the impact of the adoption of ASC 606 on our balance sheet.

	June 30, 2018
BALANCE SHEET	Under ASC 605			Effect of ASC 606			As Reported Under ASC 606
Liabilities and Stockholders’ Equity
Current liabilities
Current portion of deferred revenue	$	34,991		$	(5,764	)	$	29,227
Total current liabilities		2,289,999			(5,764	)		2,284,235
Deferred revenue, net of current portion		351,276			(19,476	)		331,800
Total liabilities		2,641,275			(25,240	)		2,616,035
Stockholders’ Equity
Accumulated deficit		(63,809,390	)		25,240			(63,784,150	)
Total stockholders’ equity	$	4,954,492		$	25,240		$	4,979,732

Disaggregation of Revenue

Revenue is disaggregated by primary geographic markets, as we believe this best depicts how the nature, amount, timing, and uncertainty of our revenue and cash flows are affected by economic factors.  For more information on the Company’s disaggregated revenue, see Note 4, Segment Information.

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SEGMENT INFORMATION

6 Months Ended

Jun. 30, 2018

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 distribution partners for international activities and our domestic sales activities for our products.

Revenues per geographic area for the three and six months ended June 30 are summarized as follows:

	Three Months Ended June 30,										Six months Ended June 30,
Revenues	2018		%			2017		%			2018		%			2017		%
Domestic	$	2,105		2	%	$	2,878		67	%		13,102		7	%	$	5,415		2	%
International		103,445		98	%		1,436		33	%		176,243		93	%		216,016		98	%
Total	$	105,550		100	%	$	4,314		100	%	$	189,345		100	%	$	221,431		100	%

A significant portion of our revenues are derived from a few major customers.  For the three months ended June 30, 2018 and 2017, three customers and three customers, respectively, had greater than 10% of total revenues and represented in the aggregate 98% and 66%, respectively, of total revenues.  For the six months ended June 30, 2018 and 2017, three customers and one customer, respectively, had greater than 10% of total revenues and represented in  the aggregate 87% and 97%, respectively, of total revenues.

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INVENTORY

6 Months Ended

Jun. 30, 2018

INVENTORY [Abstract]

INVENTORY

NOTE 5. INVENTORY

As of June 30, 2018, our inventory was comprised of Altrazeal® finished goods, manufacturing costs incurred in the production of Altrazeal®, and raw materials.  Inventories are stated at the lower of cost (first in, first out method) or 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.

The components of inventory, at the different stages of production, consisted of the following at June 30, 2018 and December 31, 2017:

Inventory	June 30, 2018		December 31, 2017
Raw materials	$	45,451	$	32,329
Work-in-progress		341,073		311,632
Finished goods		71,393		153,500
Total	$	457,917	$	497,461

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PROPERTY, EQUIPMENT and LEASEHOLD IMPROVEMENTS

6 Months Ended

Jun. 30, 2018

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 June 30, 2018 and December 31, 2017:

Property, equipment and leasehold improvements	June 30, 2018			December 31, 2017
Laboratory equipment	$	424,888		$	424,888
Manufacturing equipment		1,589,286			1,604,894
Computers, office equipment, and furniture		154,781			154,781
Computer software		4,108			4,108
Leasehold improvements		95,841			95,841
		2,268,904			2,284,512
Less: accumulated depreciation and amortization		(2,226,141	)		(2,230,789	)
Property, equipment and leasehold improvements, net	$	42,763		$	53,723

Depreciation expense on property, equipment and leasehold improvements was $5,481 and $32,842 for the three months ended June 30, 2018 and 2017, respectively, and was $10,961 and $65,558 for the six months ended June 30, 2018 and 2017, respectively.

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INTANGIBLE ASSETS

6 Months Ended

Jun. 30, 2018

INTANGIBLE ASSETS [Abstract]

INTANGIBLE ASSETS

NOTE 7. INTANGIBLE ASSETS

Patents

Intangible patent assets are composed of patents acquired in October, 2005.  Intangible assets, net consisted of the following at June 30, 2018 and December 31, 2017:

Intangible assets – patents	June 30, 2018			December 31, 2017
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		(7,437,261	)		(7,418,891	)
Less: reserve for impairment		(2,027,310	)		(2,027,310	)
Intangible assets - patents, net	$	161,367		$	179,737

Amortization expense for intangible patents assets was $9,236 and $9,236 for the three months ended June 30, 2018 and 2017, respectively, and was $18,370 and $18,370 for the six months ended June 30, 2018 and 2017, respectively.

The future aggregate amortization expense for intangible patent assets, remaining as of June 30, 2018, is as follows:

Calendar Years	Future Amortization Expense
2018 (Six months)	$	18,674
2019		37,044
2020		37,145
2021		37,044
2022		31,460
Total	$	161,367

Licensing rights

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 9. 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 agreements 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 June 30, 2018 and December 31, 2017:

Intangible assets - licensing rights	June 30, 2018			December 31, 2017
Intangible assets – licensing rights, gross	$	4,381,881		$	4,381,881
Less: accumulated amortization		(931,686	)		(725,245	)
Intangible assets - licensing rights, net	$	3,450,195		$	3,656,636

Amortization expense for intangible licensing rights assets was $103,791 and $103,791 for the three months ended June 30, 2018 and 2017, respectively, and was $206,441 and $183,964 for the six months ended June 30, 2018 and 2017, respectively.

The future aggregate amortization expense for intangible licensing rights assets, remaining as of June 30, 2018, is as follows:

Calendar Years	Future Amortization Expense
2018 (Six months)	$	209,862
2019		416,303
2020		416,303
2021		416,303
2022		416,303
2023 & Beyond		1,575,121
Total	$	3,450,195

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ACCRUED LIABILITIES

6 Months Ended

Jun. 30, 2018

ACCRUED LIABILITIES [Abstract]

ACCRUED LIABILITIES

NOTE  8. ACCRUED LIABILITIES

Accrued liabilities consisted of the following at June 30, 2018 and December 31, 2017:

Accrued Liabilities	June 30, 2018		December 31, 2017
Accrued compensation/benefits	$	129,006	$	124,819
Accrued property taxes		2,850		---
Accrued royalties		41,951		39,144
Product rebates/returns				6
Total accrued liabilities	$	173,807	$	163,969

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CONVERTIBLE NOTE PAYABLE - RELATED PARTY

6 Months Ended

Jun. 30, 2018

CONVERTIBLE NOTE PAYABLE - RELATED PARTY [Abstract]

CONVERTIBLE NOTE PAYABLE - RELATED PARTY

NOTE 9. CONVERTIBLE NOTE PAYABLE – RELATED PARTY

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”.  Refer to a description in greater detail of the the Company’s related party affiliation with Velocitas and Velo LLC in Note 16. Related Party Transactions and Concentration.

The first closing, which occurred on February 27, 2017, included the purchase by Velocitas at face value of a Secured Convertible Note, dated February 27, 2017, in the principal amount of $500,000 (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, 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 Company received of $983,092 of net proceeds from the issuance of the Initial Note and the Second Note due to $16,908 of debt issuance costs and received of $4,915,661 of net proceeds from the sale of the Series B Convertible Preferred Stock due to $84,339 of equity issuance costs.

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 right) 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 the Second Note is as follows:

											As of June 30, 2018
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	$	118,425	$	3,145	$	378,430
Second Note	$	500,000		12.5	%	03/31/2019	$	0.04	$	500,000	$	127,860	$	3,381	$	368,759
Total	$	1,000,000							$	1,000,000	$	246,285	$	6,526	$	747,189

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 such 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 $31,164 and $31,165 for the three months ended June 30, 2018 and 2017, respectively, and $61,986 and $37,341 for the six months ended June 30, 2018 and 2017, respectively.

The amount of debt discount amortized from our convertible debt was $86,812 and $87,006 for the three months ended June 30, 2018 and 2017, respectively, and $172,671 and $87,006 for the six months ended June 30, 2018 and 2017, respectively.

The amount of debt issuance costs amortized from our convertible debt was $2,194 and $1,916 for the three months ended June 30, 2018 and 2017, respectively, and $4,329 and $1,916 for the six months ended June 30, 2018 and 2017, respectively.

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EQUITY TRANSACTIONS

6 Months Ended

Jun. 30, 2018

EQUITY TRANSACTIONS [Abstract]

EQUITY TRANSACTIONS

NOTE 10. 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.  The Company received of $4,915,661 of net proceeds from the sale of the Series B Convertible Preferred Stock due to $84,339 of equity issuance costs.

On 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 9. Convertible Debt.

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STOCKHOLDERS' EQUITY

6 Months Ended

Jun. 30, 2018

STOCKHOLDERS' EQUITY [Abstract]

STOCKHOLDERS' EQUITY

NOTE 11. STOCKHOLDERS’ EQUITY

Common Stock

As of June 30, 2018, we had 201,349,431 shares of Common Stock issued and outstanding.  For the six months ended June 30, 2018, we did not issue or redeem any shares of Common Stock.

Preferred Stock

As of June 30, 2018, we had no shares of Series A Preferred Stock (the “Series A Shares”) issued and outstanding.  For the six months ended June 30, 2018, we did not issue or redeem any Series A Shares.

As of June 30, 2018, we had no shares of Series B Preferred Stock (the “Series B Shares”) issued and outstanding.  For the three months ended June 30, 2018, we did not issue or redeem any Series B Shares.

Warrants

The following table summarizes the warrants outstanding and the number of shares of Common Stock subject to exercise as of June 30, 2018 and the changes therein during the six months then ended:

	Number of Shares of Common Stock Subject to Exercise			Weighted – Average Exercise Price
Balance as of December 31, 2017		83,234,617		$	0.06
Warrants issued		---			---
Warrants exercised		---			---
Warrants cancelled		(660,000	)	$	0.60
Balance as of June 30, 2018		82,574,617		$	0.06

For the six months ended June 30, 2018, we did not issue or redeem any warrants.

Of the warrant shares subject to exercise as of June 30, 2018, expiration of the right to exercise is as follows:

Date of Expiration	Number of Warrant Shares of Common Stock Subject to Expiration
January 15, 2019		80,000
April 30, 2020		194,118
March 30, 2021		25,245,442
March 31, 2027		57,055,057
Total		82,574,617

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EARNINGS PER SHARE

6 Months Ended

Jun. 30, 2018

EARNINGS PER SHARE [Abstract]

EARNINGS PER SHARE

NOTE 12. EARNINGS PER SHARE

Basic and Diluted Net Loss Per Share

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

Shares used in calculating basic and diluted net loss per common share exclude these potential common shares as of June 30, 2018 and December 31, 2017:

	June 30, 2018		December 31, 2017
Warrants to purchase Common Stock		82,574,617		83,234,617
Stock options to purchase Common Stock		1,635,334		150,736
Common Stock issuable upon the assumed conversion of our convertible promissory notes (1)		31,250,000		31,250,000
Total		115,459,951		114,635,353

(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.

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SHARE BASED COMPENSATION

6 Months Ended

Jun. 30, 2018

SHARE BASED COMPENSATION [Abstract]

SHARE BASED COMPENSATION

NOTE 13. SHARE BASED COMPENSATION

The Company maintains the 2006 Equity Incentive Plan and the 2018 Equity Incentive Plan.  Each of the Equity Incentive Plans are administered by the Board of Directors, acting in lieu of a compensation committee, 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.

As of March 29, 2016, the 2006 Equity Incentive Plan expired by its terms, and no additional awards may be granted thereunder.  The expiration of the 2006 Equity Incentive Plan does not affect outstanding awards.

On March 28, 2018, the Board of Directors approved the 2018 Equity Incentive Plan which was subsequently ratified at the Company’s 2018 Annual Meeting of Stockholders held on June 11, 2018.  The 2018 Equity Incentive Plan allows for the Company to grant awards for up to 20,000,000 shares of Common Stock.  Awards under the 2018 Equity Incentive Plan may include the following award types: stock options, which may be either incentive stock options or nonqualified stock options; stock appreciation rights; restricted stock; RSUs; other stock-based awards, including unrestricted shares; or any combination of the foregoing. The exercise price of stock options granted under the 2018 Equity Incentive Plan is equal to or greater than the closing price of a share of the Company’s Common Stock on the grant date.

Our Board did not granted any stock option awards for the three months ended June 30, 2018.  Our Board has granted the following stock option awards for the six months ended June 30:

	Six Months Ended June 30,
Stock Option Awards	2018		2017(1)
Quantity		1,500,000		---
Weighted average fair value per share	$	0.03		---
Fair value	$	45,000		---

(1) The Company did not award any shared-based compensation for the three and six months ended June 30, 2017.

We account for share-based compensation under FASB ASC Topic 718, Stock Compensation, which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees, consultants, and directors based on estimated fair values of the award on the grant date.  We use the Black-Scholes option-pricing model to estimate the fair value of share-based awards with the following weighted average assumptions for the six months ended June 30:

	Six Months Ended June 30,
Stock Option Awards	2018			2017 (4)
Expected volatility  (1)		136.27	%		---
Risk-free interest rate %  (2)		2.56	%		---
Expected term (in years)		5.0			---
Dividend yield  (3)		---			---

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

(2) Risk-free interest rate assumption is based upon U.S. Treasury bond interest rates appropriate for the term of the stock options.

(3) The Company does not currently intend to pay cash dividends, thus has assumed a 0% dividend yield.

(4) The Company did not award any shared-based compensation for the three and six months ended June 30, 2017.

Stock Options (Incentive and Nonstatutory)

The following table summarizes share-based compensation related to stock options for the three and six months ended June 30:

	Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017
Research and development	$	5,610	$	1,682	$	5,799	$	3,345
Selling, general and administrative		---		2,691		---		5,352
Total share-based compensation expense	$	5,610	$	4,373	$	5,799	$	8,697

As of June 30, 2018, the balance of unearned share-based compensation to be expensed in future periods related to unvested stock option awards, as adjusted for expected forfeitures, is approximately $39,000.  The period over which the unearned share-based compensation is expected to be recognized is approximately twenty one months.

The following table summarizes the stock options outstanding and the number of shares of Common Stock subject to exercise as of June 30, 2018 and the changes therein during the six months then ended:

	Stock Options			Weighted Average Exercise Price per Share
Outstanding as of December 31, 2017		150,736		$	4.26
Granted		1,500,000		$	0.05
Forfeited/cancelled		(15,402	)	$	29.59
Exercised		---			---
Outstanding as of June 30, 2018		1,635,334		$	0.16
Exercisable as of June 30, 2018		135,334		$	1.38

Summary of Plans

2006 Equity Incentive Plan

In March 2006, our Board adopted and our stockholders approved our 2006 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 subsequent annual meetings of the stockholders held in 2007, 2009, 2010, 2012, 2013, and 2014, our stockholders approved amendments to the 2006 Equity Incentive Plan that increased the number of shares of Common Stock issuable under the 2006 Equity Incentive Plan 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 June 30, 2018, we had granted options to purchase 2,061,167 shares of Common Stock since the inception of the 2006 Equity Incentive Plan, of which 135,334 were outstanding at a weighted average exercise price of $1.38 per share, and we had granted awards for 68,616 shares of restricted stock since the inception of the 2006 Equity Incentive Plan, of which none were outstanding. As of March 29, 2016, the 2006 Equity Incentive Plan expired by its terms, and no additional awards may be granted thereunder.  The expiration of the 2006 Equity Incentive Plan does not affect outstanding awards.

2018 Equity Incentive Plan

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.

As of June 30, 2018, we had granted options to purchase 1,500,000 shares of Common Stock since the inception of the 2018 Equity Incentive Plan, of which 1,500,000 were outstanding at a weighted average exercise price of $0.05 per share.  As of June 30, 2018, there were 18,500,000 shares that remain available for future grants under the 2018 Equity Incentive Plan.

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FAIR VALUE MEASUREMENTS

6 Months Ended

Jun. 30, 2018

FAIR VALUE MEASUREMENTS [Abstract]

FAIR VALUE MEASUREMENTS

NOTE 14. FAIR VALUE MEASUREMENTS

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

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

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

Level 1	—	Valuations based on quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2	—	Valuations based on observable inputs other than quoted prices in Level 1, such as quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, and other inputs that are observable or can be corroborated by observable market data.
Level 3	—	Valuations based on unobservable inputs reflecting the Company’s own assumptions, consistent with reasonably available assumptions made by other market participants.

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

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

The following table summarizes the fair value of our financial instruments at June 30, 2018 and December 31, 2017.

Description	June 30, 2018		December 31, 2017
Liabilities:
Convertible Note Payable – Related Party – March 2017	$	500,000	$	500,000
Convertible Note Payable – Related Party – February 2017	$	500,000	$	500,000
Total	$	1,000,000	$	1,000,000

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INCOME TAXES

6 Months Ended

Jun. 30, 2018

INCOME TAXES [Abstract]

INCOME TAXES

NOTE 15. 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 and the Company has provided a full valuation allowance. As a result, the effective tax rate is zero and the net deferred tax assets are zero.

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COMMITMENTS AND CONTINGENCIES

6 Months Ended

Jun. 30, 2018

COMMITMENTS AND CONTINGENCIES [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE 16. 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 currently requires a minimum monthly lease obligation of $2,729, which is inclusive of monthly operating expenses.

On January 25, 2018, we entered into a lease agreement for storage and warehouse space (“Warehouse Lease”) in Carrollton, Texas.  The lease commenced on January 24, 2018 and will continue until December 2019.  The lease currently requires a minimum monthly lease obligation of $1,629, which is inclusive of monthly operating expenses.

The future minimum lease payments under the Office Lease and the Warehouse Lease are as follows as of June 30, 2018:

Calendar Years	Future Lease Expense
2018 (Six months)	$	26,080
2019		52,288
2020		---
2021		---
Total	$	78,368

Rent expense for our operating leases amounted to $15,025 and $33,596 for the three months ended June 30, 2018 and 2017, respectively, and $28,779 and $65,944 for the six months ended June 30, 2018 and 2017, 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 9. Convertible Debt.

On March 31, 2017, the second closing of the Purchase Agreement included, among 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 six months ended June 30, 2018 and 2017, the Company recorded revenues, in approximate numbers, of nil and $215,000, respectively, with Velocitas GmbH, an affiliated entity of Velocitas, which represented 0% and 97% of our total revenues, respectively.  As of June 30, 2018 and December 31, 2017, 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.

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 June 30, 2018 and December 31, 2017, the Company’s obligation to these executives for temporarily deferred compensation was approximately $72,000 which was included in accrued liabilities.

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 June 30, 2018, 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 June 30, 2018, the Company has accrued approximately $42,000 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.  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 and accrued penalties and interest 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

6 Months Ended

Jun. 30, 2018

LEGAL PROCEEDINGS [Abstract]

LEGAL PROCEEDINGS

NOTE 17. 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

6 Months Ended

Jun. 30, 2018

SUBSEQUENT EVENTS [Abstract]

SUBSEQUENT EVENTS

NOTE 18. SUBSEQUENT EVENTS

On July 20, 2018, our Board of Directors approved the grant of two Nonstatutory stock option awards to two service providers.  Each award was for the purchase of up to 500,000 shares of common stock with an exercise price of $0.05, have a term of ten years, and will vest  upon the achievement of four specific performance thresholds.

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COMPANY OVERVIEW AND BASIS OF PRESENTATION (Policies)

6 Months Ended

Jun. 30, 2018

COMPANY OVERVIEW AND BASIS OF PRESENTATION [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and include the accounts of ULURU Inc., a Nevada corporation, and its wholly-owned subsidiary, Uluru Delaware Inc., a Delaware corporation.  They do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. All adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the Company’s financial position as of June 30, 2018 and the results of its operations for the three and six months ended June 30, 2018 and 2017 and cash flows for the six months ended June 30, 2018 and 2017 have been made.

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

All intercompany transactions and balances have been eliminated in consolidation.  Certain prior period amounts have been reclassified to conform to current period presentations.

Operating results for the three and six months ended June 30, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018.

These condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, as filed with the Securities and Exchange Commission on March 30, 2018 (the “2017 Form 10-K”), including the risk factors set forth therein.

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SIGNIFICANT ACCOUNTING POLICIES (Policies)

6 Months Ended

Jun. 30, 2018

SIGNIFICANT ACCOUNTING POLICIES [Abstract]

Revenue Recognition

Revenue Recognition

The Company’s product, Altrazeal®, is distributed to and through a limited number of specialty distributors internationally and a combination of wholesalers and direct to customer sales in the United States.  These customers subsequently resell the Company’s product to healthcare providers and patients.

The Company recognizes revenue as the transfer of control of its products to the Company’s customers in an amount reflecting the consideration the Company expects to be entitled. In order to achieve this core principle, the Company applies the following five-step approach:

§ identification of the contract, or contracts, with a customer;

§ recognition of revenue when, or as, we satisfy the performance obligations;

§ determination of the transaction price;

§ allocation of the transaction price to the performance obligations in the contract; and

§ recognition of revenue when, or as, we satisfy the performance obligations.

The Company considers customer purchase orders, which in some cases are governed by master distribution agreements, to be the contracts with the customer. For each contract, the Company considers the promise to transfer products, each of which are distinct, to be the identified performance obligations. In determining the transaction price, the Company evaluates whether the price is subject to refund or adjustment to determine the net consideration to which the Company expects to be entitled. In addition, the Company evaluates the customer’s ability to pay as part of its consideration of the contract. As the Company’s standard payment terms are less than one year, the Company elected the practical expedient under Accounting Standards Codification (ASC) 606-10-32-18, and determined that its contracts do not have a significant financing component. The Company allocates the transaction price to each distinct product based on the relative standalone selling price. Revenue is recognized when control of the product is transferred to the customer, the customer is obligated to pay the Company, and the Company has no remaining obligations, which is typically at shipment. In certain locations, primarily outside the United States, product shipping terms may vary. Thus, in such locations, the point at which control of the product transfers to the customer and revenue recognition occurs will vary accordingly.

Customer returns of non-conforming products are estimated at the time revenue is recognized. In certain customer relationships, rebates exist, which are recognized according to the terms and conditions of the contractual relationship. Customer returns, rebates, and discounts are not material to the Company’s consolidated financial statements. The Company has elected to recognize the revenue and cost for freight and shipping when control over the products has transferred to the customer. When applicable, taxes collected from Customers relating to product sales and remitted to governmental authorities are excluded from revenues.

The Company has elected to immediately expense contract costs from obtaining a contract as the amortization period of the asset the Company otherwise would have recognized would have been less than a year.

Reserves for Variable Consideration

Revenues from product sales are recorded at the transaction price, which includes estimates of variable consideration for which reserves are established and which result from discounts, returns, and other allowances that are offered within contracts between the Company and its customers.  These reserves are based on the amounts earned or to be claimed on the related sales and are classified as reductions of accounts receivable (if the amount is payable to the customer) or a current liability (if the amount is payable to a party other than a customer).  Where appropriate, these estimates take into consideration a range of possible outcomes and contemplates relevant factors such as the Company’s historical experience, current contractual and statutory requirements, specific known market events and trends, industry data and forecasted customer buying and payment patterns.  Overall, these reserves reflect the Company’s best estimates of the amount of consideration to which it is entitled based on the terms of the contract.  The amount of variable consideration which is included in the transaction price may be constrained, and is included in the net sales price only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period.  Actual amounts of consideration ultimately received may differ from the Company’s estimates.

The Company believes that the reserves it has established are reasonable based upon current facts and circumstances. Applying different judgments or interpretations to the same facts and circumstances could result in the estimated amount for reserves to vary.  If actual results vary with respect to the Company’s reserves, the Company may need to adjust its estimates, which could have a material effect on the Company’s results of operations in the period of adjustment. To date, such adjustments have not been material.

Trade Discounts and Allowances

The Company receives sales order management, data and distribution services from certain customers.  To the extent the services received are distinct from the Company’s sale of products to the customer, these payments are classified in selling, general and administrative expenses in the consolidated statements of operations of the Company. The company revenue recognition is net of estimated trade discount and allowances.

Other Revenues

The Company enters into licensing agreements, from time to time, which are within the scope of Topic 606, under which it may license certain rights to its products or product candidates to third parties.  The terms of these arrangements typically include payment to the Company of one or more of the following: non-refundable, up-front license fees; development, regulatory and commercial milestone payments; and royalties on net sales of licensed products.  Each of these payments results in revenues recognized and classified as other revenues.

Licenses of intellectual property:  If the license of the Company’s intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, the Company recognizes revenues from non-refundable, up-front fees allocated to the license when the license is transferred to the customer and the customer is able to use and benefit from the license.  For licenses that are bundled with other promises, the Company utilizes judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue from non-refundable, up-front fees.  The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition.

Milestone Payments:  At the inception of each arrangement that includes development milestone payments, the Company evaluates whether the milestones are considered probable of being reached and estimates the amount to be included in the transaction price using the most likely amount method.  If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in the transaction price.  Milestone payments that are not within the control of the Company or the licensee, such as regulatory approvals, are not considered probable of being achieved until those approvals are received. The transaction price is then allocated to each performance obligation on a relative stand-alone selling price basis, for which the Company recognizes revenue as or when the performance obligations under the contract are satisfied.  At the end of each subsequent reporting period, the Company re-evaluates the probability of achievement of such development milestones and any related constraint, and if necessary, adjusts its estimate of the overall transaction price.  Any such adjustments are recorded on a cumulative catch-up basis, which would affect license, collaboration and other revenues and earnings in the period of adjustment.

Royalties:  For arrangements that include sales-based royalties, including milestone payments based on the level of sales, and the license is deemed to be the predominant item to which the royalties relate, the Company recognizes revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied).

Under the Company’s various contracts, the Company may receive up-front payments and fees, which may require deferral of revenue recognition to a future period until the Company performs its obligations under these arrangements.  Amounts are recorded as accounts receivable when the Company’s right to consideration is unconditional.  The Company does not assess whether a contract has a significant financing component if the expectation at contract inception is such that the period between payment by the customer and the transfer of the promised goods or services to the customer will be one year or less.

We received upfront cash payments for licenses of our technology in years 2007 to 2013. The revenue was recognized straight-line over the life of the patent. Our obligation was performed at the time the license was granted. Following the revenue recognition policies in accordance with ASC 606, we decreased the accumulated deficit by $26,662 as of January 1, 2018 and decreased deferred revenue by the same amount.

Effective January 1, 2018, we adopted Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers, as amended (commonly referred to as ASC 606) using the modified retrospective transition method. The cumulative effect of applying the standard was an increase of $26,662 to stockholder’s equity as of January 1, 2018. Our statement of operations for the three and six months ended June 30, 2018 and our balance sheet as of June 30, 2018 are presented under ASC 606, while our statement of operations for the three and six months ended June 30, 2017 and our balance sheet as of December 31, 2017 are presented under ASC 605, Revenue Recognition. See below for disclosure of the impact of the adoption of ASC 606 on our statement of operations and balance sheet for the three and six months ended June 30, 2018, and the effect of changes made to our consolidated balance sheet as of January 1, 2018.

The table below presents the cumulative effect of the changes made to the consolidated January 1, 2018 balance sheet due to the adoption of ASC 606.

BALANCE SHEET	December 31, 2017, As Reported Under ASC 605			Adjustments Due to ASC 606			January 1, 2018 As Adjusted Under ASC 606
Liabilities
Current liabilities
Current portion of deferred revenue	$	35,761		$	(5,764	)	$	29,997
Total current liabilities		1,512,634			(5,764	)		1,506,870
Deferred revenue, net of current portion		352,698			(20,898	)		331,800
Total liabilities		2,435,521			(26,662	)		2,408,859
Stockholders’ Equity
Accumulated deficit		(62,650,287	)		26,662			(62,623,625	)
Total equity	$	6,107,796		$	26,662		$	6,134,458

The table below presents the impact of the adoption of ASC 606 on our statement of operations.

	Six Months Ended June 30, 2018
STATEMENT OF OPERATIONS	Under ASC 605			Effect of ASC 606			As Reported Under ASC 606
Revenues
License revenues	$	1,422		$	(1,422	)	$	---
Total revenues		190,767			(1,422	)		189,345
Loss from operations	$	(900,655	)	$	(1,422	)	$	(902,077	)
Net loss	$	(1,159,103	)	$	(1,422	)	$	(1,160,525	)
Basic and diluted loss per common share	$	(0.01	)	$	(0.00	)	$	(0.01	)

The table below presents the impact of the adoption of ASC 606 on our balance sheet.

	June 30, 2018
BALANCE SHEET	Under ASC 605			Effect of ASC 606			As Reported Under ASC 606
Liabilities and Stockholders’ Equity
Current liabilities
Current portion of deferred revenue	$	34,991		$	(5,764	)	$	29,227
Total current liabilities		2,289,999			(5,764	)		2,284,235
Deferred revenue, net of current portion		351,276			(19,476	)		331,800
Total liabilities		2,641,275			(25,240	)		2,616,035
Stockholders’ Equity
Accumulated deficit		(63,809,390	)		25,240			(63,784,150	)
Total stockholders’ equity	$	4,954,492		$	25,240		$	4,979,732

Disaggregation of Revenue

Revenue is disaggregated by primary geographic markets, as we believe this best depicts how the nature, amount, timing, and uncertainty of our revenue and cash flows are affected by economic factors.  For more information on the Company’s disaggregated revenue, see Note 4, Segment Information.

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SIGNIFICANT ACCOUNTING POLICIES (Tables)

6 Months Ended

Jun. 30, 2018

SIGNIFICANT ACCOUNTING POLICIES [Abstract]

Cumulative Effect of Changes Made to Consolidated Balance Sheet

The table below presents the cumulative effect of the changes made to the consolidated January 1, 2018 balance sheet due to the adoption of ASC 606.

BALANCE SHEET	December 31, 2017, As Reported Under ASC 605			Adjustments Due to ASC 606			January 1, 2018 As Adjusted Under ASC 606
Liabilities
Current liabilities
Current portion of deferred revenue	$	35,761		$	(5,764	)	$	29,997
Total current liabilities		1,512,634			(5,764	)		1,506,870
Deferred revenue, net of current portion		352,698			(20,898	)		331,800
Total liabilities		2,435,521			(26,662	)		2,408,859
Stockholders’ Equity
Accumulated deficit		(62,650,287	)		26,662			(62,623,625	)
Total equity	$	6,107,796		$	26,662		$	6,134,458

Impact of Adoption of ASC 606 on Balance Sheet and Statement of Operations

The table below presents the impact of the adoption of ASC 606 on our statement of operations.

	Six Months Ended June 30, 2018
STATEMENT OF OPERATIONS	Under ASC 605			Effect of ASC 606			As Reported Under ASC 606
Revenues
License revenues	$	1,422		$	(1,422	)	$	---
Total revenues		190,767			(1,422	)		189,345
Loss from operations	$	(900,655	)	$	(1,422	)	$	(902,077	)
Net loss	$	(1,159,103	)	$	(1,422	)	$	(1,160,525	)
Basic and diluted loss per common share	$	(0.01	)	$	(0.00	)	$	(0.01	)

The table below presents the impact of the adoption of ASC 606 on our balance sheet.

	June 30, 2018
BALANCE SHEET	Under ASC 605			Effect of ASC 606			As Reported Under ASC 606
Liabilities and Stockholders’ Equity
Current liabilities
Current portion of deferred revenue	$	34,991		$	(5,764	)	$	29,227
Total current liabilities		2,289,999			(5,764	)		2,284,235
Deferred revenue, net of current portion		351,276			(19,476	)		331,800
Total liabilities		2,641,275			(25,240	)		2,616,035
Stockholders’ Equity
Accumulated deficit		(63,809,390	)		25,240			(63,784,150	)
Total stockholders’ equity	$	4,954,492		$	25,240		$	4,979,732

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SEGMENT INFORMATION (Tables)

6 Months Ended

Jun. 30, 2018

SEGMENT INFORMATION [Abstract]

Revenues per Geographic Area

Revenues per geographic area for the three and six months ended June 30 are summarized as follows:

	Three Months Ended June 30,										Six months Ended June 30,
Revenues	2018		%			2017		%			2018		%			2017		%
Domestic	$	2,105		2	%	$	2,878		67	%		13,102		7	%	$	5,415		2	%
International		103,445		98	%		1,436		33	%		176,243		93	%		216,016		98	%
Total	$	105,550		100	%	$	4,314		100	%	$	189,345		100	%	$	221,431		100	%

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INVENTORY (Tables)

6 Months Ended

Jun. 30, 2018

INVENTORY [Abstract]

Components of Inventory

The components of inventory, at the different stages of production, consisted of the following at June 30, 2018 and December 31, 2017:

Inventory	June 30, 2018		December 31, 2017
Raw materials	$	45,451	$	32,329
Work-in-progress		341,073		311,632
Finished goods		71,393		153,500
Total	$	457,917	$	497,461

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PROPERTY, EQUIPMENT and LEASEHOLD IMPROVEMENTS (Tables)

6 Months Ended

Jun. 30, 2018

PROPERTY, EQUIPMENT and LEASEHOLD IMPROVEMENTS [Abstract]

Property, Equipment and Leasehold Improvements

Property, equipment and leasehold improvements, net, consisted of the following at June 30, 2018 and December 31, 2017:

Property, equipment and leasehold improvements	June 30, 2018			December 31, 2017
Laboratory equipment	$	424,888		$	424,888
Manufacturing equipment		1,589,286			1,604,894
Computers, office equipment, and furniture		154,781			154,781
Computer software		4,108			4,108
Leasehold improvements		95,841			95,841
		2,268,904			2,284,512
Less: accumulated depreciation and amortization		(2,226,141	)		(2,230,789	)
Property, equipment and leasehold improvements, net	$	42,763		$	53,723

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INTANGIBLE ASSETS (Tables)

6 Months Ended

Jun. 30, 2018

Patents [Member]

Intangible Assets [Abstract]

Intangible Assets

Intangible patent assets are composed of patents acquired in October, 2005.  Intangible assets, net consisted of the following at June 30, 2018 and December 31, 2017:

Intangible assets – patents	June 30, 2018			December 31, 2017
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		(7,437,261	)		(7,418,891	)
Less: reserve for impairment		(2,027,310	)		(2,027,310	)
Intangible assets - patents, net	$	161,367		$	179,737

Future Aggregate Amortization Expense for Intangible Assets

The future aggregate amortization expense for intangible patent assets, remaining as of June 30, 2018, is as follows:

Calendar Years	Future Amortization Expense
2018 (Six months)	$	18,674
2019		37,044
2020		37,145
2021		37,044
2022		31,460
Total	$	161,367

Licensing Rights [Member]

Intangible Assets [Abstract]

Intangible Assets

Licensing rights, net consisted of the following at June 30, 2018 and December 31, 2017:

Intangible assets - licensing rights	June 30, 2018			December 31, 2017
Intangible assets – licensing rights, gross	$	4,381,881		$	4,381,881
Less: accumulated amortization		(931,686	)		(725,245	)
Intangible assets - licensing rights, net	$	3,450,195		$	3,656,636

Future Aggregate Amortization Expense for Intangible Assets

The future aggregate amortization expense for intangible licensing rights assets, remaining as of June 30, 2018, is as follows:

Calendar Years	Future Amortization Expense
2018 (Six months)	$	209,862
2019		416,303
2020		416,303
2021		416,303
2022		416,303
2023 & Beyond		1,575,121
Total	$	3,450,195

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ACCRUED LIABILITIES (Tables)

6 Months Ended

Jun. 30, 2018

ACCRUED LIABILITIES [Abstract]

Accrued Liabilities

Accrued liabilities consisted of the following at June 30, 2018 and December 31, 2017:

Accrued Liabilities	June 30, 2018		December 31, 2017
Accrued compensation/benefits	$	129,006	$	124,819
Accrued property taxes		2,850		---
Accrued royalties		41,951		39,144
Product rebates/returns				6
Total accrued liabilities	$	173,807	$	163,969

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CONVERTIBLE NOTE PAYABLE - RELATED PARTY (Tables)

6 Months Ended

Jun. 30, 2018

CONVERTIBLE NOTE PAYABLE - RELATED PARTY [Abstract]

Information Relating to Convertible Debt

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

											As of June 30, 2018
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	$	118,425	$	3,145	$	378,430
Second Note	$	500,000		12.5	%	03/31/2019	$	0.04	$	500,000	$	127,860	$	3,381	$	368,759
Total	$	1,000,000							$	1,000,000	$	246,285	$	6,526	$	747,189

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STOCKHOLDERS' EQUITY (Tables)

6 Months Ended

Jun. 30, 2018

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 June 30, 2018 and the changes therein during the six months then ended:

	Number of Shares of Common Stock Subject to Exercise			Weighted – Average Exercise Price
Balance as of December 31, 2017		83,234,617		$	0.06
Warrants issued		---			---
Warrants exercised		---			---
Warrants cancelled		(660,000	)	$	0.60
Balance as of June 30, 2018		82,574,617		$	0.06

Expiration Dates for Warrants Subject to Exercise

Of the warrant shares subject to exercise as of June 30, 2018, expiration of the right to exercise is as follows:

Date of Expiration	Number of Warrant Shares of Common Stock Subject to Expiration
January 15, 2019		80,000
April 30, 2020		194,118
March 30, 2021		25,245,442
March 31, 2027		57,055,057
Total		82,574,617

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EARNINGS PER SHARE (Tables)

6 Months Ended

Jun. 30, 2018

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 June 30, 2018 and December 31, 2017:

	June 30, 2018		December 31, 2017
Warrants to purchase Common Stock		82,574,617		83,234,617
Stock options to purchase Common Stock		1,635,334		150,736
Common Stock issuable upon the assumed conversion of our convertible promissory notes (1)		31,250,000		31,250,000
Total		115,459,951		114,635,353

(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.

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SHARE BASED COMPENSATION (Tables)

6 Months Ended

Jun. 30, 2018

SHARE BASED COMPENSATION [Abstract]

Stock Option Awards Granted

Our Board has granted the following stock option awards for the six months ended June 30:

	Six Months Ended June 30,
Stock Option Awards	2018		2017(1)
Quantity		1,500,000		---
Weighted average fair value per share	$	0.03		---
Fair value	$	45,000		---

(1) The Company did not award any shared-based compensation for the three and six months ended June 30, 2017.

Weighted Average Assumptions

We use the Black-Scholes option-pricing model to estimate the fair value of share-based awards with the following weighted average assumptions for the six months ended June 30:

	Six Months Ended June 30,
Stock Option Awards	2018			2017 (4)
Expected volatility  (1)		136.27	%		---
Risk-free interest rate %  (2)		2.56	%		---
Expected term (in years)		5.0			---
Dividend yield  (3)		---			---

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

(2) Risk-free interest rate assumption is based upon U.S. Treasury bond interest rates appropriate for the term of the stock options.

(3) The Company does not currently intend to pay cash dividends, thus has assumed a 0% dividend yield.

(4) The Company did not award any shared-based compensation for the three and six months ended June 30, 2017.

Allocated Share-based Compensation Expense

The following table summarizes share-based compensation related to stock options for the three and six months ended June 30:

	Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017
Research and development	$	5,610	$	1,682	$	5,799	$	3,345
Selling, general and administrative		---		2,691		---		5,352
Total share-based compensation expense	$	5,610	$	4,373	$	5,799	$	8,697

Stock Option Activity

The following table summarizes the stock options outstanding and the number of shares of Common Stock subject to exercise as of June 30, 2018 and the changes therein during the six months then ended:

	Stock Options			Weighted Average Exercise Price per Share
Outstanding as of December 31, 2017		150,736		$	4.26
Granted		1,500,000		$	0.05
Forfeited/cancelled		(15,402	)	$	29.59
Exercised		---			---
Outstanding as of June 30, 2018		1,635,334		$	0.16
Exercisable as of June 30, 2018		135,334		$	1.38

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FAIR VALUE MEASUREMENTS (Tables)

6 Months Ended

Jun. 30, 2018

FAIR VALUE MEASUREMENTS [Abstract]

Fair Value of Financial Instruments

The following table summarizes the fair value of our financial instruments at June 30, 2018 and December 31, 2017.

Description	June 30, 2018		December 31, 2017
Liabilities:
Convertible Note Payable – Related Party – March 2017	$	500,000	$	500,000
Convertible Note Payable – Related Party – February 2017	$	500,000	$	500,000
Total	$	1,000,000	$	1,000,000

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COMMITMENTS AND CONTINGENCIES (Tables)

6 Months Ended

Jun. 30, 2018

COMMITMENTS AND CONTINGENCIES [Abstract]

Future Minimum Lease Payments

The future minimum lease payments under the Office Lease and the Warehouse Lease are as follows as of June 30, 2018:

Calendar Years	Future Lease Expense
2018 (Six months)	$	26,080
2019		52,288
2020		---
2021		---
Total	$	78,368

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THE EFFECT OF RECENTLY ISSUED ACCOUNTING STANDARDS (Details)	Dec. 31, 2017 USD ($)
ASU 2014-09 [Member]
Revenue, Initial Application Period Cumulative Effect Transition [Abstract]
Cumulative effect of new accounting principle in period of adoption	$ 26,662

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SIGNIFICANT ACCOUNTING POLICIES, Cumulative Effect of Changes made to Consolidated Balance Sheet (Details) (Details) - USD ($)	Jun. 30, 2018	Dec. 31, 2017
Revenue, Initial Application Period Cumulative Effect Transition [Abstract]
Accumulated deficit	$ (63,784,150)	$ (62,650,287)
Current liabilities [Abstract]
Current portion of deferred revenue	29,227	35,761
Total current liabilities	2,284,235	1,512,634
Deferred revenue, net of current portion	331,800	352,698
Total liabilities	2,616,035	2,435,521
Stockholders' Equity [Abstract]
Accumulated deficit	(63,784,150)	(62,650,287)
Total equity	4,979,732	6,107,796
ASU 2014-09 [Member]
Revenue, Initial Application Period Cumulative Effect Transition [Abstract]
Accumulated deficit		26,662
Stockholders' Equity [Abstract]
Accumulated deficit		26,662
Adjustments Due to ASC 606 [Member] | ASU 2014-09 [Member]
Revenue, Initial Application Period Cumulative Effect Transition [Abstract]
Deferred revenue		(26,662)
Accumulated deficit	25,240	26,662
Current liabilities [Abstract]
Current portion of deferred revenue	(5,764)	(5,764)
Total current liabilities	(5,764)	(5,764)
Deferred revenue, net of current portion	(19,476)	(20,898)
Total liabilities	(25,240)	(26,662)
Stockholders' Equity [Abstract]
Accumulated deficit	25,240	26,662
Total equity	25,240	26,662
As Adjusted Under ASC 606 [Member]
Revenue, Initial Application Period Cumulative Effect Transition [Abstract]
Accumulated deficit	(63,809,390)	(62,623,625)
Current liabilities [Abstract]
Current portion of deferred revenue	34,991	29,997
Total current liabilities	2,289,999	1,506,870
Deferred revenue, net of current portion	351,276	331,800
Total liabilities	2,641,275	2,408,859
Stockholders' Equity [Abstract]
Accumulated deficit	(63,809,390)	(62,623,625)
Total equity	$ 4,954,492	$ 6,134,458

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SIGNIFICANT ACCOUNTING POLICIES, Impact of Adoption on Statement of Operations and Balance Sheet (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Revenues [Abstract]
Revenues	$ 105,550	$ 4,314	$ 189,345	$ 221,431
Loss from operations	(449,696)	(520,015)	(902,077)	(961,591)
Net loss	$ (585,110)	$ (543,045)	$ (1,160,525)	$ (1,005,786)
Basic and diluted loss per common share (in dollars per share)	$ 0	$ (0.01)	$ (0.01)	$ (0.01)
Current liabilities [Abstract]
Current portion of deferred revenue	$ 29,227		$ 29,227		$ 35,761
Total current liabilities	2,284,235		2,284,235		1,512,634
Deferred revenue, net of current portion	331,800		331,800		352,698
Total liabilities	2,616,035		2,616,035		2,435,521
Stockholders' Equity [Abstract]
Accumulated deficit	(63,784,150)		(63,784,150)		(62,650,287)
Total equity	4,979,732		4,979,732		6,107,796
License Revenues [Member]
Revenues [Abstract]
Revenues	0	$ 1,436	0	$ 2,858
ASU 2014-09 [Member]
Stockholders' Equity [Abstract]
Accumulated deficit					26,662
Under ASC 605 [Member]
Revenues [Abstract]
Revenues			190,767
Loss from operations			(900,655)
Net loss			$ (1,159,103)
Basic and diluted loss per common share (in dollars per share)			$ (0.01)
Current liabilities [Abstract]
Current portion of deferred revenue	34,991		$ 34,991		29,997
Total current liabilities	2,289,999		2,289,999		1,506,870
Deferred revenue, net of current portion	351,276		351,276		331,800
Total liabilities	2,641,275		2,641,275		2,408,859
Stockholders' Equity [Abstract]
Accumulated deficit	(63,809,390)		(63,809,390)		(62,623,625)
Total equity	4,954,492		4,954,492		6,134,458
Under ASC 605 [Member] | License Revenues [Member]
Revenues [Abstract]
Revenues			1,422
Effect of ASU 606 [Member] | ASU 2014-09 [Member]
Revenues [Abstract]
Revenues			(1,422)
Loss from operations			(1,422)
Net loss			$ (1,422)
Basic and diluted loss per common share (in dollars per share)			$ 0
Current liabilities [Abstract]
Current portion of deferred revenue	(5,764)		$ (5,764)		(5,764)
Total current liabilities	(5,764)		(5,764)		(5,764)
Deferred revenue, net of current portion	(19,476)		(19,476)		(20,898)
Total liabilities	(25,240)		(25,240)		(26,662)
Stockholders' Equity [Abstract]
Accumulated deficit	25,240		25,240		26,662
Total equity	$ 25,240		25,240		$ 26,662
Effect of ASU 606 [Member] | ASU 2014-09 [Member] | License Revenues [Member]
Revenues [Abstract]
Revenues			$ (1,422)

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SEGMENT INFORMATION (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2018 USD ($) Customer	Jun. 30, 2017 USD ($) Customer	Jun. 30, 2018 USD ($) Customer	Jun. 30, 2017 USD ($) Customer
Revenues per geographic area [Abstract]
Total revenues	$ 105,550	$ 4,314	$ 189,345	$ 221,431
Total revenue, percentage	100.00%	100.00%	100.00%	100.00%
Revenue [Member] | Customer Concentration Risk [Member]
Revenues per geographic area [Abstract]
Total revenue, percentage	98.00%	66.00%	87.00%	97.00%
Number of major customers | Customer	3	3	1	1
Reportable Geographical Components [Member] | Domestic [Member]
Revenues per geographic area [Abstract]
Total revenues	$ 2,105	$ 2,878	$ 13,102	$ 5,415
Total revenue, percentage	2.00%	67.00%	7.00%	2.00%
Reportable Geographical Components [Member] | International [Member]
Revenues per geographic area [Abstract]
Total revenues	$ 103,445	$ 1,436	$ 176,243	$ 216,016
Total revenue, percentage	98.00%	33.00%	93.00%	98.00%

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INVENTORY (Details) - USD ($)	Jun. 30, 2018	Dec. 31, 2017
Components of inventory [Abstract]
Raw materials	$ 45,451	$ 32,329
Work-in-progress	341,073	311,632
Finished goods	71,393	153,500
Total	$ 457,917	$ 497,461

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PROPERTY, EQUIPMENT and LEASEHOLD IMPROVEMENTS (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Property, equipment and leasehold improvements, net [Abstract]
Property, equipment and leasehold improvements, gross	$ 2,268,904		$ 2,268,904		$ 2,284,512
Less: accumulated depreciation and amortization	(2,226,141)		(2,226,141)		(2,230,789)
Property, equipment and leasehold improvements, net	42,763		42,763		53,723
Depreciation expense	5,481	$ 32,842	10,961	$ 65,558
Laboratory Equipment [Member]
Property, equipment and leasehold improvements, net [Abstract]
Property, equipment and leasehold improvements, gross	424,888		424,888		424,888
Manufacturing Equipment [Member]
Property, equipment and leasehold improvements, net [Abstract]
Property, equipment and leasehold improvements, gross	1,589,286		1,589,286		1,604,894
Computers, Office Equipment, and Furniture [Member]
Property, equipment and leasehold improvements, net [Abstract]
Property, equipment and leasehold improvements, gross	154,781		154,781		154,781
Computer Software [Member]
Property, equipment and leasehold improvements, net [Abstract]
Property, equipment and leasehold improvements, gross	4,108		4,108		4,108
Leasehold Improvements [Member]
Property, equipment and leasehold improvements, net [Abstract]
Property, equipment and leasehold improvements, gross	$ 95,841		$ 95,841		$ 95,841

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INTANGIBLE ASSETS, Patents (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Intangible assets, net [Abstract]
Total	$ 161,367		$ 161,367		$ 179,737
Amortization expense	113,027	$ 113,027	224,811	$ 202,334
Future aggregate amortization expense for intangible assets [Abstract]
Total	161,367		161,367		179,737
Patents [Member]
Intangible assets, net [Abstract]
Intangible assets, gross	9,625,938		9,625,938		9,625,938
Less: accumulated amortization	(7,437,261)		(7,437,261)		(7,418,891)
Less: reserve for impairment	(2,027,310)		(2,027,310)		(2,027,310)
Total	161,367		161,367		179,737
Amortization expense	9,236	$ 9,236	18,370	$ 18,370
Future aggregate amortization expense for intangible assets [Abstract]
2018 (Six months)	18,674		18,674
2019	37,044		37,044
2020	37,145		37,145
2021	37,044		37,044
2022	31,460		31,460
Total	161,367		161,367		179,737
Patents [Member] | Amlexanox (Aphthasol) [Member]
Intangible assets, net [Abstract]
Intangible assets, gross	2,090,000		2,090,000		2,090,000
Patents [Member] | Amlexanox (OraDiscA) [Member]
Intangible assets, net [Abstract]
Intangible assets, gross	6,873,080		6,873,080		6,873,080
Patents [Member] | OraDisc [Member]
Intangible assets, net [Abstract]
Intangible assets, gross	73,000		73,000		73,000
Patents [Member] | Hydrogel Nanoparticle Aggregate [Member]
Intangible assets, net [Abstract]
Intangible assets, gross	$ 589,858		$ 589,858		$ 589,858

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INTANGIBLE ASSETS, Licensing Rights (Details) - USD ($)		3 Months Ended			6 Months Ended
	Feb. 27, 2017	Jun. 30, 2018	Jun. 30, 2017	Mar. 31, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Finite-lived Intangible Assets [Abstract]
Total		$ 161,367			$ 161,367		$ 179,737
Amortization expense		113,027	$ 113,027		224,811	$ 202,334
Future aggregate amortization expense for intangible assets [Abstract]
Total		161,367			161,367		179,737
Licensing Rights [Member]
Finite-lived Intangible Assets [Abstract]
Intangible assets - licensing rights, gross		4,381,881			4,381,881		4,381,881
Less: accumulated amortization		(931,686)			(931,686)		(725,245)
Total		3,450,195			3,450,195		3,656,636
Amortization expense		103,791	$ 103,791		206,441	$ 183,964
Future aggregate amortization expense for intangible assets [Abstract]
2018 (Six months)		209,862			209,862
2019		416,303			416,303
2020		416,303			416,303
2021		416,303			416,303
2022		416,303			416,303
2023 & Beyond		1,575,121			1,575,121
Total		$ 3,450,195			$ 3,450,195		$ 3,656,636
Velocitas Partners, LLC [Member]
Finite-lived Intangible Assets [Abstract]
Expected gross proceeds	$ 6,000,000
Velocitas Partners, LLC [Member] | Maximum [Member]
Finite-lived Intangible Assets [Abstract]
Expected gross proceeds	$ 6,000,000
Velocitas Partners, LLC [Member] | Second Closing [Member]
Finite-lived Intangible Assets [Abstract]
Warrants to purchase shares of common stock (in shares)				13,375,000
Velocitas Partners, LLC [Member] | Second Closing [Member] | Maximum [Member]
Finite-lived Intangible Assets [Abstract]
Warrants to purchase shares of common stock (in shares)				57,055,057
Altrazeal Trading GmbH [Member] | Second Closing [Member]
Finite-lived Intangible Assets [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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ACCRUED LIABILITIES (Details) - USD ($)	Jun. 30, 2018	Dec. 31, 2017
Accrued liabilities [Abstract]
Accrued compensation/benefits	$ 129,006	$ 124,819
Accrued property taxes	2,850	0
Accrued royalties	41,951	39,144
Product rebates/returns	0	6
Total accrued liabilities	$ 173,807	$ 163,969

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CONVERTIBLE NOTE PAYABLE - RELATED PARTY (Details)		3 Months Ended			6 Months Ended
	Feb. 27, 2017 USD ($) Closing	Jun. 30, 2018 USD ($) $ / shares shares	Jun. 30, 2017 USD ($) shares	Mar. 31, 2017 USD ($) Director $ / shares shares	Jun. 30, 2018 USD ($) $ / shares shares	Jun. 30, 2017 USD ($) shares	Dec. 31, 2017 shares	Jul. 26, 2017 shares	Jul. 25, 2017 shares
Debt Instruments [Abstract]
Proceeds from issuance of convertible notes and warrant, net					$ 0	$ 983,092
Proceeds from sale of Series B preferred stock, net					$ 0	$ 4,915,661
Authorized shares of common stock (in shares) | shares		750,000,000	200,000,000		750,000,000	200,000,000	750,000,000		750,000,000
Information relating to convertible notes payable [Abstract]
Initial principal amount and purchase price		$ 1,000,000			$ 1,000,000
Principal balance		1,000,000			1,000,000
Unamortized debt discount		246,285			246,285
Unamortized debt issuance costs		6,526			6,526
Carrying value		747,189			747,189
Interest cost recognized for promissory note and convertible debt		31,164	$ 31,165		61,986	$ 37,341
Amortization of debt discount for promissory note and convertible debt		86,812	87,006		172,671	87,006
Amortization of debt issuance costs for convertible debt		2,194	$ 1,916		$ 4,329	$ 1,916
Second Closing [Member]
Debt Instruments [Abstract]
Number of board of directors | Director				6
Second Closing [Member] | Bradley J. Sacks [Member]
Debt Instruments [Abstract]
Number of board of directors | Director				1
Second Closing [Member] | Major Investor or Board of Directors [Member]
Debt Instruments [Abstract]
Number of board of directors | Director				1
Velocitas Partners, LLC [Member]
Debt Instruments [Abstract]
Gross proceeds	$ 6,000,000
Number of closings | Closing	2
Velocitas Partners, LLC [Member] | Maximum [Member]
Debt Instruments [Abstract]
Gross proceeds	$ 6,000,000
Velocitas Partners, LLC [Member] | Common Stock [Member]
Debt Instruments [Abstract]
Convertible preferred stock shares issued upon conversion (in shares) | shares								125,000,000
Velocitas Partners, LLC [Member] | Series B Convertible Preferred Stock [Member]
Debt Instruments [Abstract]
Preferred stock, shares outstanding (in shares) | shares								1,250
Velocitas Partners, LLC [Member] | First Closing [Member]
Debt Instruments [Abstract]
Debt instrument term					2 years
Velocitas Partners, LLC [Member] | Second Closing [Member]
Debt Instruments [Abstract]
Debt instrument term					2 years
Proceeds from issuance of convertible notes and warrant, net				$ 983,092
Debt issuance costs				$ 16,908
Purchase price (in dollars per share) | $ / shares				$ 0.04
Number of days taken to automatically convert to common stock					190 days
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
Velocitas Partners, LLC [Member] | Second Closing [Member] | Maximum [Member]
Debt Instruments [Abstract]
Warrants to purchase shares of common stock (in shares) | shares				57,055,057
Velocitas Partners, LLC [Member] | Second Closing [Member] | Series B Convertible Preferred Stock [Member]
Debt Instruments [Abstract]
Number of shares issued (in shares) | shares				1,250
Gross proceeds from issuance of preferred stock				$ 5,000,000
Proceeds from sale of Series B preferred stock, net				4,915,661
Equity issuance costs				$ 84,339
Initial Note [Member]
Information relating to convertible notes payable [Abstract]
Initial principal amount and purchase price		$ 500,000			$ 500,000
Interest rate		12.50%			12.50%
Maturity date					Feb. 27, 2019
Conversion price (in dollars per share) | $ / shares		$ 0.04			$ 0.04
Principal balance		$ 500,000			$ 500,000
Unamortized debt discount		118,425			118,425
Unamortized debt issuance costs		3,145			3,145
Carrying value		378,430			378,430
Second Note [Member]
Information relating to convertible notes payable [Abstract]
Initial principal amount and purchase price		$ 500,000			$ 500,000
Interest rate		12.50%			12.50%
Maturity date					Mar. 31, 2019
Conversion price (in dollars per share) | $ / shares		$ 0.04			$ 0.04
Principal balance		$ 500,000			$ 500,000
Unamortized debt discount		127,860			127,860
Unamortized debt issuance costs		3,381			3,381
Carrying value		$ 368,759			$ 368,759

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EQUITY TRANSACTIONS (Details)		3 Months Ended	6 Months Ended
	Feb. 27, 2017 USD ($) Closing	Mar. 31, 2017 USD ($)	Jun. 30, 2018 USD ($) shares	Jun. 30, 2017 USD ($)	Jul. 26, 2017 shares
Class of Stock Disclosures [Abstract]
Proceeds from sale of Series B convertible preferred stock, net			$ 0	$ 4,915,661
Velocitas Partners, LLC [Member]
Class of Stock Disclosures [Abstract]
Proceeds from issuance or sale of equity	$ 6,000,000
Number of closings | Closing	2
Common Stock [Member] | Velocitas Partners, LLC [Member]
Class of Stock Disclosures [Abstract]
Convertible preferred stock shares issued upon conversion (in shares) | shares					125,000,000
Series B Convertible Preferred Stock [Member] | Velocitas Partners, LLC [Member]
Class of Stock Disclosures [Abstract]
Preferred stock, shares outstanding (in shares) | shares					1,250
March 2017 Offering [Member] | Velocitas Partners, LLC [Member]
Class of Stock Disclosures [Abstract]
Proceeds from issuance or sale of equity	$ 6,000,000
Number of closings | Closing	2
March 2017 Offering [Member] | Common Stock [Member] | Velocitas Partners, LLC [Member]
Class of Stock Disclosures [Abstract]
Convertible preferred stock shares issued upon conversion (in shares) | shares					125,000,000
March 2017 Offering [Member] | Series B Convertible Preferred Stock [Member] | Velocitas Partners, LLC [Member]
Class of Stock Disclosures [Abstract]
Number of shares issued (in shares) | shares			1,250
Gross proceeds from issuance of preferred stock		$ 5,000,000
Proceeds from sale of Series B convertible preferred stock, net		4,915,661
Equity issuance costs		$ 84,339
Preferred stock, shares outstanding (in shares) | shares					1,250

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STOCKHOLDERS' EQUITY (Details) - shares	Jun. 30, 2018	Dec. 31, 2017
Common Stock [Abstract]
Common stock, shares issued (in shares)	201,349,431	201,349,431
Common stock, shares outstanding (in shares)	201,349,431	201,349,431
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 Preferred Stock [Member]
Preferred Stock [Abstract]
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0

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STOCKHOLDERS' EQUITY, Warrants (Details)	6 Months Ended
	Jun. 30, 2018 $ / shares shares
Warrants and Number of Shares of Common Stock Subject to Exercise [Roll Forward]
Balance (in shares)	83,234,617
Warrants issued (in shares)	0
Warrants exercised (in shares)	0
Warrants cancelled (in shares)	(660,000)
Balance (in shares)	82,574,617
Warrants, Weighted-Average Exercise Price [Abstract]
Balance (in dollars per share) | $ / shares	0.06
Warrants issued (in dollars per share) | $ / shares	0
Warrants exercised (in dollars per share) | $ / shares	0
Warrants cancelled (in dollars per share) | $ / shares	0.60
Balance (in dollars per share) | $ / shares	0.06
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) - $ / shares		6 Months Ended	12 Months Ended
		Jun. 30, 2018	Dec. 31, 2017
Earnings Per Share, Diluted [Abstract]
Antidilutive securities excluded from calculating basic and diluted net loss per common share (in shares)		115,459,951	114,635,353
Initial Note [Member]
Earnings Per Share, Diluted [Abstract]
Conversion price (in dollars per share)		$ 0.04
Maturity date		Feb. 27, 2019
Second Note [Member]
Earnings Per Share, Diluted [Abstract]
Conversion price (in dollars per share)		$ 0.04
Maturity date		Mar. 31, 2019
Warrants to Purchase Common Stock [Member]
Earnings Per Share, Diluted [Abstract]
Antidilutive securities excluded from calculating basic and diluted net loss per common share (in shares)		82,574,617	83,234,617
Stock Options to Purchase Common Stock [Member]
Earnings Per Share, Diluted [Abstract]
Antidilutive securities excluded from calculating basic and diluted net loss per common share (in shares)		1,635,334	150,736
Common Stock Issuable Upon the Assumed Conversion of Our Convertible Promissory Notes [Member]
Earnings Per Share, Diluted [Abstract]
Antidilutive securities excluded from calculating basic and diluted net loss per common share (in shares)	[1]	31,250,000	31,250,000
Conversion 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.

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SHARE BASED COMPENSATION, Stock option, restricted stock and summary of plans (Details) - USD ($)		6 Months Ended
		Jun. 30, 2018	Jun. 30, 2017	[1]	Mar. 28, 2018	Mar. 31, 2006
Options Granted [Abstract]
Quantity (in shares)		1,500,000	0
Weighted average fair value per share (in dollars per share)		$ 0.03	$ 0
Fair value		$ 45,000,000	$ 0
Weighted average assumptions to estimate the fair value of share-based awards [Abstract]
Expected volatility	[2]	136.27%	0.00%
Risk-fee interest rate %	[3]	2.56%	0.00%
Expected term		5 years	0 years
Dividend yield	[4]	0.00%	0.00%
Options, Outstanding [Roll Forward]
Granted (in shares)		1,500,000	0
Stock Options [Member]
Options Granted [Abstract]
Quantity (in shares)		1,500,000
Nonvested Awards, unearned share-based compensation [Abstract]
Unearned share-based compensation expense		$ 39,000
Unearned share-based compensation, recognition period		21 months
Options, Outstanding [Roll Forward]
Outstanding, beginning of period (in shares)		150,736
Granted (in shares)		1,500,000
Forfeited/cancelled (in shares)		(15,402)
Exercised (in shares)		0
Outstanding, end of period (in shares)		1,635,334
Exercisable (in shares)		135,334
Outstanding, Weighted Average Exercise Price [Roll Forward]
Outstanding, beginning of period (in dollars per share)		$ 4.26
Granted (in dollars per share)		0.05
Forfeited/cancelled (in dollars per share)		29.59
Exercised (in dollars per share)		0
Outstanding, end of period (in dollars per share)		0.16
Exercisable (in dollars per share)		$ 1.38
2006 Equity Incentive Plan [Member]
Additional disclosures [Abstract]
Number of shares authorized (in shares)		2,800,000				133,333
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
Contractual term		10 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]
Additional disclosures [Abstract]
Number of shares authorized (in shares)					20,000,000
Number of shares available for grant (in shares)		18,500,000
2018 Equity Incentive Plan [Member] | Stock Options [Member]
Options Granted [Abstract]
Quantity (in shares)		1,500,000
Options, Outstanding [Roll Forward]
Granted (in shares)		1,500,000
Outstanding, Weighted Average Exercise Price [Roll Forward]
Granted (in dollars per share)		$ 0.05
Additional disclosures [Abstract]
Number of options granted to date (in shares)		1,500,000
2018 Equity Incentive Plan [Member] | Stock Options [Member] | Maximum [Member]
Options Granted [Abstract]
Quantity (in shares)		20,000,000
Options, Outstanding [Roll Forward]
Granted (in shares)		20,000,000

[1] The Company did not award any shared-based compensation for the three and six months ended June 30, 2017.

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

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

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

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SHARE BASED COMPENSATION, Allocated compensation expense (Details) - Stock Options [Member] - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Employee Service Share-based Compensation, Aggregate Disclosures [Abstract]
Share-based compensation expense	$ 5,610	$ 4,373	$ 5,799	$ 8,697
Research and Development [Member]
Employee Service Share-based Compensation, Aggregate Disclosures [Abstract]
Share-based compensation expense	5,610	1,682	5,799	3,345
Selling, General and Administrative [Member]
Employee Service Share-based Compensation, Aggregate Disclosures [Abstract]
Share-based compensation expense	$ 0	$ 2,691	$ 0	$ 5,352

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FAIR VALUE MEASUREMENTS (Details) - USD ($)	Jun. 30, 2018	Dec. 31, 2017
Liabilities [Abstract]
Note payable	$ 1,000,000	$ 1,000,000
Convertible Note Payable - Related Party - March 2017 [Member]
Liabilities [Abstract]
Note payable	500,000	500,000
Convertible Note Payable - Related Party - February 2017 [Member]
Liabilities [Abstract]
Note payable	$ 500,000	$ 500,000

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COMMITMENTS AND CONTINGENCIES (Details)	1 Months Ended	3 Months Ended		6 Months Ended		12 Months Ended	13 Months Ended	23 Months Ended	36 Months Ended	60 Months Ended
	Dec. 31, 2017 USD ($)	Jun. 30, 2018 USD ($)	Jun. 30, 2017 USD ($)	Jun. 30, 2018 USD ($)	Jun. 30, 2017 USD ($)	Mar. 16, 2015 USD ($)	Mar. 31, 2014 USD ($)	Feb. 22, 2013 USD ($)	Mar. 31, 2018 USD ($)	Mar. 31, 2011 USD ($)	Dec. 15, 2017 ft²
Future minimum lease payments [Abstract]
2018 (Six months)		$ 26,080		$ 26,080
2019		52,288		52,288
2020		0		0
2021		0		0
Total		78,368		78,368
Rent expense for operating lease		15,025	$ 33,596	$ 28,779	$ 65,944
Storage and Warehouse [Member]
Leases [Abstract]
Minimum monthly lease obligation		$ 1,629
Office and Laboratory Space [Member]
Leases [Abstract]
Minimum monthly lease obligation	$ 2,729					$ 9,379	$ 9,193	$ 9,776	$ 9,436	$ 9,330
Office rentable square feet | ft²											2,500

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COMMITMENTS AND CONTINGENCIES, Related Party (Details) - USD ($)		3 Months Ended			6 Months Ended
	Feb. 27, 2017	Jun. 30, 2018	Jun. 30, 2017	Mar. 31, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017	Apr. 02, 2017
Related Party Obligations [Abstract]
Concentration risk, percentage		100.00%	100.00%		100.00%	100.00%
Summary of compensation earned, compensation paid in cash, and compensation temporarily deferred [Abstract]
Deferred compensation		$ 72,000			$ 72,000		$ 72,000
Velocitas Partners, LLC [Member]
Related Party Obligations [Abstract]
Expected gross proceeds	$ 6,000,000
Velocitas Partners, LLC [Member] | Maximum [Member]
Related Party Obligations [Abstract]
Expected gross proceeds	$ 6,000,000
Velocitas Partners, LLC [Member] | Second Closing [Member]
Related Party Obligations [Abstract]
Warrants to purchase shares of common stock (in shares)				13,375,000
Velocitas Partners, LLC [Member] | Second Closing [Member] | Maximum [Member]
Related Party Obligations [Abstract]
Warrants to purchase shares of common stock (in shares)				57,055,057
Altrazeal Trading GmbH [Member] | Second Closing [Member]
Related Party Obligations [Abstract]
Warrants to purchase shares of common stock (in shares)				13,375,000
Acquisition value				$ 869,375
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
Velocitas GmbH [Member]
Related Party Obligations [Abstract]
Monthly payment								$ 25,833
Velocitas GmbH [Member] | Revenue [Member]
Related Party Obligations [Abstract]
Related party sales					$ 0	$ 215,000
Concentration risk, percentage					0.00%	97.00%
Velocitas GmbH [Member] | Accounts Receivable [Member]
Related Party Obligations [Abstract]
Outstanding accounts receivable		$ 0			$ 0		$ 0

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COMMITMENTS AND CONTINGENCIES, Contingent Milestone Obligations (Details) - USD ($)	6 Months Ended
	Jun. 30, 2018	Mar. 07, 2008
Access Pharmaceuticals [Member]
Loss Contingency [Abstract]
Future milestone obligations	$ 4,750,000
Accrued expenses related to future milestone payments	42,000
Access Pharmaceuticals [Member] | Annual Sales, Certain Products [Member] | Minimum [Member]
Loss Contingency [Abstract]
Milestone for payment	20,000,000
Access Pharmaceuticals [Member] | Annual Sales, Certain Products [Member] | Maximum [Member]
Loss Contingency [Abstract]
Milestone for payment	40,000,000
Access Pharmaceuticals [Member] | Annual Sales, Any One Certain Product [Member]
Loss Contingency [Abstract]
Milestone for payment	20,000,000
Access Pharmaceuticals [Member] | Cumulative Sales, Certain Products [Member] | Minimum [Member]
Loss Contingency [Abstract]
Milestone for payment	50,000,000
Access Pharmaceuticals [Member] | Cumulative Sales, Certain Products [Member] | Maximum [Member]
Loss Contingency [Abstract]
Milestone for payment	$ 100,000,000
ProStrakan Ltd [Member]
Loss Contingency [Abstract]
Royalty percentage		30.00%
ProStrakan Ltd [Member] | Maximum [Member]
Loss Contingency [Abstract]
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	Jun. 30, 2018
Loss Contingency [Abstract]
Settlement payment amount to DHHS	$ 400,000
Assessed Prescription Drug User Fee [Member]
Loss Contingency [Abstract]
Prescription drug user fees		$ 535,000

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LEGAL PROCEEDINGS (Details)	6 Months Ended
	Jun. 30, 2018
LEGAL PROCEEDINGS [Abstract]
Maximum percentage of material proceedings/interest	5.00%

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SUBSEQUENT EVENTS (Details) - Stock Options [Member]		6 Months Ended
	Jul. 20, 2018 Award ServiceProvider Threshold $ / shares shares	Jun. 30, 2018 $ / shares
Stock option awards [Abstract]
Exercise price (in dollars per share)		$ 0.05
Subsequent Event [Member]
Stock option awards [Abstract]
Number of stock option awards approved for grant | Award	2
Number of service providers | ServiceProvider	2
Exercise price (in dollars per share)	$ 0.05
Term of stock option award	10 years
Number of performance thresholds | Threshold	4
Subsequent Event [Member] | Maximum [Member]
Stock option awards [Abstract]
Maximum number of shares purchased per award (in shares) | shares	500,000